House/ Mortgage question

[mc_grens]

Can anyone tell me what happens in the following case?

2People living together decide to break up. They want to sell their appartment but are in negative equity. Neither can really afford it alone.

If they sell what happens to the remaining debt? Does it get paid off over the life if the mortgage? Does it get refinanced to a shorter, killer loan?

What are the options open?

[pintsofguinness]

Cant sell it without clearing the mortgage, if the two people want to sell it they'll need to come up with the difference.

Maybe getting a loan to cover the difference would be an option?

[Tyrones own]

Don't know where you're located MG but here it would likely end up being short sold with the bank likely eating the loss
if and only if both parties can prove that they can no longer make the payments, they would have to pay tax on the
amount that the bank is out as earned income though, otherwise they're on the hook individually for what's owed to the bank after the short sale.

[mc_grens]

Cheers. Neither sound like great options...

We could both easily cover half the mortgage so we'd be fucked with the bank.

[mc_grens]

In the South incidentally.

[Tyrones own]

Could you afford to rent it til this thing (depression) blows over...whenever that'll be?
who knows she might even have forgiven you by then

[muppet]

Don't know where you're located MG but here it would likely end up being short sold with the bank likely eating the loss
if and only if both parties can prove that they can no longer make the payments, they would have to pay tax on the
amount that the bank is out as earned income though, otherwise they're on the hook individually for what's owed to the bank after the short sale.

That is the case in the States, basically if you don't have the money you just hand back the keys.

Not the same here though, in Ireland the bank can sell the house and come after you (both in this case) through the courts for the rest (car, savings etc).

On the plus side there has been a lot of talk (I know) during the bank guarantee and re-capitalisations of banks being told by the State to be very lenient in hardship cases. Go and talk to the bank first and look for some concessions. If no joy there you may have to talk, ridiculous as it sounds, to a politician.

[maxpower]

Don't know where you're located MG but here it would likely end up being short sold with the bank likely eating the loss
if and only if both parties can prove that they can no longer make the payments, they would have to pay tax on the
amount that the bank is out as earned income though, otherwise they're on the hook individually for what's owed to the bank after the short sale.

That is the case in the States, basically if you don't have the money you just hand back the keys.

Not the same here though, in Ireland the bank can sell the house and come after you (both in this case) through the courts for the rest (car, savings etc).

On the plus side there has been a lot of talk (I know) during the bank guarantee and re-capitalisations of banks being told by the State to be very lenient in hardship cases. Go and talk to the bank first and look for some concessions. If no joy there you may have to talk, ridiculous as it sounds, to a politician.

Agree completely, key is to speak to the bank beforemaking any decisions or missing any payments, , would you be able to rent it out to cover the mortgage interest?

[illdecide]

What happens in the case if you were in bad negative equity (say £75,000) and you knew you were f**ked for the payments, you sell your car and clear out your bank account (bar a few hundred quid). Then go to the bank and say "we've both been paid off from our jobs and no longer working, we've no money in the bank and no cars to sell" your call bank manager...Who takes the hit in that case???

I know the bank will prob offer some sort of holiday on the mortgage or a bit of leniency but in a case where the couple are actually trying to pull a fly one over the banks, in other words "take the f**king keys back and stick your house we don't want it"

[maxpower]

It is possible the bank will take the hit if it can be sold.  but they could still come after you.

The problem is unscruptulous builders who have finance hundreds of thousands on land and developments would/will or could go to the bank, tell them they are in negative and sell the asset at a vastly reduced price if the bank agrees to accept as full payment.  problem is banks are being forced to accept and builders will no doubt benefit from cash payments

I remember years being in told if your £20k in debt your in trouble but if your £2m in debt your in business and with the way i have seen some benefit by manipulating things now i would certainly agree

[The GAA]

On a related matter - what are the pros and cons of handing back the keys to the mortgage company - also in the south

[Hound]

On a related matter - what are the pros and cons of handing back the keys to the mortgage company - also in the south

I believe it would work something like this:

The bank will sell your house for, lets say, €300,000.
But they will incur plenty of costs, legal, estate agents and no doubt will throw in a big admin fee for all the hassle.
That might leave the balance at €260,000.

If you have a mortgage of €250,000, they'll give you the €10k cash.
If you have a mortgage of €350,000, they'll back to you looking for the additional €90k, with interest adding daily.

[Tyrones own]

Don't know where you're located MG but here it would likely end up being short sold with the bank likely eating the loss
if and only if both parties can prove that they can no longer make the payments, they would have to pay tax on the
amount that the bank is out as earned income though, otherwise they're on the hook individually for what's owed to the bank after the short sale.

That is the case in the States, basically if you don't have the money you just hand back the keys.

Not the same here though, in Ireland the bank can sell the house and come after you (both in this case) through the courts for the rest (car, savings etc).

On the plus side there has been a lot of talk (I know) during the bank guarantee and re-capitalisations of banks being told by the State to be very lenient in hardship cases. Go and talk to the bank first and look for some concessions. If no joy there you may have to talk, ridiculous as it sounds, to a politician.

The problem with that though is the bank won't talk about concessions to you unless you're 2-3 months behind unfortunately
no doubt in a attempt to weed out the scammers.....like Illdecide 

[Bensars]

I would imagine that they would also deduct any early resettlement penalties, if they were in place. I watched a show on rte a few weeks ago and one guy was being quoted something like 40k penalty to switch from a fixed interest account to a tracker.

Dont blame the bank, blame the people they borrowed the money from, seems to be the stock answer from the financial institutions

[lynchbhoy]

it was mentioned on the radio this morning - the 'short sold' scenario or whatever it was called - arising from peopl ein negative equity trying to get rid of the house (for whatever reason) and not having the ful mortgage amount.

the 'financial advisor' guy on the radio this morning said that the banks will stay after you for the money for a period of up to 12 years.

renting is fine, but check out the cost of paying tax on the rental income.

Maybe one of you will have to move out and the other person will have to get someone in to share the mortgage.
Any shortfall would have to be decided on in relation to the rent costs of whoever moves out.

either that or both stay in the house for the forseeable future untl you can get a buyer for full mortgage price !