# Will anything ever be done about neg equity??



## Working mam (3 Jul 2012)

I'm in the same boat as so many others, bought what was to be a starter house in 2006 at the height of the boom, and now have negative equity of approx €180k after we had the house valued last month. 
We would love to move house as we are not living near work or childminder and as a result I get no time with my children as I'm picking them up from work at their bedtime or near enough to. 
We qualify for a new mortgage amount that covers the negative equity portion plus the cost of a property where we want to live but there is no mortgage product to allow us do this. Frustrating as the negative equity would be the same amount regardless of the house we're living in and so is the same risk to the bank, i.e in worst case scenario and we were ever in a position where the house was repossessed the bank would be at a loss for the same amount. I hope that makes sense. 
Sorry this has become a bit long winded, I just wonder will the banks ever come up with a decent and equitable (excuse the pun) neg equity mortgage product or is there even any hope that there may be small write downs of neg equity to help people


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## PiedPiper (3 Jul 2012)

No

why would the banks do anything for you are anyone else??

They must have written the insolvency bill themselves it couldnt be worse.

Either live with it or come up with your own solution, Banks are there to get as much money as they can from anyone they can by any means possible and do whatever it takes to do that, your childminder or your child couldnt matter less.


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## Working mam (3 Jul 2012)

Well if I had a solution I wouldn't be asking the question! And no I don't want to live with it as I am stuck in an awful area where I can't let my children out to play. 
And actually the bank would gain from allowing me a new mortgage to move as I would lose my tracker rate (yes I am that desperate to move) and would make more money from me in terms of interest on a higher rate and higher mortgage. As I stated, we qualify for the amount based on income and affordability but there is no product to allow us move the negative equity. The risk to the bank is exactly the same whether we lived in this house or moved.


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## STEINER (3 Jul 2012)

Working mam said:


> Well if I had a solution I wouldn't be asking the question! And no I don't want to live with it as *I am stuck in an awful area* where I can't let my children out to play.
> And actually the bank would gain from allowing me a new mortgage to move as I would lose my tracker rate (yes I am that desperate to move) and would make more money from me in terms of interest on a higher rate and higher mortgage. As I stated, we qualify for the amount based on income and affordability but there is no product to allow us move the negative equity. The risk to the bank is exactly the same whether we lived in this house or moved.



You should never have bought in the awful area.

I bought in 2006, now the place is 60% devalued, its a nice area though, so its not the worst.

I don't think anything will happen to negative equity, it is as it is.


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## Working mam (3 Jul 2012)

STEINER said:


> You should never have bought in the awful area.
> 
> I bought in 2006, now the place is 60% devalued, its a nice area though, so its not the worst.
> 
> I don't think anything will happen to negative equity, it is as it is.



Thanks for pointing out the obvious, really helpful to what my post is actually about. It was as close to family and work at that time that we could afford and as I say it was a starter house which we hoped to sell within 3 years. I think my point about being able to transfer negative equity in cases where it is affordable to do so is getting lost.


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## Working mam (3 Jul 2012)

Thanks cashier for a helpful answer, I don't know much about that side of things, but it may be something we could explore. Not ideal as we'd be leaving behind permanent jobs but it's food for thought.


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## Working mam (3 Jul 2012)

Absolutely, I don't want a 'quick fix' or to walk away from my responsibilities unless I was left with no options. I just want to pay what I owe - but on a different address. Such a simple thing yet being made impossible by the idiots running this country and the banks. I wonder if one day someone in power will actually use some innovation


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## PiedPiper (3 Jul 2012)

You could take a career break?  You could also put the debt onto one name or the other and only one of you go.  You have options holding on to a massive mortgage on a house you dont want doesn't seem logical.


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## Working mam (3 Jul 2012)

No career breaks available in either of our jobs plus we couldn't transfer the debt into one name as the bank wouldn't allow that based on what we earn individually. We have young children so one of us going is also a no go. Thanks for the suggestions though, and yes I totally agree holding onto a house we don't want with a massive mortgage is ridiculous. The bank just don't understand the concept of a fairly logical process!


