Key Post Diary of a successful negative equity trade up with Bank of Ireland

Success: Approved for a negative equity mortgage

Many thanks for taking the time to read this.
Myself and my Partner bought an Apt in 2009 for 192k. We are trying to decide whether to sell the apartment and take a hit of approx 60k NE or rent it out and rent another property as we now have a child.

I earn approx 30-35k a year and in permanent employment and my partner earns approx 35k and also in permanent employment.
Our mortgage is 858pm and we are in receipt of MIR.
We have €20k in savings
I think the balance on mortgage is approx 170k but not 100% on this.

We are doubtful we will even sell an apartment, the bank said a couple months ago we may be eligible for a NE mortgage but as we have no savings for deposit, stamp duty, fees etc i doubt we are in a position to trade up at present and will have to rent. If we were to rent a house for max 1100pm and rent our own apt would be this be more financially viable than taking on a personal loan for the NE? We are hoping to go into the banks again next wk as found it hard to take in all info first time round as we had our new baby with us. We are reluctant to rent due to losing the MIR and all the costs associated with it but is it the best choice.

I would really appreciate some replies, opinions and will be happy to answer any questions on info I may have ommited.

Many thanks
 
@Lauraflem

Some assumptions:
- up to date on mortgage;
- variable rate mortgage
- place too small with junior

Options:
- do nothing
- sell and incur a loss: You need the sums here and what exactly the Bank will do or not
(indeed their policy may not be fully worked out here)
- rent out and rent another.

The renting option could be a good idea:

1. The rental income is taxable BUT
2. 75% of interest is deductible;
3. Many direct costs are deductible such as insurance
4. Some complications on some state charges not being deductible (scandal really)
5. Wear and tear allowances on fittings
6. Repairs deductible

So you need to assess this and see if it makes sense.

If you sell and rent you will have to get some arrangement on the shortfall.

To be frank - if it were me I would be keeping the place. While TWSNBM prevents me from idle speculation on property prices blah blah -
 
Thanks Dr Wixard..
We have a fixed rate mortgage, I think
There is another 2 years on that rate. And we are up to date with the repayments.

Yes I think another chat with the banks is warranted, but I'm inclined to agree with you at the moment. It is liveable at the moment as we have only the one child but I would be hoping to be out of it in the next year. We live in the Dublin area and have been told by an EA it would be no problem to rent.

The last time we went into the banks it was more about trading up rather than selling to rent but I'm not quite sure about the NE mortgages after reading into them a bit and lack of finances.
 
Hi guys just to update ye..

So we put the apartment up for sale at start of May with the go ahead after many meetings with the bank.

Somehow by a miracle the apartment was on the market for 24 hours and we got an offer for the full asking price. We had put it at upper end of market price as we decided we were in no rush to sell while we saved more and also if we had to drop asking price by putting it at upper price we had room to drop it.

So we have an offer of the asking price of €129k, we got a gift off parents of €10k to help with selling and buying fees and we have an offer on a 4 bed house down the country for €210k. So our letter of offer has been issued, all conditions precedent have been fulfilled and contracts have been sent to our buyer to sign and will shortly be drafted for the property we are buying.

So all going well things will progress and we will be able to move on with approx 38k NE to bring onto new property. We had to raise 10% of new property price ourselves. So hopefully the signing all goes to plan in next few weeks.
It's been pretty stressful getting it all in place but the bank have been great to us so far.
 
Just a quick update. So all was going well until our buyer asked for a 10k reduction the day she was to sign contracts. We refused as although our repayments would be very comfortable we didnt want to borrow anymore and carry anymore NE so we pulled out of the sale as she would not negotiate at all and hence had to pull out of the property we were buying. However after a few days the sellers of the house we are buying dropped the price of the house by 10k to allow us to pass on the reduction to the buyer of our apartment. So we are now selling the apt for €121500 and buying the other house for €200k. The apt buyer has signed the contract to buy. We have to submit more paper work this week to the bank, new valuation for the property we are buying before new amended letter of offer is issued. So we cannot cosign to sell apartment until that's sorted. Plus there is an issue with the land registry with new house which we have been told will be resolved in 2 more weeks. Until the contracts and full deeds are complete on new house we cannot sign to sell the apartment until all is ready with the bank and legal issues around land registry.
So hopefully we will have it wrapped up in few weeks it's taken lot longer than expected but as far as banks are concerned they have been v helpful so far.
I guess the biggest issue is until the contracts to purchase the house are ready the contracts for selling apt can't be co signed as banks won't release funds until NE is able to be transferred onto new property.
 
Lauraflem said:
euntil the contracts to purchase the house are ready the contracts for selling apt can't be co signed as banks won't release funds until NE is able to be transferred onto new property.
Click to expand...

Laura

Thanks for keeping us updated.

That is very interesting.

The bank won't actually let you sell until you have purchased the new house?

So you have to do both together. I would have thought that you would have to sell first before buying and there would be a short period while the bank had an unsecured loan.

Brendan
 
Hi Brendan, the impression that we have from the bank and solicitor is that we have to do both together, however there could be a delay with the purchase of the new house as there is a problem with the land registry so we have been told that we cannot sign the buyers of the apartment contracts until this has been resolved so that the NE can be transferred onto new property. Our solicitor is away until 2nd Sept which is holding things up as the buyer has signed her contracts for the apt but we cannot release them back to her solicitor until the contracts are fully completed on the house to purchase. However in recent days it has occurred to me surely we would have to have the proceeds from the sale of the apt to purchase new house. We are going on the presumption that once contracts for new place are ready that we can release them back to buyer solicitor and proceed with sale of apartment, put the remainder of our deposit down on d house and tie them both in together.

