Emigrating - House in negative equity - opinions?

Hi,

I'm emigrating as a job opportunity has come up that's the right career move for at least a couple of years - but it probably won't be for good.

We have about 450k outstanding of a SVR mortgage of a house in Churchtown / Nutgrove area.

Best guess at the moment is that the house is in the 350k value range (4 bed, good corner site, built new in 2006).

Have never been in any financial difficulty. We bank with KBC.

Again, best guess for rent is top end at €1700 and mortgage is in the €2350 region. However, rent may end up being as low as €1500 - which means a fairly significant monthly mortgage top-up. Obv if we register as landlords - we lose TRS.

Houses are selling pretty well in our area, as there reasonable demand for 3/4 bed houses in South suburbs.

I'm tempted to start a dialogue with KBC around the fact that we're emigrating, and that the rent top-up is too much - so - can we do a deal?

Interested to to hear what people's opinions are - and if anyone has any experience with this.

Thanks,

DB

DevilBoy said:

Obv if we register as landlords - we lose TRS.

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True, but you get the far more valuable benefit of being able to offset 75% of your mortgage interest against your tax liability on rental income. This should reduce your tax liability quite significantly.

Besides, losing TRS is not something you choose. Once you rent out the house, you are no longer eligible to receive the TRS.

DevilBoy said:

I'm tempted to start a dialogue with KBC around the fact that we're emigrating, and that the rent top-up is too much - so - can we do a deal?

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I'd imagine that the first thing KBC will want to know is what your circumstances will be when you emigrate. If you can afford to pay the mortgage shortfall when you emigrate, I'd imagine that they will expect you to do so, and won't be offering any deal.

If you think you may return in a couple of years then it may be worth holding on to it.
Nobody can tell the future of property prices, nor are we allowed to speculate on AAM, but, as you say, properties are now selling well in that area for that type of house.

You'll lose about 20.000 - nett rent v mortgage repayments -in the next two years. Looks horrible when put like that but if there is only a 5% increase in property prices you'll have effectively got it back.

The best deal that you may manage with KBC is interest-only but I tend to agree with previous poster,Ferguson, re bank's attitude.

In your circumstances I'd use the leverage of emigrating to force the bank to let you sell and agree that you repay the shortfall at a competitive rate of interest and term. Not sure if they'll play ball though.

This is info that you probably know and you may have already made your decision...
... in the last week there have been several house sales in the Dundrum-Balinteer-Churchtown area that have exceeded advertised sales prices and represent at least 10% above last year's prices for similar houses in that area.

of course, nobody knows what will happen due to this Euro crisis but if you really must sell then aim for the highest figure you think possible and hopefully reduce your NE.
On present trends (which, i repeat, may change) you'll get it.

Many thanks for the replies.

Interesting chat with estate agent yesterday. He gave us a higher valuation than expected, and has sold 4-5 houses in the area in the last 6 weeks.

Decent houses at right price in south suburbs are moving ok.

We're going to have a look at putting it up, getting all our ducks in a row to see what offers come in - and then seeing if the bank will move if we've got a half-decent offer tabled.

Thanks,

DB

oldnick said:

in the last week there have been several house sales in the Dundrum-Balinteer-Churchtown area that have exceeded advertised sales prices and represent at least 10% above last year's prices for similar houses in the area...

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How do you know this?

If you can afford to make the agreed repayments on your mortgage when you emigrate, why do you want KBC to write off some of your debt? You borrowed a sum of money from them on agreed terms - why do you want to change these terms now?

Spear - re my price rise claim. Briefly as time against me..

- It would have been more accurate for me to have said that the recent house sales in that area are about 10% above last year's lowest prices.

That is, the low, or the "the bottom", was reached end of last year, and in the last six months there has been an increase in certain hotspots in the actual selling prices of houses which now represent an average increase of 10% above the lowest time.

However, this does not represent an annual increase June 2011-June 2012 because of the big drop during last year which is slowly being retrieved this year. This price increase, of course, could stop or go back into reverse.

But even with my clarification of what i meant - how do I make such a claim for this area ?
I live here and closely following asking prices and try to obtain agreed prices. Anecdotally -and it's hard to get published figures until the accurate forthcoming offical database system arrives - I gather that last year's asking prices meant, in reality, that agreed figures were anything from 10% to 15% lower.
This year asking prices -even if they are lower than this time last year - have been attained and exceeded with several bidders surpassing the asking price figures.

For example, if a house asking price was €450k last year and a similar house is asking €430k this year , last year's house may have only achieved €420k whereas now it may achieve € 450k or more.

I have seen this three times in my road in the last few months (and I don't want give my address) and , again anecdotally, am hearing it from friends and neighbours across the area. And that's without listening to auctioneers' hyperbolic claims. And,as I said, I'm a keen follower of property prices.

Incidentally, It's not just this area that is seeing price rises -it's happening in many parts of suburbia , not only SCD.

However, none of the above is "proof", until proper stats come out, though i do note that the last two months CSO did show small increases in Dublin prices.Their next figures are out in a week for May. If this shows another increase for Dublin then it would mean the trend is upward -so far.

It would be interesting if anyone else is selling in certain areas of Soouth and to get their comments...

Hi,

@ Dave - mainly becuase I made a bad investment and I'm looking for ways to mitigate it.

Cheers,

DB

DevilBoy said:

@ Dave - mainly becuase I made a bad investment and I'm looking for ways to mitigate it.

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Why do you think KBC Bank should help mitigate your bad investment?

ouch. Bit harsh Dave.


OP wasn't suggesting the bank should write-off part of the debt as you state.
Nor does OP suggest that KBC should help out of the goodness of their heart but perhaps KBC may help out of pure self-interest -and he was looking for suggestions/advice.

It does the bank no good if they pin borrower to the wall and the borrower just can't pay. End result is a broke borrower and the bank not getting its money. If bank allows interest only for two years, a longer loan period thus reducing payments, or Bronte's suggestion of using the emigration argument to allow sale and pay off balance. (not a bad idea with prices increasing in that area0

@ Dave - because they are a business that needs weigh up risk - and there is a reality that some return on investment - is better than none.

I wasn't really interested in buying a house as an investment - I wanted a home for me & my family that we could live in for a few years and then trade up.

I was banking on my hard work helping us to do this (not just the "the market has to keep going up..." head in the sand mentality - but the market has changed, we're stuck with a bad investment that is potentially impacting on our quality of life - so I'm doing the best for me and my family.