Stories of negative equity, mortgage arrears and dealing with the banks: How 'distressed' homeowners are trying to move on and deal with debt
SINGLE PARENTSorcha Donohoe bought her two-bedroom house in Bray, Co Wicklow, in 2007 for €400,000 with a mortgage of €310,000 on a 37-year term from First Active, which is now part of Ulster Bank.
Sorcha is 38 and in a stable job, but her income has fallen with pay cuts. She also now has a child to care for, increasing her outgoings.
She has been unable to rent out the second bedroom as she had done for four years, so she does not receive the €500 in rent that had previously gone towards her mortgage.
She approached Ulster Bank and they agreed to reduce her monthly mortgage repayments from €1,640 to €600 a month, making interest-only payments, given her financial situation.
She had managed to reduce her mortgage to €304,000 before her financial difficulties, but it has risen to €314,000 in a year due to the reduced monthly repayments.
The house has fallen in value and is “probably worth about €170,000 at a push”, she says – she is in negative equity of €140,000.
She rang the Government’s mortgage advice hotline which advised her to ring the Money Advice and Budgeting Service (Mabs).
They suggested that she sell the property to a housing association on a mortgage-to-rent plan under which she would become a tenant but get to stay in the house.
“I just wouldn’t do it. I purchased a house and I want to keep my house. I don’t think mortgage-to-rent is a solution because people invested a lot of money in their house and to hand their house over to anyone is not viable for anybody,” says Sorcha.
“I talked to Ulster Bank about their negative equity mortgages because I want to move on to something bigger and they don’t offer that product to people in arrears.
“What worries me is that my mortgage is increasing and I dont know how it could be resolved by the banks because that is not a long-term solution for anybody.
“Banks are happy to see you pay reduced amounts and for your mortgage to go up. I think there are so many people in my situation.”
Mary, who works as an administrator, and her accountant husband, Brian, bought a four-bed house in Dublin 15 in 2005 with a mortgage of €399,000.
The house has halved in value since then; it’s now worth €220,000. Brian lost his job a few years ago and is working for himself. Their income has fallen as a result, so they can’t make full mortgage repayments to AIB-owned EBS. Mary says all the houses in their estate must be in negative equity because they were purchased at the height of the boom. They have two teenagers doing exams this year, so they can’t move abroad – they would leave if they could, said Mary.