Negative equity...should we stay or should we go?

First time poster - long time lurker here. I have used these forums religiously for info since 2006 when my fiance and I bought our first property so I hope this is the correct forum. We are unhappy with our current home due to its' location. It is a lovely 4 bed detached with large garden in Mallow Cork, however we really want to move closer to home (Cork city suburbs) and work, friends and family.

I could use some help on what our options are, my brain is boggled by what we should do and we have been discussing this for the last year or so and I finally want to take the plunge.

I earn 40k p.a. - public sector permanent
Fiance earns 45k p.a.- temporary
Current Mortgage=270k outstanding (Bought house for 340k, took a mortgage of 300k, it will currently sell in this market for approx. 230k)
Monthly repayments = €1300 pm
Current commuting costs to work etc.=€400pm combined / new house would reduce this to €150pm combined
TRS=€216 pm
Real Negative equity on mortgage = 50k
Losses of a further 90k if you include our own funds that we used to partially purchase and decorate house.
Combined Savings=100k
Wedding in 2013 approx. will cost =20k
No other loans

(1.)My question is should we stay or should we go? Or only reason to go is to be closer to work, family, other commitments, otherwise it is an ideal house and place to raise a family. But sometimes we just think what were we thinking why did we buy this house that is not near anything?

(2.) If we opt to sell what is the maximum we can afford to spend on a house(bear in mind a 4bed detatched near to Cork will be around 350k).

(3.)Should we rule out retaining and renting our current property and selling it in 10yrs time? I know this would not be ideal but does it make financial sense or would we be overeposed to the property mmarket?

I am finding it so hard to decide as we have been stung so badly by the property market and CANNOT afford to make any more mistakes.

Thanks in advance,
Celticcub

Addressing the lifestyle issue first. You have a "nice home" in Mallow. Easy access by train to the City. Road commute/parking would probably be up to an hour each way. I have a number of colleagues who do the same commute each day. But if you are both unhappy to settle down in Mallow, the decision to mave can be either done immediatly or postponed.
Great savings record, but negative equity will crystalise if you decide to sell. I.e. 50K of your savings will be used to discharge this.
Rents in Mallow are likely to be low (large surplus of property) and for similar reasons a sale is likely to take time. I haven't done the sums, but given the salaries as indicated above you will not qualify for a 2nd mortgage sufficient to purchase a decent new property.
If it was me I would consider taking a 5 year view on this. I.e. stay in Mallow for 5 years and continue saving. You can also consider the option of renting out your current property and renting yourselves closer to the City for a time. Alternatively you could put the property on the market and test the response. If you sell you could then rent for a while. Although if the property market moves against you, this could be a risk strategy. The bottom line is that any decision is ultimately down to a lifestyle choice.

Hi Brendan, really appreciate your reply, what you said makes a lot of sense and definetely gives me some food for thought, think Im going to go down the route of putting my house on the market first as don't think it makes sense to stay here any longer if we are not happy and ultimately going to move anyway, nothing to lose I suppose I can hopefully make a decision from there if we get any offers,
Regards
Celticcub

http://www.rte.ie/news/2012/0215/presswatch-business.html

This may be of interest to you Celticcub.

If that goes through then it may be possible for you to get a mortgage from BOI or PTSB which would include your negative-equity debt as part of the mortgage for your new property.

However, this may not be ideal if you were going from a tracker on your existing mortgage to current rates on the new mortgage + you negativity equity debt, could be a huge amount extra you would end up paying on the negative equity debt.

Also, you may not qualify for the type of mortgage you want due to your fiance's job not being permanent. Most, if not all, banks seem to only be considering applications from permanent employees so they may only consider your salary as part of the mortgage application and I don't think that would be enough to purchase a similar property nearer Cork City.

Op actually has no problems at all. She can sell and pay off negative equity of 50K. Then she has 50K. She goes and rents in Cork, for 2 people something really nice will cost a lot lot less than 1300 per month. They continue to save like mad, get a large large deposit and buy in a few years time. Their savings will be hughly boosted by the difference in current mortgage versus rent, plus commuting costs saving. But far away hills are not always greener, Mallow in a 4 bed detached is a very nice large town to raise a family. OP may be mistaken on the negative equity. But unlike most people, if she is unhappy she has a choice, right now. What is important is the make the decision and to be happy with it.

Isn't the fact that couples were buying detached 4 bedroom houses as their first homes a sure sign of what went wrong with the Irish property market??

Either way, I agree that downgrading to a smaller property in a more suitable location is the most logical choice.

Thanks all for the help, will be putting my house on the market next week to test the response.

Given your situation should you have another look at the cost of your Wedding?