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## micheller (3 Jul 2012)

If you can afford the debt, would you consider selling the house anyway at the lesser amount and asking the bank to move the remainder to a loan or some other vehicle, and maybe rent for a few years in the area you would prefer to be?
Or try to rent yours out and rent somewhere else?


I feel for you and where you are coming from as house debt is preventing many people from doing what they would like as regards moving and trading up and down.


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## Working mam (3 Jul 2012)

Micheller, that would be an acceptable option to us, selling the house and paying back the neg equity while renting - guess what, bank won't allow it! We may rent and rent out this house, I just really didn't want the hassle of being a landlord (repairs, having to pay mortgage plus rent in months when the house isnt rented out etc) and also still being stuck with a house we just want rid of. I guess there is just no easy answer but thank you for your suggestions


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## CadillacMan (3 Jul 2012)

Persistence with the bank worked in our case but the NE was a lot lower.  Therefore, I'm reluctant to advise persistence in your case.  

Have you thought about talking with a good financial adviser re the possibilities?

I had thought some banks (BOI, AIB) were planning to provide negative equity mortgages.


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## Eithneangela (3 Jul 2012)

Don't know if it's possible, but why don't you offer your house to NAMA who seem to be building a collection of assets for sale?


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## Working mam (3 Jul 2012)

CadillacMan said:


> Persistence with the bank worked in our case but the NE was a lot lower.  Therefore, I'm reluctant to advise persistence in your case.
> 
> Have you thought about talking with a good financial adviser re the possibilities?
> 
> I had thought some banks (BOI, AIB) were planning to provide negative equity mortgages.



Our mortgage is with ptsb, and they don't cater for upgrading with neg equity and as far as I know have no plans to do so. Shame as they could lose some trackers off their books from desperate people like me! 
BOI have introduced a NE mortgage but I think you have to come up with a percentage of your NE which I remember working out to be around €40k, we have good savings but not quite that amount. Plus other banks won't take on another banks debts. Thanks for taking the time to reply to my post though


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## Working mam (3 Jul 2012)

Eithneangela said:


> Don't know if it's possible, but why don't you offer your house to NAMA who seem to be building a collection of assets for sale?



Really?? I haven't heard of this, I must google some info on it, thank you! Although I'm sure the bank will find some way of saying no to this also!!


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## random2011 (4 Jul 2012)

What annoys me is the knowledge that banks might be willing to write down some debt for people who cannot pay their mortgages but at the same time there are people who continue to pay their mortgages despite having no money left over at the end of the month and the banks are unwilling to help them.

I mean for those who bought in 2006 and now have huge NE then why cant the banks write down their some of the mortgage to reflect the current value of the house. It's totally unfair. It's almost like you would be as well off to lose your job and then qualify for this mortgage write down. Give it a few months and find a new job and at the same time have no mortgage.


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## STEINER (4 Jul 2012)

Working mam said:


> Thanks for pointing out the obvious, really helpful to what my post is actually about. It was as close to family and work at that time that we could afford and as I say it was a starter house which we hoped to sell within 3 years. I think my point about being able to transfer negative equity in cases where it is affordable to do so is getting lost.



I answered your negative equity question.


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## SarahMc (4 Jul 2012)

To answer the question, will anything be done about negative equity?

No, I don't think it will, at least not on a government policy or legislative basis.
Banks may in time come up with a variety of solutions when there is more liquidity and/or competition in the Market.


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## Working mam (4 Jul 2012)

The reason I ask is that 2 seperate financial advisors told me to sit tight for now as the banks must have proposals for cost cutting, negative equity etc submitted by end of June and they were hopeful there may be something within that to help people in my position. What that could be I've no idea. My guess is it will continue to ignore the people who are paying their mortgages and we will become the Bermuda triangle of people needing help to move house.


