# Negative equity - To move or not to move?



## rosswind (12 Jun 2011)

Hi all,
Hopefully someone out there can give me some advice re my current predicament.
The details are as follows:
Currently living in south of the country but want to move back to the Northeast.
We own a house with an outstanding mortgage of 285k, recently valued at 260k.
Both of us are working: Wifey on 55k, myself on 25k. 
My wife just received a job offer in Dublin with probable earnings of 65k and opportunities for myself to change job are quite good(community worker).
I went and talked to our mortgage provider (large nationalised bank) about our options and was told we would have to take out a personal loan or equivalent to pay off the balance (negative equity).
The banker also alluded to (but wouldn't commit) to the possibility of carrying neg. equit. to a downsized mortage but this has yet to be brought before the powers to be to make a decision.
As we currently have childcare (20 month old twins) and 2 car loans adding another short term loan on top of this would cripple us in terms of trying to save for a deposit and paying rent.
Any suggestions?


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## Brendan Burgess (12 Jun 2011)

The options are 

1) Stay where you are 
2) Let out house and move
3) Sell house and move 

If you have a cheap tracker, it may well make sense to keep the house, either staying in it or letting it out. I am assuming that you have a cheap tracker.

One reason for doing this is that the bank may introduce a scheme at some stage in the future to incentivise people to pay off cheap trackers early. 

If you are committed to moving, then you have to compare letting out the house with selling it. 

Forget about buying a new house. Adjust yourself that you are going to be renting for the foreseeable future. 

If you sell the house, make sure that the bank gives you a loan at the mortgage rate and not at personal interest rates. You should  be able to negotiate this. 

Strategically, I think you should tell the bank that you have decided to let the house.  They _might _do a deal with you on writing off the shortfall in exchange for paying off a cheap tracker early. But check first if the mortgage agreement allows you to keep the cheap tracker if you let the house.


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## Complainer (12 Jun 2011)

rosswind said:


> opportunities for myself to change job are quite good(community worker).



Are you sure about this? Lots of community organisations have had savage cuts in funding, and are cutting staff, not taking on new staff.


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## rosswind (12 Jun 2011)

Brendan Burgess said:


> The options are
> 
> 
> If you have a cheap tracker, it may well make sense to keep the house, either staying in it or letting it out. I am assuming that you have a cheap tracker.
> ...


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## Brendan Burgess (12 Jun 2011)

> Basically all we want to do is move back home (northeast), buy a house  at 200k, add any debt owing to this and continue paying for our  mistakes.



That is a lot you want to do. 

You can sell the house and move back.

But even if the bank agree to give you a 110% mortgage, it's not a good idea. Sell the house and rent for a while. 

Brendan


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## rosswind (20 Jun 2011)

Had a meeting with our bank today and they were very helpful.
Discussed situation and the following was the outcome:
1. Their mortgage bank is a 'seperate entity' so would require any loan to be paid in full regardless of how we get the money. There is no carrying of negative equity to a new mortgage even if downsizing.
2. Their loans dept. is very willing to loan the difference (neg. equity) for a term up to 10 yrs at a favourable interest rate of 6.5%.
3. Standard rules apply for any future mortgage application i.e. The slate is clean, 8% deposit, thorough scrutiny of finances and ability to pay.

From our point of view selling the house (hopefully), taking the personal loan at above rates and renting up the country for a while seems the best option.
My wife is being seriously head hunted for the job so financial situation should improve. Worse case scenario I stay down here 3 days a week until I can get another job. 
Although I hate to admit it, with childcare and transport costs, I would probably be better off financially if I didn't work... rant for another forum!!!


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## Gekko (20 Jun 2011)

rosswind said:


> Their loans dept. is very willing to loan the difference (neg. equity) for a term up to 10 yrs at a favourable interest rate of 6.5%


 
This is interesting.  At least banks (or at least a bank) will facilitate this.


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