REDUCE MORTGAGE REPAYMENTS
HOUSE DEBT FOR EQUITY SCHEME
Are you in arrears in your mortgage payments or in danger of having your house repossessed during 2014?
One proposal to sort out the negative equity crisis is called the debt for equity plan, which has
worked well in the US over the last few years.
This scheme, if properly implemented, may allow property
owners currently facing repossession to stay living in
their houses. It also eliminates the embarrassment of
having the home owners name listed on the Personal
Insolvency Register, as well as improving the banks
tattered public image by avoiding the bad publicity
The idea behind the debt for equity scheme is as follows:
Assume you currently have a mortgage of € 400,000,
costing you say, € 2,000 per month. In reality however,
on your present income, you are only able to afford
mortgage repayments of say, € 1,500 per month.
The debt for equity scheme proposes that you agree a deal
with your mortgage lender to swap (permanently) a
quarter of the mortgage value back to the bank and, in return, your mortgage is reduced to the level of mortgage repayments that you can afford to pay.
You then continue to pay the reduced monthly repayments until the revised mortgage amount is fully paid off. Although you now only own 3/4 of your house, with the bank or lending institution owning the remaining 1/4, the debt for equity arrangement allows you to stay in your house for as long as you want, or alternatively you can sell your house (hopefully the housing market will have recovered by then) and keep 3/4 of the sale price. Another option is that a family member can buy out the mortgage lenders' equity interest.
If you decide to sell your house before your mortgage is fully paid off, under the debt for equity plan you are allowed to sell, but the mortgage lender will be entitled to their 1/4 of the value of the house plus the balance of the mortgage not yet repaid.
This plan faces legal clarifications and possible law reform before it could be fully implemented, but it does offer some hope for all parties involved in the ongoing mortgage crisis.
This summary is based on a recent article in the Sunday Business Post.
PERMANENT TSB | BANK OF IRELAND & AIB | ULSTER BANK | MORTGAGE WRITEDOWN POLICIES
IrishHouses.ie and its associated websites, PropertyRegister.ie are personal property blogs, providing free information of a general nature on house related costs and charges to property owners. Our websites have no connection of any kind with any commercial businesses or public bodies.
Find out the actual selling prices for any location in Ireland, by filling in the address you are interested in, into the box below.
Search the Property Sales Register From 2010 To Today By Address
Search the 2014 Property Register
Updated: Tuesday 7th July 2020
|Mortage Rates Compared
First Time Buyers
Trading Up & Buy To Let
|Bank Saving Rates|
|Current Account Interest
Overdraft Rates Compared
|Trading Up or Downsizing?|
House Selling Tips
|NAMA Property List
County by County
|How To Find Out|
The Prices Of NAMA
Houses For Sale
|Getting Planning Permission
|Building A New House|
Major House Improvements
|Buying NAMA Property
Estate Agents List
|Compare Daft House Asking|
To Actual Selling Prices
|First Time Buyer?
Dirt Tax Refunds
|Credit Ratings & Mortgages|