# Sell House in Negative Equity and Use Proceeds to Buy New Property



## econdev (29 Jan 2012)

Hi,

I have a house in a housing estate in Co. Wexford worth about 130k with a Bank of Scotland mortgage - 240k outstanding.

I'd like to buy a few acres in the country with a small cottage that needs refurbishment. There are some available for less than 130k.

Would the bank allow me to sell, keep my current loan/mortgage in place to enable me to buy a rural property with the sale proceeds, and accept a mortgage on the rural property? I would still pay the full amount outstanding - 240k.

Thanks for any advice/experience that you can offer.


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## Brendan Burgess (29 Jan 2012)

No. 

If it's Bank of Scotland, you presumably have a cheap tracker. They won't facilitate you in any way.

Brendan


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## econdev (29 Jan 2012)

Thanks, Brendan.

It's a 2.5% variable rate - capital & interest repayment; would that change the situation?


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## wbbs (29 Jan 2012)

Not a hope.  You will be lucky if the bank even allow you sell but as for giving them as security a run down cottage needing renovation, not a hope in hell I would say.


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## Macstuff (29 Jan 2012)

The fact that you are with BoS means that you have little hope of getting help, they want to get out of the Irish market and so don't want "complicated" business such as this.


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## NewHere08 (29 Jan 2012)

Is any bank currently doing this?  It seems the only workable option in my case to get new mortgage on bigger house and transfer debt, but my BS (EBS) has said that they don't allow it at the moment.


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## Brendan Burgess (29 Jan 2012)

econdev said:


> Thanks, Brendan.
> 
> It's a 2.5% variable rate - capital & interest repayment; would that change the situation?



If you have a €240k tracker, it's possible that they might accept an offer to pay off the mortgage early. You won't be able to buy the other house, but they might let you sell the house for €130k and reduce the balance outstanding from €110 to something like €90k. Or if you have some savings or family money you can bring to the deal, they might, but it's a big might, do a deal. Worth asking for.


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## Bronte (30 Jan 2012)

Why would your bank agree to this.  If you are currently paying your mortgage there is no reason a bank will allow you to sell your house for 130K and use that money to buy another property with it.   

With what were you planning to refurbish the cottage?


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## oldnick (30 Jan 2012)

Mind you, I wonder what a lender would do if a borrower said
 "look, I will pay this loan, but not if I have to stay in this property for ever and ever. Allow me to move elsewhere -which is necessary for my family, my job,my health etc and payments will continue. "

Maybe not as crudely as that ,but there may be cases where someone has to move for a new job and if he/she doesn't move then there may be no job,no incomne etc  and the bank through its stubborn refusal gets nothing.

is,really, nothing one can do because of banks inflexibility?


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## miker (30 Jan 2012)

Very interested in this, im looking to do something similar with the same bank.

I'm going to call them and will let you know what they say.


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## econdev (30 Jan 2012)

Hi, thank you all for your thoughts,

Bronte, you're right about the bank's possible line of thought, but my situation is as Oldnick suggests... "look, I will pay this loan, but not if I have to stay in this property for ever and ever. Allow me to move elsewhere... " The cottage is in quite good shape and a few thousand and some sweat equity should make it work - I'm single, so only myself to cater for accommodation-wise.

Miker, I'm looking forward to see how you get on.

Incidentally, the new property would have potential for business use in due course (with more sweat equity!)


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## oldnick (30 Jan 2012)

the more I think about this the more I think the banks are being unreasonable in  every way -plus they are acting against the national interest.

Assuming that one is exchanging one property for another of equal value and assuming that the borower will try to pay the  loan whatever property he/she owns then I cannot see any raeson for the bank to refuse.
Furthermore if the banks attitude hinders people moving for reasons of work, children ,health etc then they are acting both against the borrower as an individual and against society in general
 ("No, you can't move no matter that your present home is too small to raise a family. You have to stay in that apartment for the rest of your life." "No you can't move  because you're unemployed in Cork but have a good job offer in Sligo").


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## miker (30 Jan 2012)

Ok, 

So I spoke to BOS and two brokers today.

