Convert Negative Equity to Personal Loan at Tracker Rate?

M_Joyce

Registered User
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Hi

Not sure if this should be in trackers or negative equity mortgages, feel free to move.

I am an accidental landlord with a house that's worth about Eur260k and I owe Eur280k to ABI, tracker of 1.1%

I have since bought another home and I don't want to be lumbered with 2 mortgages any more. We had great tenants in for 5 years who have recently left, but because i didn't increase their rent when market rates went up, legally I can now only charge new tenants just over half of market rate. Not a great return for the risk and doesn't come close to paying the mortgage once tax and expenses taken into account.

Airbnb not a runner as it's not a particularly tourist friendly location,

I know property markets are rising but I'd say I've a year to 18 months to go before im fully out of NE and I just want this monkey off my back and to sell up.

I'm not buying anywhere so I can't do negative equity trade up mortgage. Interest rates on personal loans are too high.

What are the chances of AIB letting me sell and pay back the eur20k negative equity at the 1.1% tracker rate im currently on?

Any thoughts or opinions welcome
TIA
 
With a mortgage of €280k, you are paying around €3,000 interest a year at present.

Most of your monthly repayment is going in capital repayments, so even without movements in the value of the property, you will eliminate the negative equity fairly quickly.

There is a fair chance that the rent restrictions won't be renewed when they expire, so the rent shortfall may be only temporary.

Investors won't buy your property because of the rent restriction, so the price might be artificially low.

All in all, you should wait a while before selling.

Brendan
 
Logically I know that Brendan, but this house has caused me nothing but misery and I want rid of it and as soon as possible. If I can sell now thats what I want to do.
 
Yes, its in Dublin and in a RPZ

Also, its not just the low rent that's the issue, its the whole hassle of being a landlord and the risks involved particularly in the current climate. Even if I could get market rates I don't want to be a landlord and im sick of the impact on my family of paying thousands every month towards a house I don't live in in an area I've no ties with.
 
im sick of the impact on my family of paying thousands every month

You are paying about €250 a month in interest.
The rest is simply repaying the loan.

I understand your emotional reaction, and if you can easily afford it, then sell it.

But it's a good investment and the risk is greatly reduced because of the tracker mortgage.

Brendan
 
Thanks brendan, i understand what you are saying.

Leaving that aside, has anyone experience of converting NE to a personal loan at Tracker rates with AIB ?

Financially im in a good position that I could absorb the loan payments and in terms of the marginal utility of money , getting rid of this noose around my neck will have a more positive impact on my life than continuing to pay the mortgage down until it equals market.
, even if that's the better option strictly considering the financial impact.
 
I think that AIB would be delighted to get rid of the tracker and would happily convert the balance into an unsecured loan at the tracker rate.

I suggest you start by asking them for a discount for early repayment. They will refuse it but it's worth trying.

Brendan
 
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