# Trading up - Options



## candyman (3 Feb 2011)

Hi there,

Curious to hear people's opinion on the best course of action to take.

I would like to trade up from my existing apartment which has an outstanding mortgage of circa 300k left on it. My destination property is in the region of 450k but my current level of debt (the 300k) is hindering my ability to get a second mortgage.

I have a lump sum in the region of 100k. 

The question: Is it better to reduce my current mortgage from 300k to 200k or could this lump sum be better used in the purchase of the new mortgage (450k).


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## jambo (4 Feb 2011)

Knowing the current value of your apartment would help. Also your disposable income maybe.


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## candyman (4 Feb 2011)

Current value of the apartment is circa 200k so about 100k in neg. equity.
Current monthly savings plan of 2k per month also.


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## Brendan Burgess (4 Feb 2011)

Hi Candyman

You have a property worth €200k and you have net borrowings of €200k

If you buy another property, you will have property worth €650k and borrowings of €650k. You shouldn't have such an exposure to property and interest rates. But in any event, the lender won't give you the money anway.

if your current home is not suitable for your needs, then you should sell it. It is better to remain in it while trying to sell it, as it is awkward to sell a house with a tenant in it. 

When you have sold it, you will probably not have the deposit to buy a new house, so you can rent until you have accumulated the deposit. 

If you have a tracker mortgage, ask the lender to do a deal with you. They may knock something off the mortgage in return for releasing them from their loss making loan. 

Brendan


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## dec1892 (4 Feb 2011)

Brendan,

Regarding your last sentence ("_If you have a tracker mortgage, ask the lender to do a deal with you. They may knock something off the mortgage in return for releasing them from their loss making loan_") - how would this work exactly? 
Do you simply approach your bank and ask them would they be willing to reduce my outstanding mortgage by X% if I sell the house (thereby release them from the committed loan)?

I would be interested as I am in a similar position where I am on a decent tracker mortgage with AIB (ECB + 0.6%) and am considering selling - if AIB were willing to knock off 10% of my mortage,it would make up my mind for me in terms of selling

Thanks


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## dec1892 (6 Feb 2011)

Brendan or anyone else assist with my query above? Ta


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## jambo (9 Feb 2011)

You can ask them if they want to do a deal but there is no known cases of them doing deals yet. This may just be because of non-disclosure agreements.


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