Neg Eq. and New Mortgage Options

[Old Jim]

Bought house in 2006 at the height of the boom. Had to move house to get a job. Currently have signed contracts for sale. Negative equity of around €90K.
Current location is good, near family and reasonably good and secure job. Have wife and two young kids and renting home in this area.
Want to build a house on site gifted by family but am afraid won’t get mortgage with the negative equity.
Proposal at the moment is to pay off neg. eq. amount over 7 or 10 years to allow us sell the current house. Just wondering what I should do. As far as I can see, my options are:
1 – Suck it up. I can’t afford to build and should accept it until the neg. eq. is paid off
2 – Use savings to pay off neg. equity. Will then have nothing to put towards house build.
3 - Would need about €120K plus savings or €200K without savings to build house
4 – Bank of Ireland negative equity mortgage. Would they take neg. eq. from another bank?
5 – Try and get bank to accept some of the losses for the neg. eq. They gave 100% mortgage and included salary of my wife who was on a one year employment contract. Anyone have any luck with this approach and suggest how best to go about it? Not hopeful on this one.
6 - Any other options to put to the bank?

Thanks for any advice.

 

[Richardwell2]

First of all I don't have any financial training of any kind, but do you definitely have to build this house, is it a life long dream !

My simple advice would be don't use savings to pay off the negative equity, and don't build the house ! If you need the space perhaps extend the house your currently in.

Ps was your house just massively over valued when you bought it ?

 

[44brendan]

You currently have signed conttracts for sale! these funds will be used to pay off the bulk of the mortgage (i.e. you have np option here). You then need to negotiate with the Bank to clear off the balance of the negative equity. To a large extent you have negotiating power here at this time. You may be in a pposition to get the Bank to do a deal on this. However, chances of getting a new mortgages will be slim at best. Forget any concept of transfer of negative equity to another Bank. This won't happen.
Your best bet would be to sit back for at least a year or 2 and take stock before attempting to borrow to build new property.

 

[Old Jim]

Thanks for the replies and the advice.
The price of the house dropped ~40% from when I bought it to when I sold it which is probably the average drop but in hindsight, yes it was massively overvalued.

I won't rush into building although I hope to settle where I am now, hence the reason for building on the gifted site.
All I have been able to negotiate from the bank is an unsecured load at current mortgage rates for the balance on the mortgage. I'll never get a job sorting out the middle east conflict!

 

[darkbeatz]

Hi Old Jim - I am in a similar situation to you. was there any issues with you selling your house and still oweing money on the mortgage? Did you continue to pay the same amount each month on the mortgage? Please share your experience!

Thanks

 

[Bronte]

All I have been able to negotiate from the bank is an unsecured load at current mortgage rates for the balance on the mortgage.

Welll that's excellent news? How easy was it for you to negotiate that with them? Also good news for others with the Bank of Ireland in the same situation.

You need to give a lot more detail before you get proper advice.

How much will the repayments be on the 90K loan and over what term.

How much rent are you paying, what is your income, how secure are your jobs?

How much will a loan of 200K cost you and over what term.

200K sounds like a lot, but then again nobody ever seems to keep to budget. How sure are you that you won't overrun. Please tell me you're not building an Irish McMansion with too many bedrooms and impossible to heat in the middle of nowhere. You know similar to the ones dotted all over the Irish landscape.

How much will it be worth when completed.