Jill Kerby

Negotiate before you fall into negative equity trap

CP writes from Westmeath: I wonder if you could help us get out of a mortgage with a sub prime lender?  We took out a €270,000 interest-only mortgage in the good times at a rate of 6.5%.  We are now unable to pay the full amount each month and, although we are not in negative equity at the moment, if we carry on being charged the interest on interest I fear we could get into negative equity.  Of course our credit rating is now bad.  Can you suggest any way out of this?  We are very happy to look at alternative types of mortgages.

You may not be in negative equity – yet - but it certainly sounds as if you are quickly moving in that direction as your arrears and interest penalties add up.

Unfortunately, lenders are not remortgaging properties with mortgage arrears and very few are doing so if the property is in negative equity, says Rachel Doyle, the head of mortgage services at PIBA, the Professional Insurance Brokers Association.

She strongly recommends that you write to your subprime lender and request a meeting with them so that you can try and work out an affordable mortgage payment schedule.  I suggest you also contact MABS, the free money advice and budgeting service that can help you evaluate your total debt position.  They may also be able to assist you in presenting a financial statement to your lender and other creditors.

AE writes from Dublin: We returned from England in 2005 to care for my elderly mother and bought a €600,000 house, borrowing €320,000. It is now worth, possibly, €350,000. Having lived through two recessions in England I knew at some time something would happen here, albeit not to such an extent.

My husband is 62 and will be 79 before the mortgage is paid off. I do not think this is feasible, least of all because he is freelance and I can't see him still being able to work at that stage. We are struggling as it is. It is unlikely that a carer’s allowance I have applied for will be successful.

Did PTSB act in an irresponsible manner by giving us such a large mortgage and do we have any redress in this matter? (I thought you could only issue a mortgage up to age 65?) At the time, my main concern was my mother and children and it was a year before the penny dropped as to the extent of our mortgage. I know neither of us will be capable of working so long and I'm constantly worried about what will happen to us.  

First, you do not say if you are in mortgage arrears, although your letter suggests that you don’t believe the mortgage is sustainable over the next 17 years.  Nor do you say what outcome you are seeking in questioning the legality of the approval of your mortgage application. Is it to have a portion of your debt written off or to have it nullified? By your own admission, you seem to have been aware of the impending financial difficulties here before you applied for the loan.

The Free Legal Aid Centre and New Beginning are two lobby groups acting on behalf of consumers who are facing repossession, who in many cases did not have suitable incomes and should never have been sold a mortgage and now do not have the means to defend themselves against a lender’s legal action. They prioritise cases where there is already a court date for the repossession order. 

You may or may not qualify for their help – yet. But if you believe you were missold this mortgage on age grounds, you could seek legal advice or take your case to the Financial Regulator. Good luck.

EOK writes from Dublin: I bought some shares many years ago in both Bula Resources and Waterford Wedgwood. Both companies are now gone and my money is lost but I do have some profits on some other shares and I want to offset the capital losses. However I can't find all the share certs and don’t know exactly how many shares I own in each company. The stockbroker I originally bought the shares from is no longer in existence and I am wondering if there a simple way I can find out for sure how many shares I own.

The best place to start looking for your lost share certificates is Computershare Investor Services (Tel 01 447 5566) or Capita Registrars (Tel 01 810 2400), two companies that may have your defunct and current certificates on file. You should contact them by telephone first. If they hold the certificates you will be sent out an ‘indemnity for lost certificate(s)’ form that will also need to be countersigned by a bank or insurance company or by Computershare itself. Both processes involve fees that vary according to the value of the shares. 

Recovering lost share certificates can be a costly and time-consuming event. All important documents, including pension and life insurance contracts, mortgage deeds, loan agreements, birth and marriage certificates, wills and passports should be kept in a file case or document box, where everything is properly labelled.  Let your next of kin know the location.

JC writes from Dublin:  I am considering how to leave my estate in the most tax efficient manner to my three children. I am aware that the tax threshold has been reduced in recent years.

I have a joint bank account with the children who were added onto the account some years ago. In the event of my death how would the Revenue deal with such an account? Would I be deemed to have a quarter share of this account and would the revenue compute a quarter of the account as the inheritance from it to one of my children?

Some financial assets are allowed to pass outside of a will or intestacy and so can be paid out right away.  These include the proceeds of joint bank accounts. However, a Revenue clearance certificate may be needed by the personal representative of the deceased person in order for the financial institution to release the funds to the other account-holders, or to the deceased person’s estate, where, as in your case a quarter of the money is yours.  The Revenue also note that in the absence of this letter of clearance, the financial institutions “are prohibited by law from releasing monies (other than current accounts) lodged or deposited in the joint names of the deceased and another person or persons” and where the total amount held in the joint account exceeds €50,000.”

You should discuss all of this with your solicitor when preparing your Will.