# Need to move.Negative equity?



## simonfoley (16 Sep 2008)

Age: 33
Spouse’s/Partner's age: 30

Annual gross income from employment or profession: 44,000 gross
Annual gross income of spouse: 20,000 gross

Type of employment: both self-employed construction related+secretarial

In general are you spending more than you earn or are you saving? spending

Rough estimate of value of home, 320,000 (realisticaly)
Amount outstanding on your mortgage: 355,000
*What interest rate are you paying? 5.35% - 1900pm*

Other borrowings – car loans/personal loans etc
car loan 11k left to pay off
mnba credit card 7k owed
tesco credit card 4k owed and coming off interest free period soon

Do you pay off your full credit card balance each month? no
If not, what is the balance on your credit card? 11k

Savings and investments: 3,000 savings

Do you have a pension scheme? no 

Do you own any investment or other property? no

Ages of children: 2

Life insurance: 1,100


*What specific question do you have or what issues are of concern to you? *
*my wife is currently pregnant with our second child. we will badly need to get a house as the current 2 bedroom apartment is not big enough for the 3 of us, let alone an extra new baby. the problem is that we have no equity built up in our home. infact, i think the apratment is more likely to be in negative equity.  were also feeling day to day spending pressures, my overtime is less than last year and were barely able to make our mortgage. we tried talking to the bank and credit union to consolidate our other loans into mortgage with a top up, but they said no.*

*help advice?*


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## demoivre (16 Sep 2008)

Use the savings to reduce one of the cc balances and be prepared to stay in the apartment. You effectively can't sell unless you can pay the bank back in full what you owe them so by your own estimation you need to raise 35k. Even if you could sort this dilemma out you will then need to raise the deposit for your next house ( no chance of a 100% mortgage imo ) plus stamp duty plus legals. It's not a runner imo.


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## moneygrower (16 Sep 2008)

We sold our apartment and are renting a house because our one bed was too small with our baby. We couldn't afford a house without a major compromise on location etc. 

We're really happy with the extra space and as I'm hoping to start my own business it's a weight off financially.
We are thinking of moving area but that's pretty hassle free given we just have to give a months notice, and we don't have to.
No heart attacks either when listening to the news. 

We weren't in negative equity so I've no experience of dealing with that. Can you get a loan from family or something to pay off the bank? You don't really have the option of waiting out the slump and rent the apartment out will not cover the costs will it? I would say take the hit now and relax in a rented house till you've found your feet.


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## ontour (16 Sep 2008)

If you sell your apartment and pay off your debts, it will cost you 57k plus fees.  You will then need a deposit on a house plus the costs of moving in and making it habitable.  This is assuming that you can buy a house that meets your needs for approx. 400k. 

IMHO, I do not think that your current assests support an ability to service additional debt.  To make this move and end up with a similar mortgage repayment and to have cleared your current debts and pay a deposit, you require in excess of 100k.

Are there any windfall gains such as land / money / shares or property that you are likely to gain in the future, that you may be able to access now?  I believe that your situation is and will be increasingly common and will require that either the larger family units pool their equity or you live within your current accommodation constraints until you can afford to move.


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## moondance (16 Sep 2008)

Could you rent out your apartment and try and rent a bigger place in a cheaper area for yourselves?


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## steelblue (16 Sep 2008)

Hi

Renting your apt is probably a non runner as you would need 1700 pm just to cover an interest only mortgage. Not many 2 beds can achieve this unless they are located in specific areas.

It appears to me that your biggest problem is cash flow. Is the amount of life insurance a misprint as it states that it is 1100 pm. Even without the life insurance the cash flow looks poor.

If I was in your position, i would try to do the following,

1) See if bank will allow you to go on interest only for a couple of years. This would free up approx 200 pm
2) Sell the vechile with the 11K loan on it and if possible clear loan and get cheap run about.
3) Clear 3k savings from mbna card and try moving balance to another card with 0 interest offer.


I dont think there is much that can be done in moving house unless you are prepared to move to a substantially cheaper area and can raise the short fall that will occurr if you sell your apt. (maybe parents can help on a short term basis )


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## simonfoley (16 Sep 2008)

steelblue said:


> Is the amount of life insurance a misprint as it states that it is 1100 pm. Even without the life insurance the cash flow looks poor.)


 thats for the year.


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## moneygrower (16 Sep 2008)

Simon is a second job an option? Your joint income is very small to pay for that size of a mortgage, which is probably why you have the credit card debt, vicious circle thing going on. Will your partner get paid full maternity leave?


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## simonfoley (17 Sep 2008)

demoivre said:


> Use the savings to reduce one of the cc balances and be prepared to stay in the apartment.


 I need to keep at least some money in case of emergencies. 3k is literally all we have in the world right now.


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## simonfoley (17 Sep 2008)

moneygrower said:


> We weren't in negative equity so I've no experience of dealing with that. Can you get a loan from family or something to pay off the bank? You don't really have the option of waiting out the slump and rent the apartment out will not cover the costs will it? I would say take the hit now and relax in a rented house till you've found your feet.


 our parents already lent us the money to do the aprtment up when we bought it. getting more money from them is not an option.

if we rent the apartment, we would only get 1,100 a month optimisticaly.


