Sell, or keep as investment and buy new PPR

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Setanta12

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I have a cheap-and-cheerful house (my PPR) which has just entered negative equity. Unfortunately I was also made redundant recently and it could be another month or two (fingers and toes crossed!) before I re-enter gainful employment.

Ideally, I would like a mortgage to buy again to be closer to Dublin and my g-f and any new job, wherever in Dublin it very very probably will be.

My question :-

- I appreciate not a hope of a new mortgage without savings and some months (6?) in new employment (which is usually a steady profession and not in the law game), but what % of disposable income is the requirement now ?

- Is there any chance I can get 90% of cost of house (something akin to FTBs) before any S Duty, if my old PPR (currently on tracker +1.15%) were to convert to usual investment interest rate % ?

- Am I crazy for thinking that if, if, if the max I would be given ignoring my current PPR is (say) e400k - that taking my PPR valued at (say) e150k into account, I can look at properties around e250k ?

- Is my best option to be rid of my investment now (despite being able to get a rent to cover its mortgage (at present Rent-a-Room rental income covers the mortgage)) ?
 
Setanta12,

I don't really understand your first question but I think you are asking what % of your net disposable income can you use to service your mortgage? This will depend on your salary, the higher the salary, the higher the % you can use. As a rule of thumb it is between 35 and 40%.

If your PPR is in negative equity is is very unlikely that you will be approved for any new mortgage.

Yes, that is a bit crazy as it's not that simple. It would depend on a number of factors the main one being would there be a shortfall between the future rental income on the old PPR and the stress tested capital and interest repayments (at c6%) on the old PPR.

Others will have a view on whether it is best to get rid of your investment now (difficult if it's in negative equity), from a mortgage point of view, you will need to have your old PPR down to about 70% loan to value before a lender will advance a new mortgage to you. I suppose it depends how quickly you need to buy a new house and how quickly you think your PPR value will recover (or how quickly you can lower it's LTV by paying down the mortgage).


www.moneybackmortgages.ie
 
Many thanks.

Even if the PPR o/s mortgage is very low - and I believe I would be able to surpass any stress-testing once I'm back in employment ?
 
Setanta12 said:
Many thanks.

Even if the PPR o/s mortgage is very low - and I believe I would be able to surpass any stress-testing once I'm back in employment ?
Click to expand...
How can you both: have a low outstanding (os?) mortgage AND be in negative equity?
 
Many thanks. Much clearer now.

(For the other queries - Low o/s mortgage loan in euro terms - but the value of the house is also low. Much cheaper than national average and was about twice my last salary to buy initially).
 
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