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## Wishes (4 Jul 2012)

Hi Working mam,

I don't think their will be anything done about the avalanche of negative equity that is weighing most mortgage holders down.  For the past two / three years I've been speaking to financial advisors, bankruptcy experts etc. and all agree that nothing will be done; the can will get kicked further and further down the road.  Its all a disaster waiting to happen.

I'm in approx. 200k of negative equity, have put umpteen proposals to the bank all to no avail, at best I'd be lucky if they answered me.


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## Working mam (4 Jul 2012)

Hi wishes, it's very frustrating isn't it. All I want is to move house for a better way of life, commuting, nicer area for the kids etc. the banks don't seem to understand its a logical and cost effective measure for them to facilitate this. Well, they do but say their hands are tied by regulation. It's not like I'm looking for any favours, if I had no NE or was a ftb I would get the mortgage no problem, they just won't let me move the NE with me.


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## terrontress (4 Jul 2012)

We already have a situation where older generations who bought their houses in the 90s and earlier have nice homes, no negative equity.

In the next few years we will see Ireland's fortunes start to reverse with a general uplift in the global economy being reflected.

The same mistakes will not be made again so the younger generations will start to buy houses again but nowhere near the prices that those in negative equity now have paid as the mistakes have been made and lessons learnt.

So there will be an older age profile with no issues, a younger age profile with no issues but a middle-age profile where these issues will just be dragged along in perpituity.

The only thing we can hope for is the passage of time and chipping away at the capital.


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## Working mam (4 Jul 2012)

I can live with the NE element if I was just able to move. It wouldn't be so hard to swallow only for all of the bank bailouts are benefitting the wrong people. Innovation is just not in their vocabulary unfortunately.


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## bacchus (5 Jul 2012)

Working mam said:


> bought what was to be a starter house in 2006 at the height of the boom, and now have negative equity of approx €180k after we had the house valued last month. We would love to move house



What's the problem? Do you have difficulties with monthly replayment?


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## flattea2 (5 Jul 2012)

Is the obvious answer not to rent out your current house and rent another in a place you like.

Then wait and see what the fall out will be with regards govt/ bank policy on negative equity.

That’s what we are doing.


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## Jim2007 (5 Jul 2012)

random2011 said:


> I mean for those who bought in 2006 and now have huge NE then why cant the banks write down their some of the mortgage to reflect the current value of the house. It's totally unfair.



When you refer to the banks, you are in fact referring to the taxpayers of this country, since we now own the banks and any losses suffered by the banks will in some way have to be carried by the taxpayer!  So what you are really saying is that your fellow citizens should be asked to carry the can for your financial mistakes...

Having a house in negative equity and being insolvent are two different things and while I would expect that the politicians might be able to sell the electorate on doing something about people who are insolvent, expecting them to be able to sell the idea of writing off NE is a bridge too far...  

Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up!  If we start compensating people who are in NE, where do we draw the line?  What about the retirees who invested their pension savings in AIB/BOI or who ever, are not they just as entitled to compensation?  Or the couple who were investing to cover the costs of sending their kids to college, Or the invalid who lost all her compensation package etc..... Unlike someone in NE, these people's losses have materialized and they are probably suffering more that most 

I really can't see how any politician is going to convince people that they should take on the burden of other people's NE, while they are struggling to meet their own financial obligations...


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## truthseeker (5 Jul 2012)

Jim2007 said:


> Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up!



I expect that most people in NE didnt buy their homes as an 'investment', they bought them because it was all they could afford at the time. Now that people are stuck in unsuitable housing and unable to sell, there are social issues, like people not having children, or having less children (future tax payers to pay your pension) because they dont have the space. Or people unable to take better jobs because they cant move due to the NE.

Simpy dismissing it all as 'the whole issue of financial responsibility' is fine, but how do you propose to solve the problems that are arising as a result of this stasis?


