I'm looking for some thoughts on an offer I have been given. My gut instinct is that it won't work, but I figured it is worth considering at least and I’d appreciate any views.
My parents are selling the family home to move abroad. The mortgage was cleared years ago, so whatever they sell for will be purely profit. They would like to keep the home in our family, but myself and Mrs Gus are the only family members who haven’t a) bought a forever house already or b) are settled enough to consider purchasing it. In light of this, if we were to purchase it, we would pay considerably less than the current market value. Probably between 25% and 40% less.
We currently have an apartment with a tracker mortgage and we are in negative equity somewhere between €80k and €100k and we have virtually no savings due to recent wedding. Our plan, prior to this offer, was to overpay our mortgage by double the due amount (approx. €1,000 a month, so overpay by €12,000 per annum) for the next 4-5 years and hopefully then sell the apartment (breaking even) and buy a family house then.
So, for example, here are some figures:
Family Home
Current Market Value €400,000
Cost to Us (less 40%) €240,000
Mortgage @ LTV 85% €340,000
Apartment
Current Market Value €180,000
Mortgage Outstanding €270,000
Negative Equity €90,000
As I see it, we have three options that we can afford based on what we intend to spend on mortgage repayments per month:
1. Attempt to negotiate with lender to carry negative equity from apartment into the mortgage on family home on basis that we will be buying at less than market value and losing our tracker rate.
2. Apply for second mortgage to cover family home and rent out apartment.
3. Forget the whole thing, increase payments on our mortgage as planned and wait to clear the negative equity before attempting to sell.
My parents are selling the family home to move abroad. The mortgage was cleared years ago, so whatever they sell for will be purely profit. They would like to keep the home in our family, but myself and Mrs Gus are the only family members who haven’t a) bought a forever house already or b) are settled enough to consider purchasing it. In light of this, if we were to purchase it, we would pay considerably less than the current market value. Probably between 25% and 40% less.
We currently have an apartment with a tracker mortgage and we are in negative equity somewhere between €80k and €100k and we have virtually no savings due to recent wedding. Our plan, prior to this offer, was to overpay our mortgage by double the due amount (approx. €1,000 a month, so overpay by €12,000 per annum) for the next 4-5 years and hopefully then sell the apartment (breaking even) and buy a family house then.
So, for example, here are some figures:
Family Home
Current Market Value €400,000
Cost to Us (less 40%) €240,000
Mortgage @ LTV 85% €340,000
Apartment
Current Market Value €180,000
Mortgage Outstanding €270,000
Negative Equity €90,000
As I see it, we have three options that we can afford based on what we intend to spend on mortgage repayments per month:
1. Attempt to negotiate with lender to carry negative equity from apartment into the mortgage on family home on basis that we will be buying at less than market value and losing our tracker rate.
2. Apply for second mortgage to cover family home and rent out apartment.
3. Forget the whole thing, increase payments on our mortgage as planned and wait to clear the negative equity before attempting to sell.
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