Trading up from NE property - which calculation is correct

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kcat

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So Mr Black owes 250k on his property which he agrees to sell for 225. The property therefore has 25k of negative equity.

He then decides to buy a new home for 400k. After paying his 10% deposit, he needs a new mortgage of 385k (360 + the ne of 25). Or does he?

I always assumed my calculations above were correct but on my final loan offer today, the bank say that I need a new mortgage of 360k (250k of my current mortgage +110k required from new property. Are they correct?

***crossing fingers that they're right and I'm wrong.

****And apologies if this is really basic but I'm really struggling to get my head around it :(
 
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Unfortunately, your calculation seems to be correct to me. It seems that they have got their final loan offer wrong. Or else they are assuming that you are paying off your negative equity and that you have the €40k deposit.

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Buying the new house should not change your net worth.
 

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Thanks Brendan. Confirmed with bank this morning that their figures were incorrect so they'll have to reissue the loan pack.

As an FYI, we've been dealing with KBC for a trader upper mortgage from a negative equity home and, in general, it's gone really well and they've gone out of their way to be accommodating and helpful. I expected it to be a much more complex process.
 
Brendan Burgess said:
Unfortunately, your calculation seems to be correct to me. It seems that they have got their final loan offer wrong. Or else they are assuming that you are paying off your negative equity and that you have the €40k deposit.

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Buying the new house should not change your net worth.
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Hi Brendan,

If he was buying a new home would he not need 20% deposit (80% loan rules etc). ?? Actually,just wondering; can you switch your existing mortgage to a new home of the same amount or less without needing the 20% deposit?
Kindest regards
 
Hi KCat,
Hubby & I hoping to start trade up process & will also be availing of NE tracker mover mortgage. Just wondering how did you manage the selling & buying 2 properties simultaneously. Did you put your house up for sale & hope a property would come up that you were interested in or did u find the property first & then put house up for sale....with the NE mortgages having to close together trying to work out the logistics!!
 
Aini said:
Hi KCat,
Hubby & I hoping to start trade up process & will also be availing of NE tracker mover mortgage. Just wondering how did you manage the selling & buying 2 properties simultaneously. Did you put your house up for sale & hope a property would come up that you were interested in or did u find the property first & then put house up for sale....with the NE mortgages having to close together trying to work out the logistics!!
Click to expand...

I think part of this answer is dictated by where you are buying and what you are selling. We were buying in an area of high demand so estate agents had no interest in dealing with us if our house wasn't already sale agreed as they had plenty of other bidding parties to choose from. We went sale agreed on ours in June to first time buyers (another area of high demand for first time buyers) and then we went sale agreed on our new house in July. We're not out of the woods yet and I'm terrified we're going to lose our buyers but there isn't anything we can do but sit tight and pray it works out. It wasn't as stressful as you might imagine. Kids definitely make it more difficult as we had to have childcare lined up and consider schools but it's all very manageable. Good luck.
 
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