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## Working mam (5 Jul 2012)

I've read and taken on board everyone's advice and agree the rent/rent seems to be the only option at this time. My concern though is that we could be forced onto investment property rates by the bank if they know it's no longer a ppr, also I'd have to pay income tax on the rental income, plus we would already have a shortfall in the rental income versus rent we would be paying on new property. It would be too costly for us I'm thinking, I need to look into all of the figures properly. 
Also, for the point made about banks writing off NE and the taxpayer ending up paying, I thought since last week bank bailouts no longer count as sovereign debt and so is not a further drain on the taxpayer?
I personally do not think writing off everyone's NE is going to happen or is in fact the right thing to do, albeit it would be a massive burden removed, but the govt and banks do need to come up with ways of facilitating us to move. Personally we would love more children but have decided we cannot while we are stuck in this position and we are not alone.


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## Working mam (5 Jul 2012)

Jim2007; said:
			
		

> Then there is the whole issue of financial responsibility, when you invest in a house or make another investment for that matter, you accept that there is a risk that the value of your investment may go down as well as up!  If we start compensating people who are in NE, where do we draw the line?  What about the retirees who invested their pension savings in AIB/BOI or who ever, are not they just as entitled to compensation?




What about the Anglo bond holders!!!!


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## Jim2007 (8 Jul 2012)

truthseeker said:


> I expect that most people in NE didnt buy their homes as an 'investment', they bought them because it was all they could afford at the time. Now that people are stuck in unsuitable housing and unable to sell, there are social issues, like people not having children, or having less children (future tax payers to pay your pension) because they dont have the space. Or people unable to take better jobs because they cant move due to the NE.



All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!



truthseeker said:


> Simply dismissing it all as 'the whole issue of financial responsibility' is fine, but how do you propose to solve the problems that are arising as a result of this stasis?



People have to change their attitudes - as we move to a more integrated Eurozone they will have to in any case.  If people adapted a more Germanic approach to finances, we'd all be better off.

For example, last year my daughter had her first communion - total cost CHF25.  That covered the cost of cleaning the white robe supplied by the church for the occasion plus the reception  afterwards, when it was over everyone went home - no big splash.


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## truthseeker (8 Jul 2012)

Jim2007 said:


> All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!



Im not only talking about people bringing up children in 2 bedroom apartments. Im talking about people living in environments where there is no infrastructure and no schools. You can choose to dismiss it if you wish, but that does not mean that it is not a very real problem for thousands of people. Your attitude is very 'Im alright Jack'.



Jim2007 said:


> People have to change their attitudes - as we move to a more integrated Eurozone they will have to in any case.  If people adapted a more Germanic approach to finances, we'd all be better off.



Oh please. It takes decades for cultural attitudes to change. Some of us dont wish to be German.



Jim2007 said:


> For example, last year my daughter had her first communion - total cost CHF25.  That covered the cost of cleaning the white robe supplied by the church for the occasion plus the reception  afterwards, when it was over everyone went home - no big splash.



Well arent you great? Im delighted for you. Now explain to me how you think the social problems due to negative equity should be addressed. And I mean real solutions, not - we should be more German.


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## Oscaresque (22 Jul 2012)

Jim2007 said:


> All a cross Europe there are plenty of people bring up children in two bedroomed apartments with no garden etc... so the idea that Irish people can't do the same is simply nonsense!.



Have you compared some of these European apartments to a lot of the ones built during the boom here? They are not exactly comparable in terms of size or quality. Certainly in my own experience with both anyway.

My second bedroom is 5 foot by 6 foot. I'd guess most rooms this size in your average European apartment are walk in wardrobes.


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## Cailte (22 Jul 2012)

Working Mam, I am in a similiar situation to yourself, difference being that we bought a money pit of a house that has nearly driven us to breakdowns trying to sort it out BUT...in a lovely location with great neighbours, great amenities and into work in about 30 minutes, so easy commuting. Our negative equity wouldnt be as much as yours but we would have difficulties trying to sell our house because of the condition it is in. A poster previous put it so well, we will be the middle aged generation stuck with negative equity and paying mortgages on houses that were huge mistakes and that we are stuck with.

