Financial advice re rent or buy

Hi there,
Firstly,apologies if I'm in the wrong forum.
My husband and I are in a dilemma at the moment which is causing us huge stress. To cut a long story short, we are in negative equity on a house we bought 5 years ago (of about 40k+) but need to move to a different area to be nearer my family (quite urgently). We have a one year old son and are paying €800 monthly for childcare, have 2 cars (both definitely needed), one loan of €10,000 over 5 yrs and have all the usual bills. we earn about 120k between us but have no savings to speak of. (Maybe around 2k). We are not struggling financially and are paying off substantial sums off our mortgage having reduced the term 2 years ago. I'm a public servant so have a guaranteed job.
The thing is, we thought the bank wont even look at us to give us a mortgage and anyway how would we pay off the bit we owed if we sold the house atll, not to mind the deposit on the next house, so we figured we would rent our house out and rent ourselves in the area near my family. Now however I've been advised by various people that our idea makes no financial sense and that we should talk to a professional about our situation and see what they say. There are Luas tracks being laid down beside our present house so people are tellling me that maybe our house price would not be as low as we think if we hung on and waited til that was finished?
I just dont know what to do. Who do we talk to? Estate agents? the bank? Could we pay someone to give us financial advice?
Thanks in advance

It doesn't sound like you're struggling anyway. So renting is a good short-term solution if you're reluctant to sell. Simply rent out your house to pay the mortgage and if there's a shortfall, well, your salary will go a long way.

You might consider going to an accountant.

Mabs might be a good start but you might feel a bit daft going to a debt counselling service when you earn approximately 5 times more than their usual clients.

The bank won't be able to advise you. A broker probably won't, seeing as they're more interested in selling.

I'd also advise renting - if your current house is so near the Luas, then tenants are guaranteed transport into the city centre and all the areas in between to allow access to shopping, schools etc. Don't sell yet - no need to take the hit on the house until you really need to. Why don't you rent near your parents - why buy in the short term? If you can rent longterm, for at least 12 months, maybe even 24, then you might be able to negotiate a reasonable rent - on your joint income, it should be feasible. Good Luck.

would agree. you seem to be in a pretty good situation given your incomes. rent your house and rent a decent place close to your mother.

Your idea makes plenty of sense, so I would be wary of those saying that you need to sell and buy to have a move. As mentioned if you can rent the existing house at a similar price to what you will be renting in the area you are moving to, then it makes absolute sense to do it and remove a major stressor in your lives (which presumably if the move is urgent, then location is a serious issue). While there might be some hassle with tenants, the fact that the property is your existing home will probably mean that it is very well maintained and thus unlikely to result in an ongoing maintenance requirement for you, so in my view the downside is very limited.

It appears that you can service your mortgage very well at present, and thus you are not in an urgent need to sell the property. The only way to know whether selling now is right or wrong is to know the future of the property market, which none of us can judge.

The key thing for you appears to be that you need to move. Now in my book, if you need to move and you are not increasing your risk in relation to possible changes in the property market, then that is a result all round....Often what seems to be the simplest solution generally is...

OP you don't say how much the mortgage is for so it is hard to know what your repayments are.
Are you overpaying on the mortgage to try to reduce the negative equity on it?
You have a very good salary coming into the house so I would suggest renting out your home, renting near your family and save like hell to get a good deposit under your belts.

It's fairly clear that you should rent near your parents and not attempt to buy.


Is the move towards your family a long-term one? In ten years time, might you be moving back to your old home? If your parents did not need you, would you be happy to stay where you are?

If you are planning to move back to your current house eventually, then rent it out in the meantime.

If you are not planning to move back to your current house, then you should give serious consideration to selling it. The bank will probably give you a long-term loan to cover the €40,000 and you will have one less hassle to worry about.

If you are moving to care for your family is there any possibility that they might help out with paying the shortfall or lending you money towards the shortfall? For example, if you are moving to mind your widowed mother, and she has money, she might advance you some of your inheritance now.

Brendan

Brendan Burgess said:

It's fairly clear that you should rent near your parents and not attempt to buy.


Is the move towards your family a long-term one? In ten years time, might you be moving back to your old home? If your parents did not need you, would you be happy to stay where you are?

If you are planning to move back to your current house eventually, then rent it out in the meantime.

If you are not planning to move back to your current house, then you should give serious consideration to selling it. The bank will probably give you a long-term loan to cover the €40,000 and you will have one less hassle to worry about.

If you are moving to care for your family is there any possibility that they might help out with paying the shortfall or lending you money towards the shortfall? For example, if you are moving to mind your widowed mother, and she has money, she might advance you some of your inheritance now.

Brendan

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Thank you so much everybody for your replies. Just to answer some questions here:
Yes, the move is long term. We have no intention of living in our original house again.

No, we want to move to a better area to bring up our son in.

No, unfortunately, nobody is in a position to help us.

OP you don't say how much the mortgage is for so it is hard to know what your repayments are.
Are you overpaying on the mortgage to try to reduce the negative equity on it?

The morgtage is for €310k and we're paying about €1700 a month with just 18 yrs left on it. We reduced the term basically to save on the interest.We weren't in neg equity when we reduced the term.

If you are not planning to move back to your current house, then you should give serious consideration to selling it.

I discussed all your replies with hubby. He still wants to rent but I want to sell! If we sold though, we would still owe the bank around 40-50k and the houses we would be looking at would be around 400k 450k.That would mean a 40k deposit at least!... I imagine banks dont give 92% mortgages any more do they? We're looking at needing 100k to sell and buy!! I dont think its possible.

Thanks again for all the great advice