Could/Should I sell my apartment in negative equity?

R

Return2vendr

Guest
Age: 30
Spouse’s/Partner's age: 30

Annual gross income from employment or profession: 24,000 (hopefully soon to rise to 55,000 )
Annual gross income of spouse: 35,000

Type of employment: e.g. Civil Servant, self-employed
Part time self employed, about to go full time

In general are you:
(a) spending more than you earn, or
(b) saving?
spending more than I earn

Rough estimate of value of home: 170,000 (?)
Amount outstanding on your mortgage: 245,000
What interest rate are you paying? Tracker 1.X%

Other borrowings – car loans/personal loans etc: Nil

Do you pay off your full credit card balance each month? Mostly
If not, what is the balance on your credit card?

Savings and investments:
e4000, about to be blown on refurbish / relet of apartment and childcare bills.

Do you have a pension scheme? No

Do you own any investment or other property?
The mortgage above relates to an investment apartment. Only lets 75% of year last two years. Rent does not cover cost. Over last two years have put e 8,000 into apt. to cover uncovered mortgage ( 750pm ); letting agent, management company, and refurbishment fees and other costs.

Ages of children: Two infants

Life insurance: As part of my mortgage, I think


What specific question do you have or what issues are of concern to you

I am in negative equity of e70,000 at the moment. I bought my apartment to live in, but is not suitable for kids, so it is now a rental property. Only problem is, that it does not perform great as a rental investment. Renters don't seem to want to stay there too long, seeing as it is an older unit, in a glut of new developments at affordable prices. Meaning that managing it takes up a lot of time, and costs me a fortune due to frequent turn over

I want to give it back to the bank!

The way I see it, I would be 70,000 in the red if I could do that, which I hopefully could manage to pay off over, say 10 years ( I imagine with a bit of interest ). At which stage, I would be back to square 1. The alternative is to maintain the mortgage, and hold the apt into retirement really. At which stage it will have cost me nearer 450,000 with interests ( they will rise at some stage! ).

So what would you advise?

Can I even give it back to the bank?

My wife has nothing to do with this investment, she has no mortgage. At some stage (sooner rather than later) I would like to buy a house for to rare our kids, so options would need to consider the future prospects of me getting a mortgage.

thanks for advice
 
You can't return it to the bank.

They only want the money they are owed.

If you default on your mortgage, they can go for a repossession, sell the house at whatever they can get for it and still get a judgement against you for the outstanding amount.

If you sell at a loss, you will still be liable for the outstanding amount owed to the bank.

Walking away isn't an option.
 
As Paddy says, giving it back to the bank is not an option. The banks will pursue you for the balance and you can well afford it.

It seems to me that your apartment is going to be a source of hassle for years to come so you should try to sell it. Go and talk to your bank. They will only allow you to sell it if you come up with a good plan to discharge what you owe. I suspect that means remortgaging your wife's home. This would also be the cheapest way to finance the shortfall.

Brendan
 
Assuming you live in a city, I would let out the apartment to the Council over a ten year period so that they would look after management and guarantee 80% of rental (going rate) over the whole period. Look upon it as a long term investment. No hassle for you and hopefully* you will get a return eventually. Figure out what it would cost you annually if you go this route and if its around the 3k mark (p.a.) I believe its worth a punt that you will get a return. The details about the scheme are discussed here.

*Disclaimer: I dont know the future. Your home is at risk if you light a fire under the stairs.
 
Thanks guys. I contacted the council as elcato suggested and am gonna see what happens.
Thanks
 
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