Negative equity and wanting to build

B

Bec

Guest
Hi all
Myself and husband bought a house that is now in approx €90k negative equity.

We have no savings and are also paying back debt from a failed business.

We are very unhappy in our house (noisy neighbours etc) and have the option of applying for planning on family land that is worth 2 times more than our house.

I suppose my question is will the banks take the site as collateral and transfer our mortgage if we got a buyer for our house?

My husband works full time and I part time and we have 2 small preschoolers.

We are in arrears as it took my husband a while to get work after his business closed but have a repayment plan in place with the bank and are currently on schedule with that.

We are on a tracker mortgage with BoI currently.

Would be grateful if anyone had advice.

Thanks
 
I think it's unlikely

The site might be valuable, but where are you going to live if you sell your current home?

How can you build if you have no money?

Let's say your house is worth €200k and your mortgage is €290k.

Are you asking the bank to allow you to sell the house so that you will owe them €90k. And then they will lend you a futher €200k to build the new house?

It's very unlikely, but if you have a cheap tracker, you could ask them for a deal. In my view, they would be better off having a loan of €290k at Standard Variable Rate secured on a property worth more than €290k than having a loan with a cheap tracker on a property worth only €200k. But the banks don't tend to be able to do these calculations.
 
Thanks for ur reply.
Yes that's more or less what we're asking... Our house is worth approx 120,000 but we think we'll have to drop to 100,000 to get a sale. Our mortgage is 190,000.
Our plan was always to build but children came along in quick succession so we delayed it. Then the recession took hold and now are in a house we are beginning to hate... We would either live in a caravan onsite or live with family while building. I know it would make sense for the banks to take the option of having a variable rate instead of tracker and to have land as security... But was wondering if anyone has any experience of the banks even entertaining negative equity mortgages either for my situation or for others who are maybe downsizing and carrying over negative equity
 
I'm afraid I think it is highly unlikely. Apart from the other debt and the negative equity are you sure the land is worth what you think? Also by land do you mean the site or is there more land, the site is only of value while it has planning permission, if that expires its a field. Also you say family land, is the new house to be build in close proximity to existing family building as this is often seen by banks as a disadvantage because if they had to repossess it can be more difficult to sell. In fact there was a time when one of the major lenders would only lend 50% for houses built on family land because of the perceived potential difficulties.

What is the salary position, the repayments on a standard rate mortgage would be far more than the tracker you are on, are you likely to qualify for the loan at the higher rate.
 
My wife and i have an excellent credit rating, Have great savings. We tried to get a 50k mortgage for a house worth 100k and we were turned down. it was a buy-to-let property.
The moral of the story is i pewrsonally dont think you have a hope with the banks.
 
The site is 3 and half acres...we have not applied for planning yet but have plans ready to submit. Prime land in Kildare, not near family house.
Our combined income is approx 48,000 per annum.
 
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