Negative Equity Mortgage or 2nd Mortgage

K

Kai74

Guest
My wife and I are very keen to move from rural Wicklow to Dublin for work and various family reasons.

We currently have 250K left to pay on our tracker mortgage. Repayments clock in around the 1K mark per month with ICS which is manageable. Bought for 340K in 2007.

We've seen a property in a part of Dublin we both really like and even though it's a small 1 bed apartment, we'd be jump at the chance to live there having rented in area about 10 years ago.

Small apartment is approx 150K.

I'm just wondering what more of the wiser folks here would advice as the best approach. We could approach our bank and explain the situation and see if some kind of negative equity can be brought with us (assuming we can sell this place).

Or we can investigate a second Mortgage and look at how viable having 2 mortgages are until we can see second Wicklow property.

I've no interest in renting the Wicklow property out but any other advice would be gratefully accepted.
 
You have proposed 2 options:
Option 1:- Sell your current property and apply to the Bank for retention of current balance of tracker mortgage over new property. (A number of banks have discussed the option of introducing such an option. However, as far as I am aware this is still at the proposal stage with full details yet to emerge). Be aware that the bank will insist on any net sale proceeds from your existing property being used to reduce the mortgage. Assuming a net price of circ 180K (45% discount on original cost plus sale costs) you will carry forward a mortgage of circ 230K on the new property. Best to discuss the possibility of such a product being introduced with your existing mortgagor to assess whether this proposal will be feasible.
Option 2:- Retain existing mortgage and apply for new nortgage on proposed purchase. Viability of this option depends on your financial circumstances. You will need at least 40K in cash resources for a loan to be considered. Rate is likely to be minimum 4/4.5%. You will also need to have a comfortable repayment capacity from income to meet both mortgages plus allow you a reasonable excess to cover living expenses. If you do the sums, you will note that salary levels required to meet this criteria would be extremely high.
 
Like you, have similar negative equity on current ICS mortage, however have no immediate plans to move currently (would like to but stuck for the moment). If at all possible I'd be very interested in hearing how you get on if you talk with ICS.

I see news about all other mortage lenders including Bank of Ireland, everyone except ICS providing new mortgage types, so am waiting and hoping for some news on what ICS may offer to its customers.
 
Kai74 said:
We've seen a property in a part of Dublin we both really like and even though it's a small 1 bed apartment, we'd be jump at the chance to live there having rented in area about 10 years ago.

Small apartment is approx 150K.

.
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Why would you want to buy a one bed?

Would you not be better off renting a nice 2 bed in Dublin and paying back the negative equity after you sell the Wicklow property, then saving and starting again?

You currently pay 1K a month, which you mention is manageable.

What is the value of the Wicklow property. How much is it to rent in Dublin. Do you have any savings? And if now why now. Do you both work in Dublin and would the commuting costs reduction be a significant saving?

All these questions need to be answered before you could have meaningful answers.

Also don't trust the new negative equity mortgage until there is more analysis on them. Never trust the banks !
 
pjuegos said:
q

"The bank, and its subsidiary ICS, has got the approval of regulators for the new 175pc ceiling."

So, this might indicate ICS also got the go ahead.

It will be good to get confirmation of this
Click to expand...

I can confirm, as rang ICS on Friday and they said that now, unlike last month, ICS can offer same negative equity mortgages as Bank If Ireland
 
Be very careful that these negative equity mortgages are not worse than one's current situation.
 
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