Friday 15 December 2017

Mortgage trouble and your options

John Lowe

Q I bought a two-bed apartment during the boom, which is now worth half what I paid for it. I've recently lost my job and have no chance of meeting the mortgage repayments. What are my options?

Dave in Blackrock

A You are not alone. Communication and negotiation with your lender are key. Initially, you should look for a complete moratorium on your mortgage repayments – three months to find employment and work out what to do.

Your lender will ask you to complete a Standard Financial Statement outlining your income and expenditure plus your plans to eventually repay the mortgage and any other debt you may have. There is no point in incurring further debt.

So what are your options?

* You could let out your apartment and move back home. Ensure whatever rent you charge covers mortgage payments. You are probably getting mortgage interest relief as a first-time buyer. Letting your apartment means mortgage interest relief has to go – plus you will have all the usual landlord issues.

* You could also find employment, stay put where you are and rent out a room. You can earn rental income of up to €10,000 tax free under the rent-a-room scheme. Consider opting for a split mortgage where your mortgage is divided into two parts – an affordable part which you continue to repay each month, and a parked portion which you repay at the end of the term. Most lenders don't charge interest on a parked element.

* You could go down the personal insolvency route or declare bankruptcy. If you declare bankruptcy, after three years, the slate is wiped clean but you will find it hard to find a willing lender again.

QWE'RE a young family and we're struggling to pay our private health cover – particularly if our insurer hits us with another price hike. We've two young kids – and myself and my husband are in our late 30s. I've already downgraded my cover to make it more affordable. Are we taking too much of a risk if we cancel our cover altogether?

Mary in Clontarf

AHEALTH insurance plans have gone through so many price hikes I can understand why families are considering cancelling their plans altogether. That said, however, waiting lists are unfortunately growing.

The latest data from the National Treatment Purchase Fund (NTPF) has shown an increase in the number of people waiting longer than six months for treatment. In December 2012, 15 per cent of those awaiting treatment had waited longer than six months – by June 2013, this had shot up to 25 per cent.

For diagnosis, more than 60 per cent of people are waiting more than three months to see a public consultant, 42 per cent are waiting longer than 6 months and 24 per cent are waiting for more than one year. This is the gamble should you decide to cancel your health insurance.

Another factor you must consider is that if you have a break in cover of more than 13 weeks, you will need to re-serve your waiting periods which would be six months for new conditions and five years for pre-existing conditions. Health insurance fundamentally provides fast access to diagnosis and treatment when you need it. Before you cancel I would strongly advise you to make sure you are getting the best deal possible for your family. Check the Health Insurance Authority website for comparisons (www.hia.ie).

John Lowe is founder and managing director of Providence Finance Services Limited, which trades as Money Doctor (moneydoctor.ie). He is also author of best-seller 'The Money Doctor'. Follow him on Twitter @themoneydoc

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