Mortgage Application with wife who has a jointly owned property in negative equity

[pele10]

Hi there. Looking for some advice on a mortgage application

Myself and my wife got married last year. I don't own any properties or have any outstanding loans, credit card bills or anything. Salary of 66k a year.

My wife though has an apartment with a friend from back in the mid 2000s. The other owner of the apartment lives abroad. They rent it out to family members who cover the mortgage on the apartment but neither live in it at the moment. The trouble is that it's likely 180k in negative equity and they just plan to keep it going at the moment as it's in a good location and in another five years they will have a lot more paid off and hopefully the value has gone up. Relations between both parties are good and no rush to sell or anything. My wife earns around 60k.

We have just started looking around at daft etc and were thinking of applying for a mortgage for for between 300/350. Deposit of 30k available. Looking at various calculators we would have no problem getting amount without the other apartment issue.

What implication does the second property have on the application on our mortgage or their current mortgage for second mortgage?

 

[Brendan Burgess]

I suspect that it will be very difficult to get a loan.

It might not be advisable either to buy a "second" house for so much when you have such exposure to property, borrowing and negative equity already.

Is the jointly owned house on a tracker mortgage?

Is there any chance that the other owner would "buy" your wife out? You would need to pay a cash sum and I don't think that €30k would be enough if she has €90k of negative equity.

It looks as if you will have to continue renting until you can eliminate the negative equity on the apartment.

Alternatively, you should qualify for a mortgage on your own salary. It would be a smaller house, but you could trade up later when your wife sorts out the apartment.

Brendan

 

[pele10]

I suspect that it will be very difficult to get a loan.

It might not be advisable either to buy a "second" house for so much when you have such exposure to property, borrowing and negative equity already.

Is the jointly owned house on a tracker mortgage?

Is there any chance that the other owner would "buy" your wife out? You would need to pay a cash sum and I don't think that €30k would be enough if she has €90k of negative equity.

It looks as if you will have to continue renting until you can eliminate the negative equity on the apartment.

Alternatively, you should qualify for a mortgage on your own salary. It would be a smaller house, but you could trade up later when your wife sorts out the apartment.

Brendan

Thanks for the reply Brendan. I was under the impression that once we were married, it would be a joint mortgage and I could not go on my own? Would be willing to apply myself if that would make it easier.

I don't think they have spoke about it to be honest, no chance of anyone buying each other out at the moment as they are both happy enough for the rental income to pay the mortgage. I think they are on a tracker mortgage alright.

 

[Brendan Burgess]

. I was under the impression that once we were married, it would be a joint mortgage and I could not go on my own?

That would be the usual practice, but I don't see why it would have to be that way.

Had you applied for a mortgage before you got married, they would have assessed you as a single person. I haven't heard of anyone advising someone to buy a house on their own before marrying someone in negative equity. But maybe that advice should be given to people in your position?

 

[pele10]

That would be the usual practice, but I don't see why it would have to be that way.

Had you applied for a mortgage before you got married, they would have assessed you as a single person. I haven't heard of anyone advising someone to buy a house on their own before marrying someone in negative equity. But maybe that advice should be given to people in your position?

I applied for a mortgage a few years ago and was successful. The sale did not go through though as it was 2007 and signs were not good long term. Lucky escape as I would be in same situation now.

 

[wbbs]

While you might qualify on your own, most banks operate a policy where the family home has to be a joint mortgage especially when married, you might get away with it if not married but once married I doubt any of them will do a family home mortgage on a single name.

 

[nwarren]

hey pele10

my wife and i are in a similar position to you except i have a mortage NOT in negative equity and she has an apartment in negatiive equity of about 150k does . We got mortgage approval for the amount you want- problem is finding a house!! EBS and KBC are your best bet

 

[Brendan Burgess]

While you might qualify on your own, most banks operate a policy where the family home has to be a joint mortgage especially when married, you might get away with it if not married but once married I doubt any of them will do a family home mortgage on a single name.

That is very interesting wbbs. So if a person has negative equity, they should consider deferring marriage until after their intended has bought a house?

 

[wbbs]

It would certainly make it easier, co-habiting might be considered the same by the banks but whether or not to present themselves as a couple or as a single person is up to the customer, legally they will be able to tick the 'single' box.

Now if that is a good idea or not to accumulate further debt while in negative equity is another story!

 

[Dermot]

While you might qualify on your own, most banks operate a policy where the family home has to be a joint mortgage especially when married, you might get away with it if not married but once married I doubt any of them will do a family home mortgage on a single name.

I would agree with wbbs on this and as for Brendans conclusion " they should consider deferring marriage until after their intended has bought a house" this would probably be true but they might have to settle for a different type house as only one salary would be considered in that scenario.

 

[Brendan Burgess]

" they should consider deferring marriage until after their intended has bought a house" this would probably be true but they might have to settle for a different type house as only one salary would be considered in that scenario.

Can I clarify this, as it's an important point which I had not seen discussed before?

A single borrower on €60k can borrow, let's say €200k ( not sure what the figure is)

A couple earning €60 and €40k, can borrow, more , say €250k.

A married couple where he earns €60k and she earns €40k but is in €160k negative equity, can presumably borrow less than €200k if they can get a mortgage at all.

So to get the biggest mortgage, he should borrow on his own before getting married?

 

[wbbs]

The negative equity is not so much the issue, it's the repayments on that mortgage that will be factored in to the equation and they will be stress tested and probably any rental income will be severely discounted so the overall position will in most cases be worse.

Each bank will have it's own policy on how they look at rental income and stress testing of BTLs, a small outstanding mortgage on an easily rentable property will have little effect whereas a whopping great monthly repayment which has to be subsidised on top of the rental income will be a major disadvantage when looking for a new mortgage.