Money Makeover - Looking to move out of apartment

Age:32
Spouse’s/Partner's age:30

Annual gross income from employment or profession: €85K
Annual gross income of spouse:€30K

Type of employment: e.g. Civil Servant, self-employed: Both PAYE workers

In general are you: saving
(a) spending more than you earn, or
(b) saving?

We save between 500 & 700 a month.

Rough estimate of value of home: €110K-€130K
Amount outstanding on your mortgage: €274,000
What interest rate are you paying? EBS 4.58 Variable (€1500 per month)

Other borrowings – car loans/personal loans etc: No

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: €65K

Do you have a pension scheme? Yes

Do you own any investment or other property? No

Ages of children: 1 Child - 13 months Creche 895 per month

Life insurance: Yes


What specific question do you have or what issues are of concern to you?

Like a lot of people we would like to move out of the apartment and into a house. Should we:

1. Stay in the apartment and continue to save or put that money towards the mortgage?
2. Rent out the apartment and rent a house?
3. Speak to the bank about selling the apartment and moving the neg equity to a new mortgage?

We would very much appreciate some advice. Apologies if there is not enough information above.

Thank you

Very high negative equity (NE) of 144K, but you do have savings of 65K.

Very much doubt a bank will give you another mortgage and let you keep the apartment.

How long is the term? How much would the apartment rent for? Would moving out, renting it and you renting make more sense?

Your most likely getting diddly squat on your savings while paying a very large interest rate on your mortgage.

If you threw say 50K off the mortgage and over paid by 500 a month, how long before you'd be out of NE?

Is there a pressing requirement to move out of the apartment? Preferring a house and a garden is not really a pressing requirement. Being stuck in a 1-bed box apartment of miniscule dimensions, with no lift and a poor public environment could be considered a pressing requirement.
If it isn't a pressing requirement, I think it would not be wise to put further financial strain on you by attempting to move and deal with the sizeable negative equity. If it was me, I would stay in the apartment, pay down your mortgage as much as possible and plan for a longer term.

Speak to the Bank! This will at least give you an understanding of your options. You are carrying a high mortgage and you need to assess wjhether the Bank will allow yu to carry the negative equity on to another property and also whether you have the capacity to carry an increased mortgage. Until you know whether this option is open to you, it is not possible to make an informed decision!

Agree with Brendan, also what Value are you looking at for your next property?

€300k - €60k deposit = €240k + €144k (neg equity) = €388 over 30 years is €1,600 per month.

Thank you all for your comments, their greatly appreciated.

The remaining term on the mortgage is 23 years. The apartment would rent for around 1100 per month. We would certainly rent it out and rent a house if that was our best/only option.

We would like to move out of the apartment because we are hoping to have a second child and move into a more family orientated area.

In terms of value of the next property we would be looking at between 200-300K depending on what we would be able to obtain/afford.

As suggested, we will speak to the bank and get a better understanding of our options.

Thanks again for the comments.