Could we continue our repayments if property is sold?

Q& A:We have an investment property which we have owned for the past 12 years. There is approximately 15 years left on the mortgage. We are in the process of selling it and it is likely that the property will be sold for circa 90 per cent of the outstanding mortgage. What approach are banks taking to this situation?

We’re not in a position to pay off the outstanding debt with a lump sum, but would be happy to continue the existing repayments (which should clear the debt over the next 18 months or so). Would the bank want to have this remaining debt secured on our home (which would attract more expense) or would they want to convert it to a term loan (attracting a higher rate of interest)?

Or, given the mortgage is on a tracker, would they be willing to walk away with a 90 per cent payment? (If this was to happen, it would need to be in a way which wouldn’t impact on our credit rating as we plan to borrow additional funds in the near future.)

Mr JO’N, email

In any normally functioning banking system, you would be customers from heaven. You have assessed your situation realistically and have proposed a ranger of options, all of which are practicable and reasonable.

The big issue is how reasonable your lender will be. Banks at present are being defensive in the extreme and are coming under pressure from the Central Bank and others to be more proactive and open to negotiation in handling what are clearly deeply distressed mortgage books.

My instinctive reaction is that if you approach your bank with your initial position as outlined above – that you are selling the property, that you will receive about 90 per cent of the outstanding mortgage and that you are happy to pay down the balance over the following 18 months – it will look to secure the outstanding balance on your existing home.

As you say, that has cost implications and, if your lender was to pursue this path, you would be quite correct to suggest a term loan instead. You are right that the interest rate will be higher than you are currently paying but, equally, the additional cost could well be less than adding a second mortgage to your home.

However, I am most impressed with your final suggestion. Banks are losing their shirts on tracker mortgages at the moment. The amount they can charge you is a fraction of the amount they are having to pay in the market for the same money.

On that basis, it seems eminently sensible to approach your lender 15 years ahead of the maturity of your tracker with an offer to pay 90 per cent of the sum straight up now.

Assuming the bank has not entirely taken leave of its senses and that you can engage with a banker who has some limited powers of discretion, you should be able to persuade it of the virtue of such a deal.

It would have the merits of giving the bank its money up front and allowing you to sell the property without having to worry about any debt overhang.

As you cannot sell a property in negative equity without clearance from your lender, you would be best to approach it first with this proposition, before firming up your intention to sell.

Clearly, if it knows you are selling anyway, it has little incentive to settle for less than full payment.

The final issue you raise is also important. There is no point striking a deal with the lender only to find yourself at the wrong end of some credit rating subsequently. This point would need to be cleared up before any final agreement on a 10 per cent tracker haircut for quick payment.

Can my boyfriend sell shares he didn’t get certificate for?

My boyfriend bought shares worth €5,000 in a start-up technology company he worked for in November 2009. A few months later he was made redundant.

He has never received a share certificate. He was given a receipt for his money, which is signed by a member of staff who also no longer works there. He has already talked to the owner of the company who told him to look at the CRO [Companies Registration Office] website for documentation about his shares.

However, he is not listed and the shares have never been officially issued to him. He has a contract signed by the owner of the company. (In his copy there is no witness listed, so I don’t know how valid this is.)

My boyfriend jumped into this headfirst and hasn’t the first clue about how these things work. He would like to get his money back as now the shares that he “bought” are not even at the same value as they were in 2009. Is there anything we can do about this?

Ms CL, email

Ouch. I’m not surprised that shares in a tech start-up are no longer worth what they were in 2009, but even then it was a big risk for a novice.

You would not necessarily receive a share certificate but the method of the transaction raises all sorts of concerns – and the response of the owner to an approach is not encouraging.

You should approach the company registrar – the company which holds the share register of your boyfriend’s former employer – and check if his name is listed there in any form.

All else failing, I’m conscious you do not want to go to any great expense – and in legal terms, €5,000 in no king’s ransom – but I still think you should get some legal advice, even if only to guide you on your chances of success in the small claims court, albeit for the lesser upper limit of €2,000, or at least invest in a solicitor’s letter to the company. You do, after all, have some class of receipt – and you don’t have the money.

This column is a reader service and is not intended to replace professional advice. Please send your questions to QA, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to dcoyle@irishtimes.com. No personal correspondence will be entered into.