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I had savings -- but now I'm in scary territory

OVER a year ago, Joey Dempsey earned €50,000 a year as the manager of a boutique hotel in Oldcastle, Co Meath, purveying fine food and wine to discerning guests. These days, he survives on €188 a week in benefits, and worries about raising some €300 monthly repayments to keep the roof of his renovated cottage in the Laois countryside over his head.

Like so many others, he is reeling from the speed of the downturn. Since he was made redundant in late 2009, his savings are blown and he has gotten rid of his car. Last week, he was left teetering on the edge of default when his building society, Permanent TSB, hiked its standard variable rate to 5.19 per cent.

He estimates the difference to his mortgage as €60 a month. It's money he doesn't have. Unless he can come to an arrangement with the bank, his mortgage repayments will go into arrears, and he will join the wave of 70,000 homeowners behind on their home loan repayments.

"I'm going to be short at least the €60 -- there is no doubt about it. The problem with that is you hear about how flexible the banks are being. They are flexible to the point that they will give you an interest-only option but unfortunately there is no other option if you can't afford that," he says.

"It will be interesting to see how the bank will react when I tell them that I just can't sustain this."

Ironically, Joey bought the cottage in Laois 10 years ago because he couldn't afford the sky-rocketing Dublin prices. He got a small mortgage of IR£52,000 but later got a top-up loan, a personal loan for a car and an overdraft.

He has a debt of €66,000 left to pay. That sounds relatively modest compared to the enormous negative equity weighing down those who got 100 per cent mortgages to buy at the top of the boom. But not if you're on the dole.

His repayments were €600 but he got them down to about €310 by negotiating an interest-only option with the bank six months ago. Just a fortnight ago, he got the facility extended for another six months.

"I'm extremely worried. I think I have €40 in my bank account at the moment. I have additional insurance costs. I am going to have to discuss with the bank decreasing the amount of insurance they are charging me for the mortgage protection insurance," he says.

"There are other factors such as personal loans that can't be serviced."

His biggest fear is that the bank will force the sale of his house to get its money back on the personal loan he cannot repay. "Realistically, my house is worth €150,000. But the bank could literally sell my house for half its worth and get their money back and I'm basically out on the street. I'd almost prefer to be in negative equity," he says.

As for selling up, the chances "are little or none" because the property is in a rural location in the middle of nowhere.

He is paying for two mortgage insurance policies on his original loan and on his top-up. He doesn't get mortgage interest supplement because his partner used to live with him. She has moved out and he's hoping he will now qualify.

He does not see things improving any time soon. The hotel industry is "in crisis" and there are no jobs on the horizon.

"The only plan I have is to find a figure that the bank would be happy for me to pay every month and hopefully to weather the storm. My only income now is €188 a week. I will get winter fuel allowance for another two months. I will hopefully get mortgage interest supplement. On a week-to-week basis, I am in the negative by about €30," he says, adding that he has a "wonderful" girlfriend, and lots of support. He needs it.

"I had savings and I have survived but I am now in scary territory."

Sunday Independent