Ok by now I'm sure this is a common situation. Young family stuck in small apartment looking to trade up to a larger property and seeking advice on options.
Property 1 Summary:
Shoebox 2 bed apartment in SCD. Mortgage of 330k approx. outstanding.
Value approx. 200 - 220k. Fixed interest rate due to expire in 2016. Property purchased in 2006.
1 3 yr old. Another on the way. Space is very tight. Need a house.
Financial Summary:
Married couple - combined gross income approx. EUR120k gross.
1 in corporate employment. 1 self employed ltd. company the past 18 months.
Savings approx. 100k
Seeking to purchase a 3 bed semi-d in SCD for approx. 400k.
Our parents have very kindly offered us upwards of 250-300k to help us purchase a house. This won't be a gift. It will be a loan which we will repay which should mean we avoid having to go to the bank for a second mortgage or a neg. equity mortgage (and I'm pretty sure we wouldn't have much chance of obtaining a second mortgage given one of us is running their own company for just over a year - never mind the first neg. equity property).
Options:
A.) Sell the Apartment. Realise the loss on the apartment and pay the difference back to the bank in cash or carry the neg. equity to the new property. I don't think this is a good option but I'd like your opinion on it.
B.) Keep the apartment. Rent will not cover all of the monthly mortgage repayment. I imagine we'd have to subsidise this on a monthly basis to the tune of 300 p/m before we consider any landlord expenses costs. But I think we could manage this on a monthly basis by reducing our monthly repayments to our parents until such time that rents increase and mortgage repayments fall to a level where there is a monthly break even on the apartment. My guess would be this will happen in the next 10 years. At such time we've got a valuable asset which if we sell today we've lost.
I realise we're in a much better position than a lot of people who don't have the luxury of relying on parents to trade up. But I'd appreciate any insight from others on what our best options are. Are there any hidden pitfalls or anything blatant that I've missed which we need to consider?
Thanks,
Ed
Property 1 Summary:
Shoebox 2 bed apartment in SCD. Mortgage of 330k approx. outstanding.
Value approx. 200 - 220k. Fixed interest rate due to expire in 2016. Property purchased in 2006.
1 3 yr old. Another on the way. Space is very tight. Need a house.
Financial Summary:
Married couple - combined gross income approx. EUR120k gross.
1 in corporate employment. 1 self employed ltd. company the past 18 months.
Savings approx. 100k
Seeking to purchase a 3 bed semi-d in SCD for approx. 400k.
Our parents have very kindly offered us upwards of 250-300k to help us purchase a house. This won't be a gift. It will be a loan which we will repay which should mean we avoid having to go to the bank for a second mortgage or a neg. equity mortgage (and I'm pretty sure we wouldn't have much chance of obtaining a second mortgage given one of us is running their own company for just over a year - never mind the first neg. equity property).
Options:
A.) Sell the Apartment. Realise the loss on the apartment and pay the difference back to the bank in cash or carry the neg. equity to the new property. I don't think this is a good option but I'd like your opinion on it.
B.) Keep the apartment. Rent will not cover all of the monthly mortgage repayment. I imagine we'd have to subsidise this on a monthly basis to the tune of 300 p/m before we consider any landlord expenses costs. But I think we could manage this on a monthly basis by reducing our monthly repayments to our parents until such time that rents increase and mortgage repayments fall to a level where there is a monthly break even on the apartment. My guess would be this will happen in the next 10 years. At such time we've got a valuable asset which if we sell today we've lost.
I realise we're in a much better position than a lot of people who don't have the luxury of relying on parents to trade up. But I'd appreciate any insight from others on what our best options are. Are there any hidden pitfalls or anything blatant that I've missed which we need to consider?
Thanks,
Ed