You’ve been very unlucky here. Not only is the property you bought worth just a fraction of what you paid but you are now facing higher costs on the mortgage loan associated with it.
The mention of Pepper backs this up. KBC, which was among the most competitive lenders in the mortgage market for a time, has announced it is leaving the Irish market and is currently in the process of closing customer accounts. However, it has not gone yet and, given the slow pace at which it and the other departing bank – Ulster Bank – are persuading customers to sort their financial affairs, it might be some time yet before it finally gets to close the Irish operation.
So the assumption is that you had some issues with the loan that would explain it still being owing after you have retired. The question for you on this side of things is the length of time left on the loan and the amount of your pension it is costing you on a monthly basis. However, if there is not long left on the loan and you can manage it from your reduced financial resources without undue financial pain, it is worth looking back at why you bought this property in the first place.
And as for the negative equity? Either that position will improve over the coming years or it will be an issue for the family member inheriting. And, as they will have paid nothing for the property, the loss is not a personal financial blow to them. Whatever else, I would not let your decision be clouded by what this family member might inherit. Your primary concern must be your own financial wellbeing.
If the loan is impaired, it’s most unlikely another lender will consider it and, even if they did, there would be legal and other costs that might not make it worthwhile unless there is a reasonable amount of time owing on the loan.