Mortgage in my name only €195k worth ~€135k. Partner and I wish to purchase for €230k

B

balsam

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HI, looking for some advice/informed opinions??

I have a mortgage of 195,000 on my home, it would realistically only achieve 130,000-140,000 now. The house is in my name only.

My partner and I would like to buy a new house for 230,000. We have money for the deposit, fees etc. so need mortgage of 210,000 from the bank, plus any shortfall from the sale of current home. Would the bank likely agree to this or would they tell us we cant move??

When I use mortgage approval calculators they say our combined borrowing limit is 299,000, we would probably need to borrow in total about 270,000, but some of this would be covering the loss on my property. Has anyone approached a bank in similar circumstances??

I know that people say to sit tight and save money but when prices start to rise again we will be priced out of the area we want to move to . . .

Is there any hope . . .will be arranging to talk to bank next week . . .
 
Re: Negative equity . . . .Help . . .

If you have the money for a deposit on a new home, why do you feel you need to sell your first home? If you sell your first home, you will first of all have to clear your mortgage before you can apply for a new mortgage. Presumably, the shortfall will wipe out your cash reserves, so you then probably wouldn't qualify for the new mortage.

If you really do qualify for 299k, why not keep your existing home and rent it out? Would the rental income cover the mortgage commitments?
 
Re: Negative equity . . . .Help . . .

If your proosal is to borrow E270k on a property you are buying for E230k - (i.e. 117% ltv) - then I'm afraid no bank will entertain same.. sorry to be the bearer of bad tidings...
 
Re: Negative equity . . . .Help . . .

You are confusing capacity to borrow with what the bank will lend you. Their calculator may say that you can borrow up to €299k but the amount agreed would depend on the value of the property you are buying. They won't lend you 200 to buy a house worth 100. You'd have to be buying a house worth 220/230ish to get a mortgage of 200. Your options are as Bob has suggested to rent out your current PPR and buy the new property. Or else to clear the difference on your current mortgage over the house valuation and sell the place.
 
Re: Negative equity . . . .Help . . .

I felt there was no chance of getting the bank to agree to something like this but we're getting a lot of pressure from usual suspects (family/friends) to approach them . . . they all seem to think it would be no problem, as current house in negative equity anyway, so just swapping one debt for similar debt. . . I never really had much hope, but will ask just to get peace! I would have assumed you would have to pay back the shortfall then start again . . . .Oh well . . . .

I dont think renting will work for us, current mortgage is ~700, rent in area 450-550, and I know rental market is down too, so would be risking place being empty and having to service 2 mortgages? Maybe I'll ask the bank what they think of that idea though, cant hurt to ask . .

Thanks for your replies, you've confirmed my own instincts . . . now to go cry into my dinner . . .
 
Re: Mortgage in my name only €195k worth ~€135k. Partner and I wish to purchase for €

Your current negative equity is 65K (195 - 130).

You wish to borrow 92% of the new house price 210 on purchase price of 230. To this 210 you wish to add 65K of debt which brings you to a mortgage of 275 or a mortgage of 120%. Why would a bank want to do that? You will also have the costs of selling and buying.

In relation to pressure from family and friends, why on earth would they be putting you under pressure to do this?

How about putting your savings against your negative equity, overpaying the mortgage and then selling when you can cover the mortgage.

Over what term of mortgage were you going to apply for and what repayments?
 
Re: Negative equity . . . .Help . . .

Bob_tg said:
If you really do qualify for 299k, why not keep your existing home and rent it out? Would the rental income cover the mortgage commitments?
Click to expand...

Is this not bad advice at the moment? People with second houses who lose their jobs are considered asset rich when it come to welfare assessment so is it not a bit risky to have two properties on the go these days - particularly one in negative equity.

I'm open to correction, but my understanding is that it could be a bit risky.
 
Re: Negative equity . . . .Help . . .

pebbledash said:
Is this not bad advice at the moment? People with second houses who lose their jobs are considered asset rich when it come to welfare assessment so is it not a bit risky to have two properties on the go these days - particularly one in negative equity.

I'm open to correction, but my understanding is that it could be a bit risky.
Click to expand...

I agree (now).

It was more of a proposal than advice. It now looks like a bad idea given that the rental income is 450-550 and the mortgage is 700. The idea would have had merit if the rental income was well in excess of mortgage commitments. That now looks not to be the case.

Given it doesn't seem to make financial sense to rent out the first house given the deficit, I would concur with Bronte: "putting savings against your negative equity, overpaying the mortgage and then selling when you can cover the mortgage."

Just one other note to the OP...in relation to "we will be priced out of the area", I think that this is extremely unlikely to happen in the foreseeable future (unless they take bulldozers to the thousands of excess inventory lying around the country!!!).

So, no need to panic, and ignore the unhelpful pressure/advice from family and friends.
 
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