Sunday 18 February 2018

Fans told not to skip mortgages for trip with Green Army

Charlie Weston Personal Finance Editor

FOOTBALL fans who skip their mortgage payments to fund a trip to the Euro 2012 Championships will end up scoring an own goal, they were warned yesterday.

A leading accountancy body said that so-called "lifestyle strategic defaulters" would end up with a red card from their banks.

Bankers are on alert for those who miss payments next month as this will raise suspicions that the money was used to follow the Boys in Green.

Trap's Army is expected to descend on eastern Europe in large numbers for the football festival, with the FAI anticipating that 20,000 will travel.

However, some people wrongly assume that they can stop paying their mortgage and use the funds for lifestyle spending like football trips, president of the Association of Chartered Certified Accountants, Tom Murray, said yesterday.

These people are holding out the false hope that new insolvency laws will include some sort of "magic debt-forgiveness wand", he said.

"The personal insolvency legislation has no magic wand, and at best will reduce the mortgage repayments from 'completely unaffordable' to 'barely manageable'," he said.

Extravaganza

A controversial report issued recently by financial adviser Karl Deeter estimated that up to one quarter of those in arrears on their mortgages were strategic defaulters -- people who deliberately do not pay their mortgage even though they can afford to. They hope to persuade the bank to write some of the debt off.

And these people may be inclined to use the mortgage money to go on the beer to the Euro 2012 extravaganza.

Mr Murray, who works in insolvency accountancy practice Friel Stafford, said he was hearing reports of people tempted to strategically default, although he said the numbers involved were likely to be small.

"This is a high-risk strategy because the legislation as drafted is balanced in favour of the banks," he said.

Personal insolvency legislation to be published next month is set to include a provision to allow borrowers who are genuinely unable to pay mortgages and other borrowings to have some of the debt written off. But banks will retain a veto on these deals.

However, Mr Murray said it would still be a tough process which may involve people surrendering their passports and the likely sale of the family home.

"A borrower is better off doing a budget, determining how much they can afford to pay on their mortgage and paying that amount. Simply stopping payment in the hope that this will force the bank to forgive the debt is likely to backfire badly," he said.

Most fans travelling to Poland for Euro 2012 are believed to have approached credit unions with loan applications to finance their trips.

Credit unions have loan rates for holidays as low as 5.75pc -- one-third of the charge imposed by some banks.

It is expected that it will cost around €3,000 to fund such trips -- although that figure does not include a budget for alcohol.

Irish Independent

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