Trading up but not in negative equity?

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Brendan Burgess

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The new rules favour people in negative equity. If you are thinking of trading up
  • Don't pay any extra capital off your mortgage
  • Trade up before your house comes out of negative equity
The Central Bank rules are overlaid onto the existing rules. I have taken the ptsb rules as representative of the other lenders as they explain them best.

Central Bank rules

Housing loans for borrowers in negative equity who wish to obtain a mortgage for a new property are not within the scope of the LTV limits.


Existing ptsb rules for negative equity mortgages
Minimum deposit: 10%
Maximum LTV on new property: 125%

upload_2015-1-28_8-32-27.png

The bizarre result is that the Central Bank is telling some customers that they must borrow no more than 80% of the value of their home, but for others there is a limit of around 125%.

Brendan
 

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I asked the Governor about this at the Press Conference this morning and he said that the 15% exemption would allow for peculiarities like this to be taken care of.

Brendan
 
Hi Brendan,

Just wanted to ask a question relating to a negative equity trade up you mention above.
I own an apartment which is in negative equity and unfortunately no longer suits my family circumstances.

Are you saying that there is a possibility (dependent on the banks decision of course) that there could be a way of only needing a 10% deposit rather than a 20% deposit.
As long as the LTV is under 125% and reduces from its current value and that I provide a deposit of 10%.

Obviously I would need to talk to my bank about this but just want to get a better understanding of the situation first.

Thanks
 
The LTV rule does not apply to Negative Equity mortgages.
The Loan to Income rule does.

I gave the figures for ptsb, but the decision depends on which lender you are with.

Brendan
 
Thanks Brendan

The LTI rule doesnt affect me, the 20% deposit is the issue for me.
Basically, I need to talk to my mortgage provider about my options.

Cheers
 
Hi Brendan,

Thanks for the above. Very helpful. I've a very good tracker on an apt which is either just out of Neg Eq or barely in. By the above logic, as long as I have the 10% for a new propertly and sell below current mortgage value then I could bringer tracker to new property on a 90% LTV. Essentially what I'm saying is for me it could be beneficial to sell for a grand or two less, yes it's that close according to property price register, as the 20% is my main problem. Does the above sound correct?

Thanks,

Ian
 
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