Looking to trade up on a Negative Equity Mortgage? What are the options?

[DublinGuy2015]

• I own a house but I am not currently living there;
• I bought the house myself with a mortgage of €300k, its current market price if I was to sell it today would be €200k i.e. i am in €100k negative equity;
• I am currently renting the house out and I am living with my wife and child in rented accommodation closer to family;
• Have been renting for a few years now and really looking to buy our own place;
• We are hoping to buy the house we are currently renting, the cost of the house would be roughly €350k;
• Between myself and my wife we earn circa €120k gross per annum;
• We have savings of roughly €70k.

1) Are the banks offering negative equity mortgages, as in, could i buy the house we are renting and transfer over the €100k and have a mortgage of €450k? Is this even an option?
2) Would it be a better idea to keep hold of my original house and take out a second mortgage with my wife on the new house?
3) Is option 2 even feasible based on the ballpark figures I have outlined below?
4) Without knowing the intracicies of the new Central Bank requirements (20% deposit required), based on what I have outlined above, what would appear to be the best approach? How do the Central Bank requirements apply to negative equity mortgages?
5) Does anyone know what the banks are currently are offering for people looking to trade up but have a property in negative equity?

Basically, I am looking for any opinions or suggestions from people who are better educated than myself in this field on how best I should proceed? Or if maybe sitting tight and continuing with my current arrangement is the best option in the current climate?

 

[Brendan Burgess]

Hi Dublin Guy

Most banks do allow existing customers to trade up and bring their negative equity with them. Which bank are you with and what is the interest rate?

You will find the AIB/EBS terms here: http://www.askaboutmoney.com/threads/summary-of-aib-ebs-haven-tracker-mover-product.187831/ The other lenders have roughly similar terms (It says tracker mover product, but the same criteria apply to non-tracker mortgages.)

1) Are the banks offering negative equity mortgages, as in, could i buy the house we are renting and transfer over the €100k and have a mortgage of €450k? Is this even an option?

You would need to use the €70k as a deposit to bring down the overall LTV

2) Would it be a better idea to keep hold of my original house and take out a second mortgage with my wife on the new house?

No. If you sell your house, you will have a Loan to Income of 3.2 times, which is steep enough. If you keep your house, you will have a very dangerous LTI.
3) Is option 2 even feasible based on the ballpark figures I have outlined below?

Probably not. I doubt any bank would lend to you while you have €100k negative equity.
4) Without knowing the intracicies of the new Central Bank requirements (20% deposit required), based on what I have outlined above, what would appear to be the best approach? How do the Central Bank requirements apply to negative equity mortgages?

If you trade up, you are exempt, as you are in negative equity.

5) Does anyone know what the banks are currently are offering for people looking to trade up but have a property in negative equity?

AIB's is set out above. Other banks have them on their website.