Defaulting on investment property, can bank chase PPR?

B

Bobbyg

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This is a hypothetical question at the minute but could be reality for me in a couple of years. Myself and my girlfriend recently moved back to our parents to save for a house. We currently own an apartment which we have rented out, we could not sell it as it was in negative equity but had no problems renting it.

We are currently saving €2k a month and hope to have approx €50k saved by early 2012 to use as a deposit to buy a house. We have already spoken to banks and they have told us that it should not be a problem to get the second mortgage and we will get in the region of 3 times are combined salary.

My question is if we do buy a house and we were ever to have problems renting out the apartment (I am hoping this won’t happen) and default on the mortgage of the apartment how would this effect the mortgage on the new PPR?

The second mortgage will be with a seperate lender if this makes any difference.
 
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Brendan
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If you were to have you're apartment repossessed the bank would at a minimum place a second charge on the PPR and the interest on this would roll up. When you sell the bank would be entitled to part of the proceeds. If the propoerties are cross charges both could be sold if the apartment went in to arrears significantly.
 
Just out of curiosity what bank is giving you another mortgage when you have one that you wouldn't be able to pay if you didn't have tenants?
 
No bank at the moment. We will more than likely be in a position to cover the investment property if we had no tenants, certainly for at least 6 months. It was purely a hypothetical situation but I was curious as to what would happen.

We approached a couple of banks to see if we would be able to get a second mortgage and they said that if we had a good saving record and a large deposit we would get a second mortgage (in the region of 220k). This was about 6 months ago so things have probably changed since then but we are currently saving €2,000 per month and hope to buy in 2012/2013 so hopefully we will have in the region of €50k/€60k for a deposit.
 
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