Options for new mortgage

B

BillyO

Registered User
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I am looking for some advice on what options I might have for trading up family home.

Current situation:
Existing mortgage on variable rate of 4.3% with PTSB (there new MVR product)
3 bed semi
25 years remaining
Amount outstanding: 260000
House Value: 180000
NE: 80000
Savings: 30000
Joint Salary: 80k + 55k
Childcare: 500 per month
Car: 350 per month
No other loans/credit card debt.

Ideally we are looking to trade up to a bigger home with a value somewhere between 200-230k (no house identified at this stage, no point in looking I feel until we are ready with a plan and an approval)

I know PTSB have a NE trade up product but not keen to bring that amount of NE to a new mortgage which would mean a new balance of between 280k-310k on a higher interest rate minus the 30k deposit so between 250 and 280k

My thoughts were to perhaps continue saving for between 3 and 5 years and build a larger deposit and at the same time hope the NE is reducing due to rise in market value and ongoing repayments. Although my monthly repayment is currently 1230 of which most is interest so not really reducing capital much each month.

Any advice where to put the 30k; at the moment it is in an AIB 30 day notice saver account where I guess the interest earned is minimal. Could I get a better return elsewhere.

Also I dont want to use the 30k to pay a lump sump from the mortgage as this then wipes out our savings/deposit for new home.

If I could switch I would as I know there are better rates to be had but the NE prevents this.

Appreciate any thoughts on this.
 
the switching option is not a runner as you rightly point out. You are proposing to upgrade not significantly to a max of €50k. You already have 30k of funds available so maximum additional mortgage is c20K with 25 year term left. By saving for a further 3/5 years you will be losing money on your savings given the differential on the 4.3% and the minimal rate received on savings. Also negative equity run down would be similar on any new property purchased given the same term. Rise in market value will also apply to any house you propose to purchase.
Why not approach PTSB and see what they can do for you on an increased mortgage. Then you will be in a position to make a decision. I don't really see any advantage in delaying the decision, but perhaps other posters may!
 
44brendan said:
the switching option is not a runner as you rightly point out. You are proposing to upgrade not significantly to a max of €50k. You already have 30k of funds available so maximum additional mortgage is c20K with 25 year term left. By saving for a further 3/5 years you will be losing money on your savings given the differential on the 4.3% and the minimal rate received on savings. Also negative equity run down would be similar on any new property purchased given the same term. Rise in market value will also apply to any house you propose to purchase.
Why not approach PTSB and see what they can do for you on an increased mortgage. Then you will be in a position to make a decision. I don't really see any advantage in delaying the decision, but perhaps other posters may!
Click to expand...

But is the maximum additional mortgage not 100k when you include NE portion of 80K. I think the new rate for a NE mortgage goes up by 1% so new mortgage would be on 5.3%

Lets say we see a house for 200k
The CB rules mean we can trade up with a 10% mortgage AFAIK

I have 80K NE today meaning new mortgage is 280k less deposit of 28k equaling 252k on a rate of 5.3%. Would we be mad on that rate.

As a side note I also read you can save money by selling your house privately. Think it is 1.5% that the EA receives for selling my home. Surely this is something one can do themselves. You can still advertise on Daft and you have more control and can act quicker during negotiation.
 
The negative equity is not relevant to the new mortgage. You sell your existing house for 180K and buy a new house for 230k. You have 30k in savings so you require a mortgage of 280K (an additional 20k). Negative equity remains at 80K. In the circumstances I can't see PTSB applying a rate of 5.3% on the full new mortgage as it makes no sense. However you will need to find out exactly what they can do for you and what the new rate will be before you make any decision.
CB minimum deposit rules don't apply to negative equity mortgages.
You can certainly look at a private sale of your home. However, a good EA should be able to cover his fee in the price received.
 
44brendan said:
The negative equity is not relevant to the new mortgage. You sell your existing house for 180K and buy a new house for 230k. You have 30k in savings so you require a mortgage of 280K (an additional 20k). Negative equity remains at 80K. In the circumstances I can't see PTSB applying a rate of 5.3% on the full new mortgage as it makes no sense. However you will need to find out exactly what they can do for you and what the new rate will be before you make any decision.
CB minimum deposit rules don't apply to negative equity mortgages.
You can certainly look at a private sale of your home. However, a good EA should be able to cover his fee in the price received.
Click to expand...

Thanks for input Brendan.
I'm leaning towards building a bigger deposit which will reduce the loan required. All the same I think it would be worth while speaking with someone in the bank to discuss options.
 
We approached the bank who have given us a mortgage approval in principal for 250k on a rate of 4.3%. Although we are happy to wait until a property for 220k comes on the market.

I have also thought about the option of keeping the existing home as a second home and applying for a new mortgage with a different bank and trying to decide if this is a good idea or not. We could get a rate less than 4% on a new mortgage.

The main reason for this is I am not comfortable with the large amount of NE that will transfer to the new NE trade up mortgage (approx 80k). If we took out a second new mortgage and rented our existing house we could get 1000 per month in rent but the monthly repayments are 1200 so we would need to contribute 200 each month along with the usual extras. If in time the property value increase we could sell and hopefully sell and clear the mortgage or keep it indefinitely.

For a new mortgage we would need a 20% deposit which we do not have just yet but could borrow the balance (approx 10k) from the parents. We only need a deposit of 10% for the NE trade up option which we have at the moment.

Is it best to sell existing home and accept NE or look to keep the existing house and get a second mortgage.
 
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