Brendan,
Yes I managed to get it done just a few weeks ago - but it wasn't easy and throughout the process it was obvious the bank hadn't done many of them and the bank hadn't thought out and put a clear policy in place to follow.
My case was probably a little easier for the bank to accept.
1. I was on a tracker – (so I keep that for 5 years)
2. While there was negative equity the mortgage payments where easily serviceable
3. I had more than the value of the negative equity in cash but why would I pay it off?
4. After the trade up they now have a loan to value of just less than 100% - previously it was 125% albeit the numbers are now bigger
So as I said to them they had the option of not making any money from me or actually making money and having more security for their risk.
Some issues I ran into where
1. The original numbers agreed and advised by the advisor as meeting all the lending criteria was rejected by the underwriters and they only ended up offering 85% of that number.
2. I had to prove where I had acquired all the deposit/funds I had.
3. Relative to the repayments and about outstanding I had a very small car loan with a year remaining. The repayments were about 10% of the mortgage repayments with only approx. 3k outstanding. They made me clear this loan. There was no other debt outstanding.
4. We put an offer on a house with the high number that we were originally advised but underwriters rejected this – after this we had to make sure all offers would be acceptable to them. So before we made an offer we had to ensure they would give us the funds and had to run each house by them. They would not just give a number they wanted an address – and then at the same time after losing out on some houses they were getting angry that we came back with another house – it was as if we were an inconvenience looking for another approval when it could have been stopped if they just said yes you can borrow this amount.
5. In terms of the actual sale of my house – they could not fathom how they had to release their claim on the property in order for me to sell the house. Only after numerous calls from myself and my solitior did they agree that they had to do this for the sale to go through.
6. The offer letter and other correspondence said the sale and purchase had to take place simultaneously or the purchase had to happen immediately after the sale. However they would not release the new mortgage funds until the old mortgage was repaid. This made the simultaneous sale/purchase impossible. So we had to sell – get our sale funds and then forward to the bank – this took best part of a week for them to receive and process them correctly. It was an EFT so why it didn’t happen over night is a mystery. They then finally made the payment to my solicitors account for us to complete the sale. So all in there was a contradiction in their policies and their actual practices. While they wanted the sale and purchase to happen together the actual process made this impossible – if our purchased had of collapsed in the meantime the bank would have had no security against the negative equity. I’m lead to believe that in normal circumstances the funds are given to the solicitor from him to carry out the sale /purchase together.
