Case study Negative Equity, wants to trade up

[sky1]

Myself and my partner are living in a 2-bed house which is too small for our family.

Amount Outstanding: 590k (negative equity 170k)
Interest rate: Tracker
Repayments: Up to date – no repayment issues
Savings: 70k

We are fortunate in that repayment is not an issue but space and negative equity are. Looking at our options and wanted to see if anyone had any advice.

Option 1 - Planning in place to extend our existing house. Worry here is the house will still be too small in years to come and putting more money in to an extension. May also need to borrow 20k-30k for the extension…..is this possible given negative equity?

Option 2 – Sell house with Banks permission and bring negative equity with us, using savings to buy new house. Looks like we qualify for a negative equity mortgage. Has anyone had any success in bringing all or part of their tracker with them in this scenario?

Option 3 – do nothing & try to build savings further

Any advice greatly appreciated.

 

[Brendan Burgess]

Here is a Key Post on the topic


Apartment too small for my family - what are our options?

It's probably best to provide the information in this format, although your mortgage is sustainable:

Standard Format for unsustainable mortgage Case Studies

Which lender do you have your mortgage with?
What price is the house you want to trade up to?

You are living in a 2 bed house worth €420k. I would imagine that you would be able to buy a larger house for the same money in a different area?

Your net negative equity is €100k. With a cheap tracker you are probably knocking €18k a year off the negative equity. If house prices don't change, you will be out of negative equity in only 5 years.

You obviously have a good income, so you could sell the house and rent at that stage. Or maybe even keep the house and rent it out, so you retain a stake in the property market.

Brendan