Negative Equity Mortgage

Can anybody give me some advice here as to wheter we would qualify for a negative equity mortgage or what other choices we have.

We have a house which we wish to sell. Mortgage with EBS €192000 remaining. If we are to sell this, i would imagine we will have negative equity of approx €90000.

The house i am looking to take a new mortgage out on is a house i was left a share in. I need to pay off the 2 other party's approx €40k - €50k each this is negiotable but roughly this figure.

New mortgage including negative equity €180k or €190k roughly.

Salary self - public sector €32800
spouse - €24000 ( not permanent work)
2 children - 3 year old & 1 year old
mortgage payment - €965 per month, no arrears
no other debts.

Thanks, Kellie

hi kellie,

i can't comment on payment capacity etc but just as a guide, here is Haven's negative equity mortgage brochure

[broken link removed]

part of AIB along with EBS so potentially similar policy

it seems you'd be classed as trading up - i'm assuming the house you're buying is worth about €150k if you're paying €50k to 2 others plus your existing share, so from the Haven brochure...

Trade up involves moving to a property of greater value than the value of the existing property. Typically you might want to trade up if your family is growing or you need to relocate. If you need to use the trade up option to move to a property of greater value, you
will increase your outstanding loan balance.

Up to 92% loan to value (LTV) finance is available to you towards the purchase price of your new property:
> Max LTV 85% for mortgages over €400,000;
> Max 75% LTV for one-bedroom apartments;

The combined balance of the residual debt and the new mortgage must be of a lower LTV than the LTV of the existing property.
The maximum loan to value of the new property including the residual debt cannot be more than 175%, subject to a maximum loan balance of €700,000.

Click to expand...

you need 66% LTV on the new purchase price (€100k of €150k) so you are ok.

total LTV will be 126% (€90k neg eq + €100k price = €190k mortgage, €150k val of €190k loan is 126% LTV)

your existing LTV is 192% (€192 loan / €100 val)

you'd be in a better position here and your repayments should be the same / similar as your debt is roughly same but your new house is worth more.

so i think technically you tick the (Haven) boxes in principle but presumably they will need to assess your repayment capacity for the new mortgage, uness i'm missing something obvious

it's worth asking the question i think

It helps to put the figures in a table



So, EBS should be agreeable to do this.

What interest rate are you on at present? If you are on a cheap tracker, the rate will be increased by 1%, so you will pay an extra €1,900 a year or €160 a month in interest.

Other options
You could consider selling the inherited house and paying down your mortgage to a more comfortable level. If you have a cheap tracker, you probably should not pay down the mortgage. This option needs careful analysis if you do go down this avenue.

Do the other two need the money immediately? If not, you could move into the jointly owned house and pay rent, while renting out your existing home. You should only do this if EBS refuses to allow you to transfer.

much more eloquent than my waffling answer!

Hi Macken



I find that by putting the numbers in tables, they are much easier to understand.

Brendan

Thank you Mackemdub and Brendan. We are on a variable rate with EBS 4.3??? The other 2 are not looking for the money but they need it and this is going on a while. I am just worried about this because my other half is only temporary in his job. So he could work for 4 months and if they are quiet they could let him go for a couple of wks and so on. I will arrange a meeting with the EBS and see what they have to say.