Help need re negative equity

[Bobbyg]

My girlfriend and I bought an apartment a year an a half ago and it is now in negative equity. We were really hoping to buy a house in the next 2-3 years but I think the negative equity on the apartment may now affect our plans. Is it possible to buy a house and keep the apartment we have and rent it out?

Also is there any way of us increasing the amount we are saving each month for our deposit? We were thinking of going interest only on the apartment for 2 years and putting the money we would normally be paying on the capital towards our savings but the bank has told us they will only give 3 months interest only. Do we have any other options?

Would renting out the apartment and moving back home with our parents make sense to help us save more money quicker? Thanks in advance for the advice.

 

[Guest116]

How much you can borrow depends on how much you earn and how much you already have borrowed.

Renting out your appartment is a big issue, but plenty of previous threads about it if you search.

 

[NorfBank]

Is it possible to buy a house and keep the apartment we have and rent it out?

Also is there any way of us increasing the amount we are saving each month for our deposit?

Would renting out the apartment and moving back home with our parents make sense to help us save more money quicker? Thanks in advance for the advice.

You will need to speak to your lender on this, it would depend on your income, outgoings,job security etc. It is very unlikely the bank will allow you to turn a residential property that is in negative equity into an investment property where you may be paying interest only instead of capital and interest thus further exacerbating the negative equity on the apartment.

Not being smart but spending less and saving more is the only way to increase savings. Artificially saving by putting the apartment on interest only and saving the difference does not really equate to saving more. The bank may stress test the repayments on the apartment over capital and interest payments in any case.

If there is not a pressing reason for buying the new property, then my advice would be to stay where you are and try to bring your apartment out of negative equity over the next 2 to 3 years by overpaying the mortgage.


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[Bronte]

I think this is a mad suggestion unless the rental on the apartment will cover all the mortgage and costs and this should include an extra amount to get down the negative equity. Do you have those figures so that we can make a more informed judgement.

Personally I think you would be better off paying everything you can to reduce the negative equity and if moving in with your parents helps to do this than do it now before you have children. Getting into more debt is not a good idea.

You and your girlfriend should have a legal agreement as to what happens in the event you split up.