# Joint AIB Tracker > Negative Equity > Portable?



## Prof Chaos (1 Jul 2014)

*Income details*
*Net monthly* (i.e. after tax) Income self: €3400  Full Time Private Sector PAYE
*Net monthly* income partner/spouse: €1000 Full Time / Part Time Pre-School Teacher
Income history: 
Amount of child benefit received (Should be €130 per child) €260
Amount of Mortgage Interest Supplement received (MIS is the social welfare payment to unemployed people, don't confuse with TRS) €0

*Personal circumstances so we can calculate your reasonable living expenses *
The Insolvency Service has published Guidelines for Reasonable Living Expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be. 
Two Adult Family with 2 young kids.
Do you need a car for work or do you use public transport? 
- 1 family car. Wife uses for work I use Annual Commuter ticket and bike for work

Number of children 0- 2 years old: 1
Number of 3 years old children: 1

Monthly childcare costs: 
Monthly spend on special circumstances: e.g. exceptional healthcare costs
- This fluctuates as wife approx 300-400 pm but probably only 9months of the year

*Home loan*
Bought with a friend, lived in for 4-5years now rented
Lender: AIB Finance
Amount outstanding: €310,000 
Value of home: €210,000 (Probably at a range of 190k-235k)
Interest rate: Tracker +1.1 I think
Monthly repayment Approx €1200
Amount in arrears €0
Monthly rent received €950
Supplemented Payment: €400 each (building up for rental income tax, maintenance etc)

*Rental*
Renting family home €900pm

*Credit Union*
Amount of shares €1200
Amount of loan outstanding €9300
Monthly repayment €240
Term left Approx 3.5yrs Hope to pay down a lot sooner

*Other loans and creditors - delete those which don't apply to you
Overdraft - amount outstanding: Sneak into it the last week or two of the month, probably for the first 6 months of the year where most of the big 1 off bills happen.
Credit Card - amount outstanding : €680 Focus the last few months of getting rid of this
Credit Card - monthly amount you are paying : 20%

Other savings and investments 
Savings:
€5000 Bank savings account. Recently took a major hit.

Assets:
Approx 1/2 Acre Site with FPP - Approx Value 20-35k

How important is retaining the family home to you? 
Which of the following best describes your situation?
I don't care about keeping the family home. 


Any other relevant information

What is your preferred realistic outcome? 
On current interest rates house is a decent investment, but having it on the books means I've a very small chance of buying a family home.
Preferred outcome buy a family home, fine with taking a loss onto new house.

Fluff
Ok so this is a little complicated so if it isn't clear feel free to request clarification.

Bought a Duplex for €380k (North Wicklow) with a friend, plan was to live in it for a few years and sell on with the bones of a deposit for the next house  
Life moved on for both of us, best solution was to rent out the duplex. Its not something either of us are comfortable doing for the long term, its a necessity for now.
I'm renting a house with my Wife and 2 Kids, the ideal is to buy a family home, for keeps this time. Last month we set ourselves a target of 12months to sort out savings, debts and credit cards etc as much as we can and then see if we're in a decent position.
Have a site which was gifted to me by my parents, would've liked to hold onto it for ourselves or the kids but considering selling it to get a deposit for a purchase in a more suitable location. The site isn't commutable for work for us, and I will not get work closeby that would suffice. Big shame as its been the dream for a long time.
So there's approx 100k neg equity on the Duplex, had rang the bank to see if we could sell at a loss and then split said loss in two and I'd take my half onto a new mortgage, and friend would do the same or service an unsecured loan. They were not interested in discussing it as they rightly pointed out we are both jointly liable for the debt so only thing they would do is give us the full debt in a joint unsecured loan and pay it at a discounted interest rate. This would be madness as we'd be far better off just keeping the house as we'd be unlikely to get a mortgage with a loan like that on the books anyway.
So fast forward to today AIB announce this Portable Tracker product and trade up / trade down / splittable
Sounds as if it might tick most of the boxes. 

- Friend is in much stronger financial position than me with wages etc.. keen on getting rid of Duplex with as small a loss as possible, considering purchasing also (He may be able do so without offloading) 
- Will they allow the porting and splitting of the tracker for neg equity mortgages and would both parties be required to be purchasing a home at the other end of the transaction.
- If only 1 wanted to port the tracker, and the other take an unsecured loan, I assume the Trade Down cut-off point is halved? is would have to be 150k or below to qualify?
- New House Price Range: 160K-240K Depends on Trade Up / Trade Down Criteria
- Am I mad to be considering this at all?*


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## Brendan Burgess (1 Jul 2014)

First things first, would you be approved for a mortgage to buy a house for say €200k, assuming they allow you to split your mortgage. 

