Overpay mortgage or save lump sum?

[CreNaCille]

I am currently in a position where I can overpay my mortgage I'm on a fairly cheap tracker.

I am also deep in negative equity

I also will need to move home in 3/4 years :/

Should I overpay my mortgage for 3/4 years thereby reducing my negative equity?

Or should I save for 3/4 years to build up a lump sum which could be used to fund buying a new home (while renting my current home)?

 

[Bronte]

How do you plan to move if you are in negative equity, banks are not allowing this?

You have a tracker, you can overpay, figure out if overpaying versus putting the money in a high paying savings account is better.

 

[mcloving]

How do you plan to move if you are in negative equity, banks are not allowing this?

You have a tracker, you can overpay, figure out if overpaying versus putting the money in a high paying savings account is better.

I thought they were allowing a move if in neg equity, on a case to case basis?

If not then what else are people to do, they can't be expected to stay in a property that does not suit anymore.

Ireland is a republic society and not a dictatorship, so lets act that way.

 

[CreNaCille]

How do you plan to move if you are in negative equity, banks are not allowing this?

I haven't asked the bank but if prevented from selling, the other option is to rent my PPR and then either rent somewhere myself or buy a second home.

You have a tracker, you can overpay, figure out if overpaying versus putting the money in a high paying savings account is better.

I'm trying to establish what puts me in a better position to buy in future. Reducing my negative equity through overpaying OR building up a lump sum which could be used as a deposit.

 

[Bronte]

I thought they were allowing a move if in neg equity, on a case to case basis?

More like on an extremely rare case where you have people in solid state jobs I'd imagine. As for your emotional argument, we are talking about banks and cold hard finances come into it.

 

[Bronte]

I haven't asked the bank but if prevented from selling, the other option is to rent my PPR and then either rent somewhere myself or buy a second home.



I'm trying to establish what puts me in a better position to buy in future. Reducing my negative equity through overpaying OR building up a lump sum which could be used as a deposit.

Have you done the figures on renting, being a landlord is no easy task, but the figures might show that this is a good idea particularly as you say you need to move.

It is unlikely your current bank will let you sell in negative equity, but another bank might allow you a mortgage if the first property is rented and the figures stack up. Particularly if you have a large deposit.

 

[Brendan Burgess]

I have a Key Post on the general topic Should I use a lump sum to reduce my mortgage?

Adapting this to your particular circumstances...

The fact that you want to move in 3 or 4 years argues strongly that you should retain your cash as it gives you flexibility. I don't think you will be able to buy another property while your liabilities exceed your assets. I don't think you should buy another property and expose yourself to further losses while your liabilities exceed your assets.

As you have a cheap tracker, you should stay in this house as long as possible as it's so cheap.

When you have to move, you should rent if you have not been able to clear the mortgage on your existing property.

4 years is a long time away. Stay flexible. A lot could happen in the meantime.

Bank policies could change. They might allow you to sell the property and do a deal on the mortgage shortfall especially if you have a lump of cash to contribute towards it.

Brendan