Would we get another mortgage?

D

Deb81

Guest
Hi there,

My Husband and I bought a house in 2007 for 380,000. We now have a mortgage of around 350,000 and the house is worth around 285k so has around 65k negative equity.

My husband earns 80k and I earn 40k, we are both in good steady employment for the last 12 years. We have 60k in savings and no other loans. I was wondering if any bank would entertain us if we were too rent out our current home (it is in a good rental area) We would get around 1100 a month in rent, this is the same as we are paying mortgage at the moment (we have a tracker which I understand we would probably lose).

I am wondering if:

a. we would qualify to buy another place at all what with being in negative equity, and

b. if we do qualify how much is it likely to be for.

I only ask cos in the area we would like our forever home to be it is possible to get a home for 300k or less (would have been 600k plus in the boom). Selling the first house is not really an option because of the neg equity, we would have to use savings to pay off the bank and we would be back to square one.

I hope the above makes some sort of sense!
 
I doubt they'd let you have the two mortgages. They may however allow you carry the negative equity over onto the new mortgage. It all depends on your circumstances really. Talk to your bank.
 
Well one place would become a rental property. But that is very interesting about carrying over the negative equity, I didn't even know that was an option. If we bought a place for 300 then we would have relatively the same size mortgage so if the bank are doing this kinda thing then it would work for us! Have you heard of it being done?
 
I was just thinking, surely this is not possible. If I buy a place for 300k and the bank lets me carry over 50k negative equity, am I not getting a 100%+ mortgage?
 
I think the banks could easily entertain your situation. They would take a look at your employment and how secure it is. The key here is to go to all the banks....one after the other...some will refuse...but I think others will give you some sort of options. I have been into two of them recently with a not so dissimilar situation. Both were willing to lend.
 
Thanks for responding Grindle.

Do you mind me asking what scenario the banks were willing to lend on, one property being rented out, or selling the property and carrying over the negative equity?
 
The bank would be more favorable for you to sell the property and then buy another and carrying over the negative equity.
 
Grindle said:
I think the banks could easily entertain your situation. They would take a look at your employment and how secure it is. The key here is to go to all the banks....one after the other...some will refuse...but I think others will give you some sort of options. I have been into two of them recently with a not so dissimilar situation. Both were willing to lend.
Click to expand...

woudl it be possible for you name which banks that were open to this kind of thing, as am in a similar position myself.

cheers!
 
Me too! All the banks I spoke to said no, but that was a few months ago now, perhaps something has changed?
 
I cannot see any lender approving this Deb81:

- you earn 120k but are looking for total finance of 620k i.e 5 times salary.
- most lenders are not taking rental income into account when calculating how much you can borrow.
- you are in negative equity
- the mortgage repayments will just be covered by the rent in a falling rental market but in a rising interest rate environment. Soon there may be a shortfall here.

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