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Financial advice please!(14 Posts)
I?m looking for a bit of financial advice as I can?t seem to figure out what to do! So back in 2005 dh and I bought a house just outside Dublin. They were offering crazy money back then but we didn?t take it, we found the cheapest house we could that was in a decent area. We bought a two bed terrace for 240,000 euro. We were both working in Dublin, had just got married a year before and were planning to start a family. I know looking back it was the worst time in Irish history to have bought a house but for us we were just doing the get married, buy a house, have kids thing, we were just about to turn 30. It was the right time of life for us to buy and so we didn?t really think about it, afterall, sure the prices were expensive but prices had been going up every year.
Since then the economic crisis occurred. My job ended. I was on a contract and so when it ended it was not renewed as there was no money for further work, so no redundancy. I am now out of work. Dh got work last year down the country but due to the price crash we have been unable to sell our house (we are hearing things like house prices reduced 65% since 2006). So we rented out our Dublin house and rented a house ourselves down the country.
We had a tenant that trashed the house, but now we have nice tenants. However they only pay 750 euro a month, the mortgage is 1,000. We can?t afford to pay the shortfall.
Dh?s work pay has been cut and we now have only 1,800 a month to live on. He may well be out of work shortly, as his hours keep on being cut. We are both well educated and I had a professional career until this economic crisis. Right now I see no work in the future at all. I have sent my cv out to be told they would love to hire me but they can barely keep their own staff going at the moment. We are really really struggling every month and literally can't cut our expenses further.
The house in Dublin is considered to be an investment property according to revenue. We are taxed on the income. We just want to get rid of it, we are falling further and further into arrears every month. Should we:
1. Sell it and then owe the bank about 60K? Payable back over our lifetime.
2. Should we hold on to it, going further into arrears every month, with no job prospects in the foreseeable future, with nearly 30 years left on the mortgage?
3. Should we try to declare ourselves bankrupt and start over from scratch?
4. Any other thoughts?
Sorry for long post! I also put this in chat but have got no responses there. Thanks for any advice.
I'm really sorry to hear this op. Is your mortgage interest only? Any chance you could go on to interest only? Or increase the rent to cover your expenses?
i would try my very hardest to keep the house, can you get a tenant to pay more rent? Selling the house at a loss is a no brainer. Rental market is meant to be strong at the moment inUk anyway not sure about Eire?
Would it be worthwhile to move back into it?
We can't get more rent at all. The way it is here we are lucky just to have a tenant. In fact I'm worried that in the summer they will look for a rent decrese. My concern is that everyone is saying house prices will never ever go back to where they are and that by keeping the house we are in the longer run paying way more than we would if we just walked away now.
We are in the process of switching to interest only. But the money will have to be paid at some point and there are no jobs in this country.
Thanks for the replies.
Bronze - Financially perhaps. But we just couldn't. We both hated it there, it wouldn't be worth it in terms of our happiness. It was also very small, no storage space at all. Where we live now is three hours away. It's nice and ds loves his school here.
What a nightmare for you, not bring reckless in your decisions just poor luck. Can't help with any useful advice.
Can you move to find jobs? Maybe London or big city?
If you were in the UK I'd be pointing you in the direction of one of the free debt advisory services. Is there an Irish equivalent of Citizens' Advice Bureau, for example? My personal view would be to cut your losses. Every day you hold onto the property it's costing you money you haven't got and are unlikely ever to get. An interest only mortgage will only work if you manage to cover the monthly payments with rent and save up enough to pay off the capital at the same time... extremely doubtful if jobs are scarce. Selling up leaves you with a very big debt that you may ultimately not be able to afford any better than the current one. Bankruptcy may actually be the best solution if you have no other assets to risk but there are some serious downsides that you need to be aware of before taking that step. Do take professional advice.
I opted for bankruptcy years ago when my business partner ruined what had been a very sound business through profligacy. It seemed like a fate worse than death when I contemplated it but in fact it was exactly the right thing to do. It is now long spent and I have an excellent credit record again and the Official Receiver was very kind to me - I made quite small monthly payments to him for 3 years ( it has all changed now and the periods are shorter) Sometimes bankruptcy is the only and best solution.
Irish bankruptcy laws are considerably more stringent than those in the UK. (I'm assuming you're talking from a UK perspective of course!) The implications of going bankrupt for the op are far harsher than for someone living in the UK. I do tend to agree with those who are advising not throwing good money after bad, tho'.
You poor thing, what a nightmare. I would echo one of the others and encourage you to speak to a debt counselling service, there are somemcharities that deal with this sort of thing. They mot be able to help you negotiate with your mortgage provider. Best of luck.
I would do what others have said and look for some sort of financial advisory help, some are run by Church organisations (not religious orientated, but more it is their duty to help).
Speak to your mortgage provider and see about getting it changed to interest only until things pick up, especially as you say you don't intend to return to it, the eventual sale at a later date won't be an issue when you don't pay off the capital.
Some time ago I used to work for what is now HMRC. I used to deal with a lot of rental accounts, both UK and foreign because of the nature of a very large local employer. With rental income, expenses are allowed against the income, that includes mortgages. Was the case in Eire tax system 10 years ago, unlikely to have changed since (foreign tax paid is allowable against UK tax liability and vice versa for most countries including Eire). I would check with the tax office that you have declared the income correctly. It sounds that you may be in a loss situation, which should be allowable against future rental income (carried forward) and may even be allowable against other income in the same year. Eire follows a very similar accountancy system to the UK, the tax legislation may be slightly different. You have nothing to lose from asking.
I think you'd have to take specialist advice on the bankruptcy/house sale/keeping house issue (it depends on the specifics), but I agree with other posters that it might be worth seeing if you couldn't up sticks to a place with more work such as London/other big city for a bit. Obviously it depends on what field you work in, but it might be a lot easier to think straight if you were earning a good income that COULD pay off your house debt if that's what you chose to do.
Whole thing is SO UNFAIR on ordinary people just trying to get a home
OP, have you been to MABS? Also check out askaboutmoney.com - it's an Irish financial website with a wealth of information and support. They have a section called money Makeover - you fill in a template which allows other users to offer more specific advice.
Hope things get sorted for you soon - it's sad that so many are in the situation you describe.