Just so you know my situation, have a house worth maybe 200k we owe 280k Its a three bed house.

We would like to build and have found a number of suitable sites with full planning permission for between 90 - 130k in the same area. We are both in permanent jobs and between us earn about 150 a year.

So explained this to BOS asked if i could sell house and take the balance out in a loan at the same rate, they flatly refused and wouldn’t entertain the idea or allow me to transfer the mortgage.

However they did say that they have a short fall plan, the example they used was if we were in 20k NE and we had a buyer we could offer of 18k. They wouldn’t go into concrete figures but i got the impression if you made a decent offer they would take it.

So not sure what we will do now, we could probably stretch to a second mortgage, although we wouldn’t really want to go down this road. I think though we will start saving and for the moment and pay off our loans (about 23k including Credit cards) and reassess the situation 

Best of luck
Miker


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## Bronte (31 Jan 2012)

Miker on your good salaries why do you have 23K of debt and why haven't you over paid your mortgage?


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## miker (31 Jan 2012)

Ha ha,

We have been asking our selves that for the last year.

I guess it’s because of our life style. Our credit card debt isn’t that high only about 4k. The rest is a car loan. A wedding loan that we had is now paid off.

Now we have a baby and would eventually like to get a bigger house. Since my Wife became pregnant, our life style has changed and we aren’t spending as much money.

At the moment we are living on my wife’s salary 90k and my salary is paying for a software project we are getting developed. This will be paid for in the next two months. 

After that we hope to try save about 3k plus a month.

I know it sounds mental that we don’t have much saved and are in debt. I guess the silly things add up socialising, holidays, cars, gadgets etc etc

The more we make the more we seem to spend!


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## 44brendan (31 Jan 2012)

Yes BoS are doing deals. However, you need to have something concrete to offer them. House is worth 200K with 280K mortgage. Have you assessed whether their is a reasonable chance of selling the house at 200K. AFAIK the market in Wexford generally is extremely flat & unless the property is in a very desirable area it is unlikely to mave for some time. 
The good news is that if you can get a buyer for close to 200K, you will be in a good position to make a deal with BoS.


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## miker (31 Jan 2012)

44brendan said:


> Yes BoS are doing deals. However, you need to have something concrete to offer them. House is worth 200K with 280K mortgage. Have you assessed whether their is a reasonable chance of selling the house at 200K. AFAIK the market in Wexford generally is extremely flat & unless the property is in a very desirable area it is unlikely to mave for some time.
> The good news is that if you can get a buyer for close to 200K, you will be in a good position to make a deal with BoS.



Hi Brendan

Is this for me or the OP? My house is in Wicklow, Kilcoole. 

Not sure if the market would be any better here. Although there's some houses very similar going for 240,000 doubt they would get it though.


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## miker (31 Jan 2012)

Also do you have any experience of the deals they are doing ?


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## Bronte (1 Feb 2012)

miker said:


> I know it sounds mental that we don’t have much saved and are in debt. I guess the silly things add up socialising, holidays, cars, gadgets etc etc
> 
> The more we make the more we seem to spend!


 
Then you have a serious problem and need to learn to budget and save, instead what you are doing is trying to get into more debt without paying off what you aleady owe, living outside your means and not saving to fund what you wish for.


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## 44brendan (1 Feb 2012)

miker said:


> Hi Brendan
> 
> Is this for me or the OP? My house is in Wicklow, Kilcoole.
> 
> Not sure if the market would be any better here. Although there's some houses very similar going for 240,000 doubt they would get it though.


 
My apologies Miker. I wrongly assumed that you were the OP. Generally the response would be similar. Yes BoS are doing deals. However, you are only in a position to do a deal if you have something to offer them. Re-finance has no attraction to them as they want to exit the market. Look at the prospects of selling your own house first. When you find a buyer you will be in a strong position to negotiate with Certus (BoS) and assess your future options. Taking on additional debt is fine. However, you will need to be satisfied that you can afford it ongoing. Remember, interest rates are going to rise again over the medium term.


