Advice - negative equity but want to relocate

[Hope]

I know negative equity has been discussed in detail previously in lot's of posts but I am looking for some advise from anyone in a similar situation who may be further down the process than we are.

Currently have a mortgage of €635k (house value c.€500k) with all repayments up-to-date, reduced the term on the mortage over 12 months ago to make inroads on the negative equity which has helped (a tiny bit).

No issues in terms of affording the repayments on the mortgage but we would like to relocate out of Dublin. Plan would be to sell the house and buy down the country bringing whatever negative equity with us as the mortgage level is not an issue. This is a short/medium term plan........is it a pipe dream?

 

[mathepac]

Re: Advise - negative equity but want to relocate

... . Plan would be to sell the house and buy down the country bringing whatever negative equity with us as the mortgage level is not an issue. ...

You will not be allowed to "transfer" negative to a new mortgage. The lender would expect settlement in full before they will agree to the sale going through, either by a personal loan or the sale of another asset. This in turn could effect your ability to enter into another mortgage agreement.

 

[Robin Banks]

Re: Advise - negative equity but want to relocate

You will not be allowed to "transfer" negative to a new mortgage.

The banks must be prepared to show some flexibility on this - particularly as they owe their current existence to any number of state funded guarantees, handouts and bailouts.

They are not increasing their risk by transferring the negative equity to another property therefore they should facilitate it.

 

[mathepac]

Re: Advise - negative equity but want to relocate

The banks must be prepared to show some flexibility on this ...

Who do you suggest will compel them? The government, some consumer-oriented regulator, borrowers?

... They are not increasing their risk by transferring the negative equity to another property ...

Yes they are. It is precisely this kind of behaviour that brought the house of cards tumbling down in the first place. Each mortgage must stand or fall as a single entity, not secured against yet another mortgage.

... therefore they should facilitate it.

I disagree and for the moment the banks seem to disagree as well.

 

[Towger]

Re: Advise - negative equity but want to relocate

Welcome to the Negative Equity Trap.

 

[chlipps]

Re: Advise - negative equity but want to relocate

Hope... you would have been better off to start saving the money into a savings account and try get highest interest possible. Mathepac is right in that negative equity cannot be moved onto another mortgage. So maybe you sell and rent for awhile down the country but you still will have the negative equity to pay off

 

[Hope]

Re: Advise - negative equity but want to relocate

I am not suggesting I am going to walk away from the negative equity, we borrowed the money in good faith and intend to repay every penny which we are obliged to do in any event.
I am talking about selling the house for say 500k, taking loan of 135k out and then buying new home at say 90% mortgage.
As I say, repaying the mtg is not an issue. I looked at the options at the time and reducing the mtg and upping repayments was the right decision. We also have built up savings.
I would have thought the fundamental of any lending proposal is repayment capacity which is not an issue.

 

[chlipps]

Re: Advise - negative equity but want to relocate

What level of savings have you built up at this stage? Will you have the 10% for the new house? The bank will take your 135K into account when stress testing your mortgage.

Probably best that you visit the bank manager and see what he/she will provide. I think that you will need to have the 135 euro loan paid off and have further 10% saved for new house before they give you new mortgage

Best of luck

 

[Hope]

Re: Advise - negative equity but want to relocate

By the time we would be hoping to move we will have 10% deposit saved.

If the bank requires 135k to be repaid before providing a new mortage then that could take years..........I should rename my username to "No Hope"

It seems crazy as we can afford the mortgage we have now and are looking to have the same mortgage level (including the 135k) or even less if we moved.

 

[Brendan Burgess]

As of now, the only option you have is to let the house and rent your new home.

You may be able to sell the house with the consent of the bank and convert the deficit into a personal loan.

You will not be able to buy another house as it would in effect be borrowing well in excess of 100%.