Regarding children? My husband and I have decided not to have any at all, how sad is that. We are barely scraping by.


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## Working mam (23 Jul 2012)

Cailte that sounds like a bittersweet situation, house in the perfect location but due to struggling with the high mortgage you have decided not to have children. Have you engaged with the bank with a view to going interest only for a while? We too bought a house that needed to be gutted and we have put a lot of money into it, not that it helps the value but it may make it more 'saleable' if we can ever be in a position to put it on the market. We did a lot of the work ourselves and looked for cheap ways to improve the look of the house. I wish you the best of luck in the future


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## Working mam (23 Jul 2012)

Oscaresque said:


> Have you compared some of these European apartments to a lot of the ones built during the boom here? They are not exactly comparable in terms of size or quality. Certainly in my own experience with both anyway.
> 
> My second bedroom is 5 foot by 6 foot. I'd guess most rooms this size in your average European apartment are walk in wardrobes.



Good point, and it's also houses that have an issue with size, our 3rd bedroom is too small for a bed to fit in, we never considered it a problem as we thought we would be out of this house after our first child. The 2 kids will have to share a bedroom when the youngest is out of the cot. Not ideal but it means no more kids for us unless we want to go back to our parents era of loads of kids sharing a room!


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## Cailte (23 Jul 2012)

Thanks Working Mam for your kind words, we will figure something out, I had just wanted to let you know that you are by no means on your own with your situation. The worst part of it for me is the smugness of people who didnt buy when we did and their complete lack of understanding or sympathy for our situation. In fact I have sensed an air of 'good enough for you' from people (not family or friends, just 'people') if I have ever said even a little of our situation  (that includes online as well, hence why I don't mention it, except in relation to your post). 

I think, only in Ireland, would you get people happy to see you in trouble.

I wish I had some suggestions for you, Working Mam, particularly as you have already approached your bank already. Would it be worth going to your local TD? I haven't gone down that avenue myself but I know of people who were thinking of doing this, after similar refusals by their bank.


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## Working mam (23 Jul 2012)

Cailte you are absolutely right, I come across the same attitude from 'people', only people stuck in this position can appreciate the effect it has on you and how it hinders certain areas of your life. It's hard being stuck in a house that never feels like home, but I have to keep telling myself we could be a lot worse off, I see so many of my friends struggle financially and losing jobs and I know that is much worse than my 'problem'. 
I did actually speak to a TD about this, but as positive as he was about the proposal I feel the TDs have no interest in getting involved. Probably part of the 'well I'm fine so why should I help you' brigade. I'm going to just give it more time and keep saving and hope for the best!


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## terrontress (24 Jul 2012)

Cailte said:


> Thanks Working Mam for your kind words, we will figure something out, I had just wanted to let you know that you are by no means on your own with your situation. The worst part of it for me is the smugness of people who didnt buy when we did and their complete lack of understanding or sympathy for our situation. In fact I have sensed an air of 'good enough for you' from people (not family or friends, just 'people') if I have ever said even a little of our situation (that includes online as well, hence why I don't mention it, except in relation to your post).
> 
> I think, only in Ireland, would you get people happy to see you in trouble.
> 
> I wish I had some suggestions for you, Working Mam, particularly as you have already approached your bank already. Would it be worth going to your local TD? I haven't gone down that avenue myself but I know of people who were thinking of doing this, after similar refusals by their bank.


 
I hear a lot of the younger generation, students and the like, complaining that they have to move away for work and I find myself thinking that at least they are not in debt. A spell away will be a great adventure, broaden their horizons. The world has never been easier to travel round and it's never been easier to communicate.

I'm envious of them.


