have we any options being in negative equity?

M

movinghome

Guest
Hi everyone,

I would be very grateful of any advice on the following:

Age: 31
Spouse’s/Partner's age: 29

Annual gross income from employment or profession: nil
Annual gross income of spouse: 57500

Type of employment: private sector

In general are you:
(a) spending more than you earn, or
(b) saving? have just paid off all loans this month (except mortgage!) so saving from now on

Rough estimate of value of home 220000
Amount outstanding on your mortgage: 295000
What interest rate are you paying? 4.05% fixed until 02/13

Other borrowings – car loans/personal loans etc : none

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 0

Savings and investments:none

Do you have a pension scheme? husbands pensionca 25k

Do you own any investment or other property? no

Ages of children: 10 months

Life insurance: Husband, sorry I don't have the details of that at the minute


Between Mortgage and management fee our home costs 1350 pm. We are relocating home and hope to rent the property for hopefully 900pm and make up the shortfall ourselves. So we are looking at a cost of 5400 over the course of a year for that. The only saving grace is that when we move we will be living in a house belonging to my parents and we won't be paying rent.

In the worst case scenario where we have no tenants we expect to be in a position to save about 750 a month but hopefully we will be able to add rental income to that. These figures assume I am still unemployed.

Our long term plan in 3-5 years is to build our lifelong home on a site my parents are giving us.

My question is this: have we any option other than to rent at a loss? Is it an option to cut our losses, sell in negative equity and pay back the shortfall as a loan? Could we rollover that shortfall into any mortgage we get in the future? Will we ever be able to get another mortgage full stop?

Any help would be brilliant,

Cheers.

MH
 
Last edited by a moderator:
If the house is in a good location where you can rent it then try that for a while, it seems crazy to sell it in the current market. However if you rent it you are supposed to register withthe tenancy board and pay tax on the rental income. You can only write off the interest you pay on the mortgage against tax. I rent my first home, the mortgage is 900pm - 500 of that is interest. The rent I get 550pm so I have to pay tax of 41% on 50 euro pm. You have to make a self assessment at the end of the year to revenue.
 
Thanks for that reminder JM. I must get the breakdown of the mortgage repayments and figure out exactly how much that'll work out at.

Cheers!
 
@ jmurphy1999:- Didn't a recent Finance Act restrict the availability of 100% mortgage interest relief against buy-to-lets, such that only about 75% of the interest you pay on your mortgage in a year can be set against your rental income ?
 
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