IT: Property Investor - Interest-Only Storm Clouds Gathering

irishtimes.com/newspaper/pro … 84981.html

Shaka, when the walls fell.

I have a friend of mine who is a Garda. He told me quite a few of his colleagues are bricking it because they took out these IO mortgages for investment properties.

They do need to get rid of that rule, where garda can be sacked for going bankrupt.

Nerd alert.

Keep the rule and cut the public sector payroll.

Trekkie alert !

I’m a bit confused here because there seem to be two issues: the ending of IO periods and whether the mortgage is a tracker.

So to clarify: this article is saying that irrespective of whether the mortgage is a tracker or not, repayments are likely to jump enormously in the coming months when IO periods end. Is that right?

Also, what percentage of investment mortgages are trackers? And is there any reason to believe that the T&C’s of investment loans make it easier for the bank to switch them to variable rates than seems to be the case with OO mortgages?

Why? The person (Garda) clearly knew that there was a bankruptcy rule in place, yet the leveraged up with an investment property on an IO loan. No sympathy here.

Keep the rule, theres enough rule bending breaking etc with those in power without adding to it.

Jeez guys. No sympathy for them losing the property but it shouldnt mean that they lose their job aswell. All for personal responsibilty over here btw ust this is taking it a bit far.

Solicitors and barristers are another story as they asre self-employed. Well, mostly.

Not a case of them losing the property as they never owned it to begin with. It’s a case of them takeing on debts that they can’t service or repay.

8DD The glory days. I’m limited to Fringe these days.

And if they lose their jobs they’ll never be able to repay.

Do you know what “being bankrupt” means?

Ok, I’m just saying I think it’s taking it too far to sack them for going bankrupt.

Can I ask anyone what is the interest tax relief on an investors mortgage? I know it was cut in a budget but I can’t remember to what and my searches are throwing up too much information.

The underlying trend, based on several aquaitances in this situation, is that banks have been rolling over the IO period each 6 months for the past year or so but are now indicating this is the last time and there are allot of pending switches accumulated in the banks. As the majority of these loans are now in negative equity the banks are rightly switching them over to variable rate where they can and leveraging the IO terms for those which revert to trackers, i.e. offering maybe 1 year IO at a teaser rate but with the elimination of the tracker once the loan reverts to P+I. This last part is heresay, no proof of it.
Fubarred is the only word I have for a few aquaintances with these, many were self-employed in the construction industry, currently recieving job seekers which will end soon, struggling to rent the properties, and with other financial issues associated with overdraft facilities, taxes, creditors, and bad debts from defunct builders, etc…

Most of these are single investment guys, i.e. 1 apartment each, one or two would have IO on sites, 1-off builds, and smaller developments. Funny enough it is the smaller guys who would seem to be feeling it more, i.e. under more pressure from the banks, I guess it is because it can be dealt with at local manager level and using local solicitors, the letters are arriving regularly for a few of these guys and the pressure is huge on them. I feel very sorry for them as they got caught up in the hype but they were also greedy and turned down good offers on some of these properties back in 2006 which would have allowed them to make a nice profit. To a man they considered the mortgage cost to be the IO portion so the rent was more than covering it, no thought to a reset to P+I,etc., financially illerate in general and now paying the price big time.

All of these guys have their property on the market but all priced high IMO, mainly driven by agents telling them not to lower as offers are lower anyway, some driven by fear of the losses, and others just in cuckoo land.

Only 1/2 hour ago an agent told me not to bother with a viewing if I wasn’t going to be offering more than 90% of the list price.

If they’re self-employed they can’t get jobseeker’s benefit, and if they have other properties they’ll fail the means test for jobseeker’s allowance so I’m not following that bit. I think you might be thinking of mortgage interest relief which is limited to one year, but they would only get that for their PPR and only under special conditions.

Explain to EA the semantic difference between viewing a house and bidding on it. Offer to go into detail on how different philosophical traditions have dealt with the nature of impressions, judgements and intentions.