Negative equity mortgage from BoI for a self-build?

Capet

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Just wondering if anyone has any opinions re trade up negative equity mortgage/self build mortgage.

We have apartment in dublin, mortgage remaining 325k, 29 yrs left, variable rate, rented-1250/month, mortgage is 1750/month. We have been paying an extra 250 euro/month off the capital also.
Mortgage is with BOI, similar apartment sold before christmas for 270k

We are living in a relatives house rent free currently- our jobs meant we had to move out of the capital and this is where we would like to settle down now, never intended to be landlords.

Wages-60k and 68k respectively.
Currently saving 2500/month, trying to be somewhat frugal at the minute.
Have 30k in savings

Have car loan with 9k left, we pay 600 euro/ month into this, 18 months or so left.

1 child, family help with childminding so bo crèche fees etc.

Before christmas we were thinking negative equity mortgage vs second mortgage.
Now thinking more strongly about negative equity mortgage.

Just wondering if anyone has any advice/experience with similar-getting negative equity mortgage, if self building does that complicate things even more?

Is negative equity mortgage likely to be a goer at all?

Should we keep overpaying mortgage?
 
First things first - stop overpaying your mortgage.
1) Negative equity mortgages are exempt from the Central Bank's new mortgage lending limits, so, it pays to be in negative equity.
2) Bank of Ireland requires you to have 10% of the purchase price of the new property. So, if the property you want to build costs €300k, you will need your €30k + more for the transaction costs.

Bank of Ireland explains its Negative Equity package here. It seems you qualify to build a house up to a value of €300k

Maximum LTV for Self Builds - 125% (including negative equity)

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I am not sure how a new build works in practice. (Selling and buying a new house for a contractual prices is straightforward enough)
I presume you have the site?
Do you sell the house now and keep up repayments on the mortgage shortfall?
Then draw down money for the building costs as you build?

If the €300k is a bit tight, you could consider waiting another year. Your savings will go up to €60k. If house prices don't change, you will build up a bit more equity in your home through the capital repayments.

But presumably a self-build is a long project. So it might be best to put your apartment on the market now. This locks in the negative equity at the current prices. This protects you against house price falls. And, bizarrrely, it protects you against house price increases which might lose you your exemption from the new Central Bank rules.
 
Hi Capet

Did you get a second mortgage. I am currently in negative equity of approx 90K, mortgage currently a tracker of 1.75% with PTSB. Myself and finace want to trade up as it is pretty small 2 bed apartment. we have approx 80K in savings and save 3000 per month. We both are on 40K per annum and would like a mortgage of approx 170-180K?
I havent heard of any success stories and wondered if you did?
I want to retain the apartment and rent it out which shouldnt be a prob as it is currently rented out (this does not effect my tracker) and it covers the mortgage and has been for a number of years.

Any advice would be great!
 
Hi Capet

Did you get a second mortgage. I am currently in negative equity of approx 90K, mortgage currently a tracker of 1.75% with PTSB. Myself and finace want to trade up as it is pretty small 2 bed apartment. we have approx 80K in savings and save 3000 per month. We both are on 40K per annum and would like a mortgage of approx 170-180K?
I havent heard of any success stories and wondered if you did?
I want to retain the apartment and rent it out which shouldnt be a prob as it is currently rented out (this does not effect my tracker) and it covers the mortgage and has been for a number of years.

Any advice would be great!


Hi!
We actually decided to forget about self building and are looking for a house to purchase now instead.
We had no problem getting approved for another mortgage.
They were mainly looking at repayment capacity. They just took the current mortgage repayment out of our income every month in order to see if we could afford another one. They allowed a portion of the money we receive as rent to be included as income- not sure what percentage though.
We got approval for more than we want/need.
House hunting is ongoing.

If you've any more questions ask away.
But going to the banks was definitely a more positive experience than I had anticipated
 
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