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## simonfoley (17 Sep 2008)

moondance said:


> Could you rent out your apartment and try and rent a bigger place in a cheaper area for yourselves?


 we would add hours on to the commute and only save a very little doing that.

we only have one car and i take the wife to and from work  you see.


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## sandymount (17 Sep 2008)

Sell your car and buy a banger.


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## simonfoley (17 Sep 2008)

moneygrower said:


> Simon is a second job an option? Your joint income is very small to pay for that size of a mortgage, which is probably why you have the credit card debt, vicious circle thing going on. Will your partner get paid full maternity leave?


 i'm thinking that an extra job really is the only way I can get out of this  my overtime has dried up so i can probably do another job at night. any suggestions?

my wife will only get 2/3s pay on maternity leave so we will have another short fall in cash.


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## j26 (17 Sep 2008)

It just ain't gonna happen, unless there is a cash windfall out there.  You would need 100k to do it, and that's just not attainable in your current situation.  You also owe over 5 times your combined gross income on the mortgage.  You are not going to get that again soon, especially when you are in the constuction industry, so it you were to trade, it would have to be a serious trade downwards.

Those credit cards are a concern, and you don't have the facility to remortgage, so you need to focus on bringing them down for the next while with any spare cash that you can muster.

As you've another child on the way I'd say keep at least some of the 3,000 as an emergency fund as you never know what sort of calls will be made on you in the next few months and having a few quid in reserve will give you serious peace of mind.


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## simonfoley (17 Sep 2008)

sandymount said:


> Sell your car and buy a banger.


already doing that, car is up on carzone just there. although i don't think I;ll get much for my hyundai accnet


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## Flax (17 Sep 2008)

You can't afford to sell, let alone buy a larger place. It's as simple as that.

You need to figure out a way to use your apartment space a bit better (e.g. turn the sitting room into a bedroom at night) and you need to figure out a way to earn more money.

You can look for part-time jobs here: [broken link removed]

I would stay away from any multi-level marketing system (these are the adverts which say you can earn €500 - €2000 per week working part-time...)


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## ronaldo (17 Sep 2008)

You also need to analyse every expense and cut where possible. As an example, take life assurance. 

I have assumed that this is required for your mortgage. Therefore, I have taken you and your partners ages, mortgage amount and assumed a term of 30 years and that you don't smoke. I have entered the ASKABOUTMONEY discount code on the LABROKERS.IE website (which I used for my mortgage protection) and entered the above details into the website. It's coming out with a figure of €420.25 per year with the first year only costing €63.04.

You should be able to cancel your current life assurance and transfer it to this life assurance. You'll then get a refund of whatever percentage of your current €1,100 life assurance is left. Use some of this to pay the initial years' €63.04 premium and use the remainder to pay off some of your credit card. You'll also have an additional €680 per year in subsequent to pay off the credit card/loans. Every little helps....

As you are currently in the higher tax bracket, if you get a part-time job at minimum wage (€8.65 an hour), you will need to work more than 200 hours to save the amount that you will save in just the first year by following the above advice. 

P.S. Don't just look at the above and agree that you must do this some time.... Do it NOW, get on the phone to your current life insurance provider first thing in the morning - procrastination will cost you and prolong the length of time you remain in debt...


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## Bronte (18 Sep 2008)

OP - you cannot move but you are going to get deeper into debt, how will your wife be able to work when you have a second child, will you have to pay for childcare?  That monthly mortgage figure is really hitting into your salaries.  Is there any possibility of extending the term of the mortgage to decrease the mortgage amount?  If not I'd sell the house, as I can only see you getting deeper into debt.  As you're not sure of the value maybe it would cover the mortgage, if it does then you can sell and go to renting a house which will cost a lot less then 1900 a month and maybe your wife could stay at home as I'm assuming a 20K salary doesn''t pay for a lot of childcare.  You could then tackle your other debts.  You also should go to MABS they will help you go through the figures and may give you some pointers on negotiating with the bank.


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## simonfoley (18 Sep 2008)

Great suggestion ronaldo. we cannot however cancel the exisitng life insurance and get our money back. however, we only have 4 months left on the policy and can switch at the end of those 4 months. thank you

bronte: changing the mortgage isn't viable. were not even two years into it and because its already for 35 years and 100%, the bank wont even look at re financing. 

we cant afford to let mrs foley stay at home at the moment. her hours are flexible and her mam is currently minding the baby for only a nominal sum.

we also tried phoning mabs, but they say they only help people who are not able to service their loans. we so far have kept our heads above water (barely).


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## moneygrower (18 Sep 2008)

since your in construction would it be worth your while training as an energy assessor?
what do you in construction? If it's a trade there's loads of scope to do nixers in your time off. Exhausting I know but whether you hang in there or sell your going to need more cash. 
That's great you have a granny babysitter so you've some relief there. 
Remember too lots of people get into hot water at the small children stage of their life and are nice a comfy again when are in their middle age. 
See can you move up or over in your career to give yourself more options.


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