What are our Options?

Hi,

Thanks for taking the time to read my post. I am looking for some guidance and advice please. I will try and provide as much information as possible.

Myself and my husband purchased an apartment in 2007 and we are now looking to move (young child and hoping to expand family).
The apartment cost 247,500, we borrowed 225,000 and currently have 195,000 outstanding on our mortgage. We are in the region of 70K in negative equity.
We currently have a tracker rate mortgage and re-payments are 700 per month, however we overpay and pay approx. 950 each month and have done for some time. We have approx. 5k in savings.
I work in public sector, have recently gone part time and earn 25k per annum. My husband works in private sector and earns 40k. Both jobs are secure.

What are our options – In an ideal world we would like to rent out apartment (good rental area and rent should cover mortgage plus management fees). We would look to take out a second mortgage approx. 220K. Have we any hope of this or what would we need to do (savings etc wise) to get us into a position to afford this?

All comments/advise appreciated.

Thanks

I would think with your very small amount of savings that you would have no chance at present of getting a mortgage of any amount.

Stop over-paying your mortgage and increase your savings, can you go back full-time?

I could go back full time but don't want to as the move was made to spend time with our child while he is small.

We could look to bhuild up our savings over a couple of years, do you think stopping overpaying and saving is a good option in this regard?

What about a negative equity mortgage?

Why not rent the apartment and rent a house in a area you want to live in?

Have bad memories of renting from my 20's - having to move 3 times in a year due to landlords changing their minds and leases not being removed. It just seems very temporary and unstable to my mind?

Will the rent cover the mortgage, after tax, management fees and periods of non rental?

If your child is very young, I would stay where you are and overpay the mortgage as much as you can and keep the tracker. Long term this will save you money.
Will you be able to fit 2 children into the apartment for a few years and maybe plan for a move in 5+ years when you are financially in a much better place?
Also, we are in similar position, and the bank wanted us to have 2k + 250 per child at minimum, before making a mortgage payment. Finally, think about the variable rate on the second mortgage in the region of 4-5%.

If you wait, you maximise your financial health in a few years time.

Thank you all very much for your posts.

My little one is 2 and we are hoping to add to the family in a year or two. I suppose we are not looking to move this year, i just wanted to know what our options would be and what we can do to get ourselves in a better place financially etc etc when we do look to move.

laura28 said:

Have bad memories of renting from my 20's - having to move 3 times in a year due to landlords changing their minds and leases not being removed. It just seems very temporary and unstable to my mind?

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With the advent of the PRTB and security of tenure for tenants (after 6 months of renting you are entitled to stay for 4 years with few exceptions) things have moved on a lot since then.