# Stuck between an apt and a house- time to buy again?



## looking (2 Nov 2009)

*Can we trade up from apartment to family home?*

Age: 30
Spouse’s/Partner's age:34 

Annual gross income from employment or profession: 60000
Annual gross income of spouse: 52000

Type of employment: e.g. Civil Servant, self-employed state body

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving
Rough estimate of value of home unsure- purchased for 330000 5 years ago- not sure what it would sell for now....240000???
Amount outstanding on your mortgage: 275000
*What interest rate are you paying? ECB & 1.35*

Other borrowings – car loans/personal loans etc none

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments: approx 100000 in savings

Do you have a pension scheme? yes

Do you own any investment or other property? No

Ages of children: 2 & baby

Life insurance: No


*What specific question do you have or what issues are of concern to you?  *
*We currently live in an apt which is no longer viable with 2 small children. Unsure whether we should *
*a) use our saving to pay off negative equity and sell apt at very reduced rate and then rent a house for ourselves*
*b) approach babk about possibility of taking 2nd mortgage to buy home and rent apt*
*c) rent apt and rent house for next few years*
*d) follow up on possibility of house swap in our development. friends who own 4 bed are interested in our apt and we could buy their house- using our saving to pay difference and mortgage repayments would be around what we are paying now*

*thanks so much in advance*


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## Brendan Burgess (2 Nov 2009)

*Re: how to get a family home? Selling or renting current property*

This is a very difficult decision. 

To simplify things, the price you paid for the apartment is irrelevant. Negative equity is an irrelevant concept, given that you have the cash to wipe it out.

You have a property worth €240,000
You have net borrowings of €175k

You have reliable annual income of €110k

So, overall you are in a much better position than most.

If you keep your current apartment and buy a home, you will end up with too much exposure to property. You will be at risk of further house price falls, and more importantly, a loss of rental income if you can't rent the property.

My gut view is that if the apartment is not suited to your needs now, put it on the market to see if you can sell it. 

If you sell the apartment now, you will have €65k. You could probably get a loan of €400k, so you could buy a property for around €465k. 

If you can sell the apartment now, you will be in a very good position to get a deal in buying another property.

Is the house swap your ideal house? If not, then you might consider renting from each other until you find buyers for your houses.  You rent your apartment to them for €500 a month and they rent theirs to you for €800 a month, or whatever.


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## Brendan Burgess (26 Jan 2012)

Folks

Please make sure to avoid speculating about house prices while answering this interesting question.

Brendan


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## elcato (26 Jan 2012)

Your priority now should be to buy a home to spend the rest of your life in. I would use the 220k to achieve this. Firstly, I'm guessing you are in Dublin so look around at where you want to live. Get a rough estimate on how much you have to spend and then decide how much of the 220k to sink into this. Seperate any connection between you and the apartment. You can either let it out or take a hit at a later stage but put it on the back burner for now. Worst case scenario is that you may have to top up the differance between rent in and outgoings such as mortgage/fees/tax etc. Figure out how much that is. If your sights are not too high you should be able to get a good mortgage with a large deposit which should satisfy your needs in the future. Do not make the same mistake again and buy so that you hope to move up the ladder in ten years time !


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## Bronte (26 Jan 2012)

Very interesting and I've looked up your other posts for more details so you are both really good savers in secure jobs. And you have left the apartment are renting somewhere else. 
Do you want to be a landlord. Would you be able to hack it? Do you want rid of the apartment. If you are going to be a landlord it is better to not reduce that mortgage if at all possible and keep your savings to give you a lower mortgage on your next purchase. 
How much is the monthly repayment, what is the likely rent? You'll have to give proper figures to get more concrete advice. 
With such a large deposit and such a good income you should be able to get a nice family home, I guess you want 3/4 bed, detached with garden, not sure where your market is? Dublin is the most costly and family homes the most prized. What price home are you looking for? How much would that mortgage cost monthly. What term of mortgage are you thinking of.
In relation to property prices which we are not allowed to discuss, but I think it is important to say that now is when you need the family home, now is a good time and it is actually irritant to you whether they go up or down as it will be your family home. 
Finally you may have a problem getting a bank to allow you to get a mortgage without paying down the negative equity at least on the apartment, but if you make a good financial argument to the bank that might swing it. Another problem is the will want to get you off your tracker. A good broker like Norfbank on this website would seem to me a sensible option to look to for advice on that score as this is a tricky situation.


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## ClubMan (26 Jan 2012)

I merged the two duplicate threads on this issue. Please read the posting guidelines:


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## looking (26 Jan 2012)

Thanks for all the replies- I really appreciate them.
ClubMan- I didn't mean to duplicate- the post that you have merged it with dates from 2009- what I posted today was our current situation and different questions as our circumstances have changed- is it possible to have both updates on the same thread?
Thanks


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