Can I buy/mortgage a property solely if married to wife with negative equity?

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Byrneand

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Quick question and wondering if anyone has experience.

If my wife is in negative equity on a property she owned before we met, can I/we buy a new family house and exclude her from the mortgage or will any potential bank make me pay off her negative equity before allowing me to take out a new mortgage? For background it is fair to assume that I comfortably meet any lending requirements on my own and that is not an issue. We currently rent abroad.

I think a fair assumption would be that my wife would have little financial input into our household income as she is a live-at-home mum. I can personally quite easily meet the lending criteria on my own e.g. mortage would be 1-1.5x income. It's simply a case of we do not want to crystalise the losses on my wife's property which would be c.200k currently. The current rental income covers the mortgage and so from a cashflow perspective we're happy to leave it ticking over. Just to add, we currently do not own any properties together.

Additionally, does this change if the house deeds are in both of our names or just my own? e.g. would I have to completely exclude her from the purchase of the house?

In conclusion, I suppose the direct question is: Is there anyway for me to buy a house for our family to live in without having to deal (pay-off or include in future mortgage calculations) my wife's negative equity on what is now an investment property?

Thanks in advance!
 
This question is popping up here regularly, most banks in Ireland insist on the family home mortgage being in joint names, they will want to underwrite it based on all income and outgoings of the family unit which makes sense. For this reason it is unlikely you will be able to borrow in your own name only, however that does not mean you will not qualify for a new mortgage jointly even with the existing property, it all depends on the income/expenditure and the banks lending guidelines.
 
Thanks certainly sounds as if there's hope. Has anyone heard of anyone being successful with something like this - any banks that are particularly open to the idea?

Again many thanks for the help - obviously keen to not have to crystalise the loss on DW's apartment or delay the purchase of a proper family house longer than necessary.
 
No banks are more open than others to the best of my knowledge, it all depends on your income and whether or not you can afford two mortgages. Won't be easy but then maybe you are earning massive bucks, I don't know!
 
Again thanks. We're very fortunate at the moment with our current income level but this is derived offshore thus, the question of negative equity calculations may impact the timeframe over which we return to Ireland. Hence expecting a decline in income on return to be 1-1.5x mortgage but also aware of requirements of 1 year credit history in Ireland pre mortgage application.

Any others with experience?
 
If you got married with an 'out of community of property' marriage contract with a prenup which makes you both separate legal entities, surely that would separate you both legally? We got married abroad and our marriage contract is "out of community of property". Although I have posted the same question on the forums in terms of my husbands credit rating affected by my own debt situation and havent gotten a 100% clear answer on this yet.
 
It's highly unlikely you would get a mortgage on your own. For married couples they are going to take all income into account
 
It doesn't matter what way you got married or what pre-nup exists the bank's lending policy will dictate and in general that is family home must be joint mortgage.
 
Bronte said:
It's highly unlikely you would get a mortgage on your own. For married couples they are going to take all income into account
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.. in my situation were I am the sole earner, do you mean all expenditure rather than income into account?

If the negative equity property is generating positive cashflow whilst on an investment mortgage (and stress tested. e.g +2% interest rate), does this mean that banks will therefore deem this to be net neutral and thus ignore in income/expenditure clauclations or will they see this as a 200k liability that I need to settle on behalf of my wife before purchasing a new (as in additional rather than new buld), more expensive family home?
 
They won't ignore it, they will take at best a percentage of the rental income only to allow for empty periods, tax, maintenance etc and they will add this to your income and then they will factor in the repayments at a stress tested rate to your outgoings.

The negative equity is not the issue, it is income v expenditure.
 
Byrneand said:
.. in my situation were I am the sole earner, do you mean all expenditure rather than income into account?

If the negative equity property is generating positive cashflow whilst on an investment mortgage (and stress tested. e.g +2% interest rate), does this mean that banks will therefore deem this to be net neutral and thus ignore in income/expenditure clauclations or will they see this as a 200k liability that I need to settle on behalf of my wife before purchasing a new (as in additional rather than new buld), more expensive family home?
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Sorry I didn't finish the post above. Yes basically they will take your income, your outgoings and the NE into account. Everything will be counted.

I asked a bank recently about borrowing for an investment and they said that we had to have maximum 80% mortgages on all our other properties to borrow. This would imply for you that the NE even though it is in your wife's name only would scupper any chance of you getting a mortgage, even though you can well afford it. They have becomea lot stricter, I'd go so far as to say that it's the strictest I've ever found them, even from before the celtic tiger it was not so stict.

Maybe a different bank would give you a mortgage. You could try a broker to see if it's possible. There's one on this website. LDFerguson.
 
Sure, so if you've got a low LTV on the new property and net salary of >5x mortgage(assuming no off the scale expenditure) it should be fine. E.g assuming all the standard lending criteria is met on the new property (even if you assume no rental income on the prior apartment) then banks willnot be too stressed on the negative equity.

Does anyone know if any specifc banks are more open to this at the moment than others?

Thanks again everyone
 
Bronte said:
I asked a bank recently about borrowing for an investment and they said that we had to have maximum 80% mortgages on all our other properties to borrow. QUOTE]

So just for a worked example:

2008: property bought for 300k with 90% LTV = 270k mortgage
2013: property values at 100k impying 170k negative equity.

In order to puchase a new seperate property, I'm going to have to bring the original mortgage down to 80k (e.g. pay off 190k), before being allowed a spererate mortgage?

Is that the correct logic?

Thanks
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wbbs said:
, they will take at best a percentage of the rental income only to allow for empty periods, tax, maintenance etc and they will add this to your income and then they will factor in the repayments at a stress tested rate to your outgoings.

.
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This was not my experience recently. The bank never asked about what the rental income would be. They are lending based on ability to repay.
 
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