1 bed apartment with baby growing fast

S

southside100

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I'm gonna get straight to the point instead of rambling on:

Bought One Bed Apartment for 325k in 2007
Outstanding Mortgage is 313k
Apartment now worth 255k
Negative Equity -60k

Both our salaries add up to 75k per annum between us

Wedding Loan 17k (590 per month repayment)
Term Loan 8k (290 per month repayment)
Both these loans will be clear in 3 years

We had our first baby in Jan and we will really need to move to a bigger place soon. We were looking at renting our apartment but we'd only get 850 a month and our mortgage is 1300 a month so we'd have to make up the othe 450 ourselves. We have no savings so if someone defaulted on the rent we'd be stuck with the rent of a new house and covering our full mortgage repayment.

Would a bank let us go interest only on our mortgage at least til we clear our loans then we'd be in a better situation to cover the gap between what we'd get for rent and what we have to repay in our mortgage each month. We were hoping to rent a house for 1100-1200 a month.

Any advice would be much appreciated
 
Are you on a tracker rate? if you rent out the house, they may well switch you to the investment property rate which might be a lot higher.

Why not try to sell the apartment? You will have an additional loan of €60k to pay off but you have fairly good salaries.

Brendan
 
No we're actually on a Variable of 4.05% but we're considering fixing soon with rumours that the rates are predicted to rise sharply in the next few years?

Would a bank let you sell a property even though we still owed them 60k? I didn't think they would allow this...
 
Hi southside

I don't think that fixing is a good idea as you need flexibility at this stage.

If you can come up with a repayment plan for the deficit, the bank should allow you to sell.

Ask them.

Brendan
 
Im not sure where you are based but cork city and county council are currently looking for 1 and 2 bedroom houses and apartments for council tenants. They take 20-30 year leases and guarantee rent even if they dont have tenants in the house(no wonder the country is in such a mess). If your local council offers the same deal then availing of it might be an option.
 
I think it would be advisable for you to look at the situation in the format of one of the 'Money Makeover' layouts. By renting out your own property, you should probably only count 10 months rent to allow for voids. You will also have to factor in loss of mortgage interest relief, insurance, management fees, letting costs, PRTB registration etc. etc. The return from renting might be a lot less than you think.

Putting rent on top of this would likely leave you very little scope to finance any other loans or to save.

Although living in a one bed apartment with a child is not ideal, it may be better to put up with it for a year or two and maximise your debt reduction or savings to allow you to move on. The alternative is to find a family member with a property with more space than they need and swap residences for a few years.
 
Why not have your baby stay with you and your hubby in the same room for the meantime? Rather than thinking of moving to a bigger apartment. It'll somehow help you in your finances.
 
thank you all for your replies, I think we're gonna stick it out for the next 2 to 3 years in our apartment until we clear our loans and then take another look at the situation.

When he gets a bit bigger I think we may have get a sofa bed for our living room and give up our bedroom for our child, after all its not his fault we got ourselves into this situation.

There are people a lot worse off than us so I don't think we can complain too much really!
 
I know a couple in a similar situation,when the baby got to toddler size they put a cheap partition wall in the bedroom, made it into 2 rooms,enough room for toddler to have a single bed and chest of drawers and were able to stay in the apt. It helped that the apt bedroom was a big enough room to do it. It could be a low cost option to do this instead of the sofa bed.
 
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