‘Mental stress can be ticking time-bomb’

Case study: Ken Cowley

Ken Cowley had trouble with his mortgage and agreed to restructured payments. Photograph: Dara Mac Dónaill

Ken Cowley had trouble with his mortgage and agreed to restructured payments. Photograph: Dara Mac Dónaill

Fri, Apr 12, 2013, 02:00

Back in 2006 Ken Cowley paid a deposit for a one-bed apartment in Carrickmines off a developer’s plans. They were the heady days of steamy property adverts, overnight queues for new housing developments and unsolicited bank loans.

On a salary of up to €50,000 a year in software sales, he still needed a loan from his father to pay the deposit on an apartment valued at about €375,000. By the time he moved in, the property bubble had burst. The economy was on the slide and so was his income. Suddenly, the property was worth closer to €100,000.

“I was able to afford the mortgage at the time. I had stress tested myself, allowing for an increase in interest rates. But my income came down gradually, the sales commissions fell. I changed jobs, my taxes went up. It just got harder and harder each month,” Cowley says.

He ended up borrowing from his father just to keep up the monthly €1,450 repayments. He tried to get the banks to engage over changing the terms of the loan or restructuring, but says they weren’t interested.

“It all led to enormous physical and mental stress. It started affecting my sleep. Mental stress can be a ticking time-bomb. It places a big toll on people and there’s very little counselling available.”

One way he found effective in dealing with the the stress was running. He began training for marathons and taking part in mountain races. He also began campaigning for a new approach to mortgage debt. Soon, his energetic approach was beginning to yield results. The bank finally agreed to switch his mortgage to interest only.

This brought the repayments down to a more affordable €1,000-a-month. The process involved sending in a personal financial statement, detailing his income and expenditure.

“They never told me to cut back on anything, but then I don’t lead an exuberant lifestyle. Most people in mortgage difficulties don’t. They’ve already cut everything back. They wanted details on all my outgoings. If I’m honest, it didn’t feel particularly invasive. They never harassed me, but then I was paying my mortgage – with the help of my father. It was just cold and analytical. All they wanted was statistics on a balance sheet.”

He has since written a book about his experiences and also writes a blog, notrunningaway.com, where he comments on developments around mortgage debt.

Cowley has also moved out of the flat, rented it and lives with his girlfriend. He’s moving on with his life, but knows the interest-only mortgage is just a stop-gap solution.

Insolvency isn’t a possibility for him, as he borrowed the mortgage jointly with his father. If Cowley refused to pay, his father – who is in his 70s and relies on a public service pension – would be liable for the whole debt. Now, he wants to discuss other possibilities with his bank.

“I need to get it restructured, or just earn my way out of trouble. I don’t see anyone riding to the rescue. I think if you can earn, say €50,000 or €60,000, then it’s a possibility. But if you’re stuck on low wages or on the dole, maybe insolvency is the only option.”