What should I do with my negative equity mortgage as i want to buy house?

T

tobeor

Registered User
Messages
6
Investment Mortgage 210000 5.6% 1330 a month 21.5 years left
House selling price today 145000
Negative equity 60000
Getting 800 rent
Paying 500 off mortgage from own income
Want to buy own house I can get a negative income mortgage but will have 320000 mortgage (house value 260000)
Also will have to pay 10000 fixed rate interest penalties if selling investment house
Should I wait for 2.5 years until fixed rate mortgage is over and hope house prices in Dublin cuts out the negative equity and then buy another house without taking negative equity hit.
Or should I sell and take hit.
I am paying 700 euros in rent at the moment also.
Also if I wait for 2.5 years (until fixed interest rate is up) should I try to go interest only on the investment mortgage? I really don’t see the point in paying it off if the negative equity will be cut out in 2.5 years by house price rises.

I'm 39

House I am thinking of buying is in rural Ireland

Any thoughts from the brokers experts on here?
 
(Not a broker).

Can you afford a mortgage of 320K. Your rent is 700 plus your mortgage subsidy of 500 makes 1200 a month to repay a mortgage.

What is the term and repaymnets of the 320K mortgage. Has a bank actually offered you a NE mortgage?

Your current NE is 65K, and apparently if you're to go with this option you've also to come up with another 10K. Plus selling and buying costs. Have you the money for all this.

Have you any savings.

You've asked us about the possibility of Dublin house prices rising and wiping out the NE, we're not allowed to discuss that on AAM, so you'll have to make up your own mind on that.

What is your reasoning for buying in rural Ireland? I'm assuming you work in Dublin, and that your investment property is also in Dublin. Would it not make more sense to live in this property, and rent out rooms for less than 10K tax free. Are you paying tax on the investment property?
 
Don't live in Dublin working 200 miles from Dublin. Work move. Have 50 grand saved. Got wife kids 3. Income 100 grand joint. Private sector. Approval in principal for negative equity mortgage.
 
So if I am interpreting this correctly then you are proposing to purchase a property for c. 150k and I assume you are keeping 10k aside for purchasing related expenses?

It makes sense on one level as the extra mortgage of 110k (on top of 210K from investment property) will probably not cost you anymore than the rent you are currently paying, but I guess it depends on how safe your jobs are and I'm sure (hope) that the banks will assess this side of things.

Lots of investors have gone interest only in the past but personally speaking I would continue to pay off the capital on your investment mortgage for as long as you can. If house prices rise then all the better, and you can treat the capital repayments as a kind of a saving scheme.
 
Property given its high cost imho should be treated as a long term investment. In this case it appears you are tring to exit early and that is going to come with a high cost (i.e. loss of initial deposit and the 60k negative equity). Have you tried to re-negotiate the interest or duration with the bank? E.g. put it over 30 years and try and get the rate down?
Then once that is done go to the bank for new mortgage?

Prices in some parts seem to be rising - can you wait and not crystalise your losses now?
 

I wont get a mortgage unless I sell hhouse. New mortgage would be 320000 inclusive of 60 g negative equity.
 
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