Let's say you sell your jointly owned home for €210k, you will have €100k cash and a mortgage of €150k . To buy a house for €200k, you will need an additional mortgage of €100k. 

So your total mortgage will be around €250k.  It seems that your gross income is around €70k, so this should be possible.  

Go onto the AIB calculator and, ignoring your current mortgage, see what they will approve you for.

If you get approval for €250k, then the next hurdle will be that you will need at least 8% of the price of the new house in cash - i.e. €16k.  You don't seem to have that at present, but could get it from the sale of the site. 

AIB allows people to separate and bring the half the mortgage each with them. They will also allow your current property partner to allow you to take the full mortgage with you, but he presumably will want part of it for himself. 

*Alternative 1
*Could either of you live in the Duplex? That would be the simplest solution. A cheap rate. Low repayments. Put up with for a few years while paying down the negative equity and building up a deposit to buy a house. 

I would imagine that AIB will allow either of you to take over the mortgage in your own name. 

*Alternative 2 - stay where you are 
*What is wrong with renting?

It has a lot of advantages.
You keep your stake in the property market through your current profitable investment and your site. 
You get to keep your site and may be able to build on that some day.


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## Brendan Burgess (1 Jul 2014)

Some other issues 

*Why have you an expensive credit union loan while you have savings? 
*
"Savings:  €5000 Bank savings account. Recently took a major hit."

You don't really need €5,000 as an emergency fund and would be better off clearing your borrowings.  With €9,300  you are probably paying around €1,000 a year interest.  Pay this down with your savings and your shares, and you will save a lot of money. 

Hold on this decision, until you have made a decision on the house.


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## Prof Chaos (1 Jul 2014)

Hi Brendan, thanks for the quick response.
We should qualify for the 250 with AIB, but we will need to sort out the debts and deposit as you said.


> Alternative 1
> Could either of you live in the Duplex? That would be the simplest solution. A cheap rate. Low repayments. Put up with for a few years while paying down the negative equity and building up a deposit to buy a house.


My friend has no intention of ever living there again, too far out of the city for him  Plus he's moving out of the country for a couple of years anyway.
Me and my wife lived there for a year or two but we left 6 months after our first kid arrived to be close to family for support with childcare etc. I wouldn't rule out returning though but it would be a last resort


> Alternative 2 - stay where you are
> What is wrong with renting?


Yeah you're right there, very happy with where we are, we couldn't afford to buy our rental house actually. Its very much home for us but would love to knock a few walls and make a few structural changes, things that are out of our control when renting which is probably being a bit ungrateful given the pressure and stress some people are under.

The other thing is that interest rates are going to turn sooner or later, and its a worry that the supplementary payments to maintain the property and pay the mortgage might get out of hand. We're paying more than 1k less now per month than peak which is fantastic now but a reminder that there's only one way for those rates to go.

This AIB deal got me thinking again, but we should probably stick with the original plan, pay down debts, build back up savings and see where we're at in 12 months.


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## Brendan Burgess (1 Jul 2014)

Prof Chaos said:


> , very happy with where we are, we couldn't afford to buy our rental house actually. Its very much home for us but would love to knock a few walls and make a few structural changes, things that are out of our control when renting which is probably being a bit ungrateful given the pressure and stress some people are under.



Well that makes it fairly clear. Stay where you are and keep your tracker. If your partner wants out, have a look at buying him out if AIB will allow it. 

If he is going away for a few years, he probably should not be interested in buying another house, so he can keep a foot on the ladder by holding onto this house. 



> The other thing is that interest rates are going to turn sooner or later, and its a worry that the supplementary payments to maintain the property and pay the mortgage might get out of hand.



Yes, but rents may rise, which of course, is a double edged sword for you.

If you borrow an additional €100k now, you will also be affected by higher interest rates as well as paying a higher rate than you are at present on your tracker.





> This AIB deal got me thinking again, but we should probably stick with the original plan, pay down debts, build back up savings and see where we're at in 12 months.



It sounds like the right thing to do, but it's not a final decision. Keep it under review.


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