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## lff12 (7 Aug 2012)

STEINER said:


> You should never have bought in the awful area.
> 
> I bought in 2006, now the place is 60% devalued, its a nice area though, so its not the worst.
> 
> I don't think anything will happen to negative equity, it is as it is.



That is correct.  Usually long term inflation gradually irons out negative equity which normally occurs when an economy has withstood a major shock, as we have.

The government did nothing to prevent people from profiting from price increases, so they can't really turn around now and rescue those who were unlucky enough to buy at the wrong end of the pyramid.

Give it time, your equity will gradually recover over time.

Can't help you with buying in an undesireable area though, my cousin insanely did the same, and is now at least 60% in neg equity.  But his house is quite nice, despite the horrendous neighbourhood.


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## terrontress (8 Aug 2012)

lff12 said:


> That is correct. Usually long term inflation gradually irons out negative equity which normally occurs when an economy has withstood a major shock, as we have.
> 
> The government did nothing to prevent people from profiting from price increases, so they can't really turn around now and rescue those who were unlucky enough to buy at the wrong end of the pyramid.
> 
> ...


 
Over what period do you believe the equity will recover, for example for those straddled with 60% NE in an awful neighbourhood.

For people shelling out €350k for a 3 bed in Ballyfermot, I don't think they are ever going to get that back unless the Euro devalues massively and we get high inflation.


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## Protocol (9 Aug 2012)

Not getting the 350k back is not negative equity.

Negative equity refers to when the mortgage balance is > house price.

Say the 350k 3-bed in Ballyfermot falls to 175k.

Once your mortgage balance is below 175k you are out of negative equity and back to positive equity.

You've lost 175k on an asset, yes, but you are not in negative equity.


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## Protocol (9 Aug 2012)

I bought in 2005 and I have lost 100k on the house purchase.

But I was never in negative equity.


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## terrontress (9 Aug 2012)

Protocol said:


> I bought in 2005 and I have lost 100k on the house purchase.
> 
> But I was never in negative equity.


 
OK, fair enough.



> Give it time, your equity will gradually recover over time.


 
I took that to mean the value of the home will recover to the value of the loan rather than the value of the loan dropping to the value of the home.


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## Alwyn (9 Aug 2012)

Houses in 'old' Ballyfermot have sold for less than 80k.  Something the banks or auctioneers don't want you to know.


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## terrontress (10 Aug 2012)

I see them on myhome for less than 90k so I suppose the selling price will be somewhat less than that.

It's a nightmare.

Does anyone know how much those places went for in the peak of the boom?

If I look at the loan on my home compared to myhome there is a €100k difference but I am sure that I would never get the full amyhome asking price if I were to sell.

Something is only worth what someone is prepared to pay. I can't ever see things going back to where they were. Interest only mortgages are only delaying the inevitable.


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## Alwyn (11 Aug 2012)

terrontress said:


> Does anyone know how much those places went for in the peak of the boom?



You can knock around 50k off the asking price, that will give you an indicator of what these houses are fetching now.  

In  the peak they fetched in and around 270k right up to 400k.  Massive  negative Equity in that area.  Though 270k back then would probably have  gotten you a house that needed upgrading hence large top up loans on  top of the main home loan.

A lot of people bought in this area to avoid moving to the commuter towns.  There was also talk of a luas line etc., this of course amounted to nothing.


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## Toto123 (12 Aug 2012)

flattea2 said:


> Is the obvious answer not to rent out your current house and rent another in a place you like.
> 
> Then wait and see what the fall out will be with regards govt/ bank policy on negative equity.
> 
> That’s what we are doing.



Definitely is the done thing.  I personally don't think anything will be done about negative equity for people who can afford to pay their mortgage.
Live in a 2-bed apartment myself that my now husband bought before we met.  Will only move now in the foreseeable future if we absolutely have to (e.g. if we find out we are expecting triplets ), but if we do, we'll rent.
I've actually replaced a lot of the furniture that himself bought with space saving stuff from ikea, so that's made a big difference in terms of spaciousness of the place


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