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## miker (1 Feb 2012)

Bronte said:


> Then you have a serious problem and need to learn to budget and save, instead what you are doing is trying to get into more debt without paying off what you aleady owe, living outside your means and not saving to fund what you wish for.


 
We I don’t regret doing any thing we have done in the last couple of years and wouldn’t change a thing, life is for living J 

Apart from the car loan, wedding loan, small credit card debt and mortgage that’s all be have borrowed. In the last couple of years we have enjoyed nice holidays, allot socialising, shopping, had a baby in a private hospital (Wifes decision) and funded two business ventures in the couple of years all with out borrowing and I don’t regret it.

We are still youngish both 32, but my problem has always been that I’m impulsive and when I see something I want it now. 

I do agree though we should budget better and save for the things we want, which is what we intend on doing in the future. As i mentioned above we intend on trying to save 3k plus a month. 

Our outgoing are still pretty high, but we are working on reducing them. 

What would you advise? When we purchased the house we had intended on it being short term (5-6 years) Now would like something bigger.


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## miker (1 Feb 2012)

44brendan said:


> My apologies Miker. I wrongly assumed that you were the OP. Generally the response would be similar. Yes BoS are doing deals. However, you are only in a position to do a deal if you have something to offer them. Re-finance has no attraction to them as they want to exit the market. Look at the prospects of selling your own house first. When you find a buyer you will be in a strong position to negotiate with Certus (BoS) and assess your future options. Taking on additional debt is fine. However, you will need to be satisfied that you can afford it ongoing. Remember, interest rates are going to rise again over the medium term.


 
Thanks

Could you give me an example of an offer you think we would need to make? I know they want to exit the market, but surly they wouldn’t write off that much money?

Our jobs are pretty secure, I’m wife’s is very secure so we could afford to take on a second mortgage, but ideally would prefer not to.

I don’t think there is much of a rental market where we live, but we could lease the house to the council for 10% less than the market value. But you get the security of a 4 year lease!!


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## Bronte (1 Feb 2012)

miker said:


> We I don’t regret doing any thing we have done in the last couple of years and wouldn’t change a thing, life is for living J
> 
> .


 
Well you made me laugh.    You never know your business ventures might pay off.  I'll think about your question though and post back another time.  

Meantime it's only too true, life is for living.


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## 44brendan (1 Feb 2012)

Miker, your'e probably running a little ahead of yourself here. before you are in any position to negotiate, you need to have something to offer. Currently you have nothing to offer BoS. Wait until you have a realistic offer on the property (or alternative cash) and then talk to BoS about a settlement. No point in talking about examples of other deals. This is done on a case by case basis.


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## miker (1 Feb 2012)

Bronte said:


> Well you made me laugh.  You never know your business ventures might pay off. I'll think about your question though and post back another time.
> 
> Meantime it's only too true, life is for living.


 
Ha ha thanks

Don’t think there will be a return on business 1 of a couple of years, business 2 though you never know, but it’s a niche market.

Anyway I’m not expecting or counting on any income from them for quite a while.

Thanks Bronte!!


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## miker (1 Feb 2012)

44brendan said:


> Miker, your'e probably running a little ahead of yourself here. before you are in any position to negotiate, you need to have something to offer. Currently you have nothing to offer BoS. Wait until you have a realistic offer on the property (or alternative cash) and then talk to BoS about a settlement. No point in talking about examples of other deals. This is done on a case by case basis.



Ok Thanks


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## South007 (4 Feb 2012)

I have been told that B of S will be writing off Euro 4 billion within the next year as they leave the Irish market 100%.  In addition, if you owned lots of properties, yes, the bank would do a deal with you, i.e. tell you to sell them for what you can get, give them the proceeds and as far as I know, they would then leave you alone.

As a small fish, it seems that this option is not yet available to you.

It may yet be though so I wouldn't give up.

I would also wait a while before buying land and/or a property in Ireland as prices continue to plummet.  I own an apartment which cost Euro 139,900 - I have been saying it will be worth Euro 20K in a few years max and no-one is disagreeing with me.


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## miker (6 Feb 2012)

Thanks South


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