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Q. We have four rental properties in addition to our family home and are facing increased mortgage payments of up to €2,100 a month because Permanent TSB want to change us from interest only tracker to capital repayments.
One of the properties we bought in County Longford on the advice of our accountant who said, because it as Section 23, we could use it to offset against tax on rental on the other three properties.
At the moment, the rent on this property falls short of the mortgage obligations by €160 a month. If we go to the full repayment then the property will be €460 short.
The other three properties are profitable in interest only but all will become loss-making if we go to full capital repayment.
I understand that Permanent TSB has the right to change the terms of our mortgage from interest only but I am wondering what the best advice would be in terms of negotiations. We can’t afford an extra €2,100 a month. But we don’t want to walk away from the mortgages, just want a reasonable arrangement until I can get a job again.
Nora, County Kildare
You have kindly sent us copies of your mortgage contract with the Permanent TSB’s and as you say the “special conditions” in these mortgages allow them to take customers off tracker rates at any point during the life of the mortgage and off interest only.
We spoke to Frank Conway from moneycoach.ie and he thought your proposals to move one or two of the properties onto capital repayment and ask them to stay at interest only on the other two was a good solution.
Permanent TSB have said they will allow customers to stay on tracker rates as long as they move off interest only onto capital repayment.
However Permanent TSB has said those customers who want to stay on interest only will have to move off tracker to the standard variable rate.
“She has put forward a reasonable plan, but what she’s needs to do before going back to Permament TSB is to produce a financial statement outlining all her assets and her debts. This needs to be honest. There is no point in producing a statement that just involves the houses. It needs to include car finance, credit card debts, school fees etc.
“The banks will work with customers but they will try and find holes in the financial statements. They will also want customers to show that they are cutting back. What they absolutely will not stand for is a plan that, say, doesn’t include cutting back on the car or another luxury. You can’t go in and say ‘I won’t pay my mortgage but I’ll continue to keep up my payments on my Mercedes. That’s where the problems arise.
“She also needs to put a proposal together that shows a viable path to recovery – a sale of one of the properties down the line or an increased payment if Nora gets a new job,” said Conway.
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