We did ask a number of time in bank and they said the bank would have to see that the NE was being transferred into a new property and I guess until we can prove that with the new contracts we are in limbo. It's very frustrating this is only the 2nd NE mortgage they have done in the branch and the first our solicitor has done, so we feel very vulnerable as we did find out today until we sign our part of contract to sell apt it's not legally binding and we can't do that until deeds are fully completeted on new house we are hoping to purchase.
 
Hi Laura

I was told by someone in UB when they launched it first, that the customer had 6 months in which to do the deal.

Worth checking the publicity at the time to see if they said anything about this in public

Brendan
 
Hi Brendan
I know what we had our lette of offer extended last week again to complete purchase, it was never mentioned to us now about timeframe but we knew the letter of offer was sent to us it was valid for 90 days so we got it extended for another 90 days last week.
It's a minefield, the house we are purchasing estate agent and solicitor don't seem to be in any hurry to sort the land registration issue as they think as we have a buyer for apt it's grand, it took to almost shouting down the phone at the EA today that the contacts our buyer has signed are not legally binding until we have signed them which can't happen until we can proceed with purchase of house, so in effect she can pull out without consequence at present. I think it finally did hit home but we explained this wks ago but obviously didnt sink in.
 
Negative Equity Trade up approved - difficulty in selling house

Just looking for peoples opinions. We were in the process if selling our apt and buying a new house through a negative equity trade up mortgage. Our NE is 45k. Approval given for new loan.
Their is a delay until we sign contracts for new house due to a land registry issue that is being resolved of 2 months. We went into bank 3 weeks ago to ask bank what could we do as buyer of apt was going to pull out as wouldn't wait that long. Bank sent letter to the solicitors saying that they consent to allow us to go ahead with sale and deeds would be released. Sale was due to close last friday. However buyer solicitor requested deeds of discharge and now they won't release them until new mortgage drawn down so buyer won't go ahead.
As branch manager signed off on it we are now in process if trying to get a bridging loan, it has gone to the deputy of mortgages and legal team.
Has anyone been in this situation? All through this process we knew deeds would not be released until new mortgage drawn down but they actually rang mortgages in front of me 3 weeks ago in branch who said go ahead and close sale.
 
Lauraflem said:
. Bank sent letter to the solicitors saying that they consent to allow us to go ahead with sale and deeds would be released.

All through this process we knew deeds would not be released until new mortgage drawn down
Click to expand...

This is contradictory. Did the letter say they would be released when the new mortgage was drawn down, or when the sale went through?

If I were the purchaser I'd pull out too as it's so messy. They have to wait until a legal issue for your new purchase is sorted out. With no idea of how long this would take in a buyers market.

Are you sure a bridging loan is a good idea. You've mentioned a period of 2 months, but how long is a piece of straw?
 
Hi Bronte the letter said that the deeds would be released when the sale went through. To be honest if it meant us selling our apartment we would gladly take on a bridging loan. It has gone to a credit forum this morning and bank manager is hoping to have an answer by afternoon to find a solution as he is the one who signed off that letter 3 weeks ago. They are basically trying to find a way of releasing the deeds to the buyer by this way.
Well the buyer is only giving us until tomorrow to see what they come back with and she will pull out understandably. We have moved out of said property so it would be awful to have to move back.
I did point out to the bank manager that he signed this letter on behalf of BOI which both sets of solicitors used to proceed the sale and it was only when requisition for deeds of discharge was put in the legal team said they wouldn't.
 
He basically said our only option is to get a personal loan to clear the proceeds of the sale or negotiate with bank to try get a loan to bridge the gap for the two months. He does not feel buyer will hang on much longer after speaking to her solicitor.
 
So a quick update. Our case went to a credit forum today and after couple hours discussion, we got a resolution. We have a 3 month time limit to close the sale of new house and have to sign a letter to that effect, and have to put 15k in a deposit account which will offset against the 45k NE after the 3 months if new mortgage not drawn down, on the proceeds of the sale of the apt they will now release the deeds to the new buyer once those two things are carried out. We are delighted. Worse case scenario if after 3 months we can't close house sale we clear what we can of the NE and pay off rest, rent and save new deposit. At mo we are living with parents. We will get written confirmation of same tomorrow.
So hopefully we can close sale this week of apt.
 
I'm glad this seems to be sorted for you. For the new purchase, I presume there is some special clause in their to protect you in the event the bank do not come up with a mortgage, or you go beyond the 3 months the bank have given you.
 
Hi Bronte, as far as I can see their is no claus, this was their option if we wanted to sell and given the timeframe to Close the sale of the apt we have accepted it as we knew the buyer would walk this week as this has been going on so long. I asked yesterday and basically if we do not close in the 3 months the bank have said they have the right to use the 15k to offset the NE and we will be liable to pay the rest. We feel confident we can close the sale in that time as we have been speaking direct to the person handling the land issue( through a friend of a friend) who said 3 weeks ago 1-2 months. So hopefully.
It's a risk we have to take but one we are willing to move on from a property no longer suited to our needs. In fairness the manager in the branch could not have done enough for us over the last two days to ensure our case got dealt with ASAP giving the urgency of it.
 
Well we finally closed the sale on our apartment today. Could not be more relieved or excited!
 
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