Buying a house in negative equity

Hi , I would greatly appreciate some help . Here is our situation :my parents bought a house in 2006 as I couldn't get a mortgage on my own for that amount of money at that time . . I live in the house since with my grilfriend then 'now wife and we have one child . In 2011 we were both made redundant and we had to retrain , now we are back working with permanent positions . We approached few banks to c if we can get a mortgage (we are both first time buyers ) and the max we were offered was 230000. We would love to buy this house as we did so much work in it and we really feel attached to it as we live here for 10 years now. My question is can my parents sell the house to us at 230000? What's is going to happen with the rest of the loan ? Also we are the once paying the mortgage , property tax and all the Oder payments for the house , practically we are like owners just not in papers . Thanks in advance .

Your parents can sell the house to you at any price they like, as long as they clear the loan on the property. If the mortgage is for €400k, they will not be allowed to sell it unless they can clear the shortfall from their own resources.

How much is the house worth?

How much is outstanding on the mortgage?

There doesn't seem to me to be any hurry for you to buy it. Why not wait until you can borrow more? By then, you will also have reduced the amount outstanding on the mortgage.

Brendan

The house is worth 350000 , outstanding 480000. We are not really in a hurry I'm just worried if something happen with my parents (dad is quite sick at the moment ) will my two sisters have a say over the house .? Now everything if fine but never know

taxproblem said:

practically we are like owners just not in papers

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Hold on a minute. So you are just like owners but are you not also just like mortgage holders?

If your father dies, your mother will own the house and will also be responsible for the mortgage.

When both your parents die, the house and mortgage will form part of the estate. What other assets do your parents have?

Do they own their own home? Do they have a mortgage?

You are lucky that you were refused a mortgage at the time. Today you would have €130k of negative equity and a huge mortgage.

Brendan

We are not mortgage holders everything is on my parents name , we pay rent to them . They own their home with no mortgage. What I want is to have some security here in the house

You say that you are practically like owners. Most owners are also mortgage holders.

You clearly can't afford to buy the house you want to live in.

Brendan Burgess said:

You say that you are practically like owners. Most owners are also mortgage holders ?

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What do you mean by mortgage holders ? My parents have nothing to do with the house and never had the only connection is that they have the loan with the bank not us .

Your parents are both the owners and the mortgage holders, at this moment in time you are only a tenant in the house you rent from your parents.
Your parents can sell you the house for the 230000 but they would also have to pay the bank the rest of the outstanding mortgage 250000.

Thank you for all the answers .

I think this issue is a lot more complex because if they are paying the mortgage they are in fact acquiring ownership in essence and the only person that can sort it out is a good solicitor.

Bronte said:

if they are paying the mortgage they are in fact acquiring ownership in essence

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No, they are paying rent to their parents who are paying the mortgage.

I have never heard of a tenant claiming that they have ownership rights before.

By the way, taxproblem, have your parents been declaring the rent they receive from you for tax purposes? I would be just concerned that you might all think of it as your making mortgage repayments, but I don't think that Revenue would see it that way.

Brendan

Brendan Burgess said:

By the way, taxproblem, have your parents been declaring the rent they receive from you for tax purposes? I would be just concerned that you might all think of it as your making mortgage repayments, but I don't think that Revenue would see it that way.

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That's why I advised going to a solicitor. Sometimes people can have property rights even though the mortgage is not in their name, it has happened before and is a very tricky area.

I imagine the parents don't consider it as rent and also that it's not declared as such.