Negative Equity

R

R196

Registered User
Messages
30
i bought a house 3 years ago for 300,000 - i am looking to sell for 200,000 and buy a house closer to work for approx 230,000 but the bank will not allow me to sell my current house as the o/s mortgage is 250,000. therefore im in negative equity (50,000)

does anyone know a way around this?
 
Banks generally dont let you sell for less than your mortgage is worth.

You could try to rent out your house and rent a place closer to work.
 
There isnt really bar you can get the mortgage down to the Value of the house at present. They way the bank are looking at it, would probably cost you another 10k all told to move (solr's fees, moving expenses etc etc).

If property prices come off the floor in the next 6-8 months (very debatable, nobody knows) chances are a move is possible, aside from that, if you can at all id advise holding out.
 
if the market does pick up tho, the hosue we wish to buy in cork city will increase ata quicker rate than ours. it will take at least 4 years for the value of our house to reach the o/s balance of our mortgage! i would of though the bank would allow us pay back the 50,000 in negative equity as a long term loan and give us the 2nd mortgage. they would be at no loss as total mortgage would be approx 280,000 - only 15000 more than what we owe at the moment!
 
I would keep trying and contact your local TD about it. If your credit is good there is no good reason why they can't loan you the 50,000 as an unsecured loan.
 
grawns said:
I would keep trying and contact your local TD about it. If your credit is good there is no good reason why they can't loan you the 50,000 as an unsecured loan.
Click to expand...

What can a TD do about this? It's the bank that makes the lending decision......
 
Getting TDs to convince banks to give people 5-figure unsecured loans?

Yes, that's definitely what we need right now.
 
The banks are going to have to find imaginative ways of dealing with this problem. Maybe they are already doing so - though I have not seen any evidence of it.

As I see it, the bank could ( and should) 'move' the negative equity from house A to house B provided that the figures are such that the bank would be no worse off.

In practice, this would mean that the OP would have to fund all transaction costs from savings, rather than from increased borrowings. However, if OP can put together a transaction where he\she goes from a negative equity of €50k on property A to a negative equity of less than €50k on house B, then it may well be in the Bank's interest to support this.

Obviously, it would not be in the interest of any other bank to wade into this mess - only the existing lender.
 
I think the banks would be looking at Risk Profile Here. Any movement of finance, even if it is only the situation above incurs some small risk. I appreciate this is minimal, however the banks are completely risk averse at the moment so unlikely to approve anything which could increase risk profile.

Sorry, not much help, but i know its how they operate....

They would also probably cite the moving costs as another reason not to provide the finance, extra costs = less money for you to pay them = more risk = less reason to provide finance.

TD is no use at all i would think. Unless its Johnny Junket and he can expense it.... :)
 
By closer to work what are we taking here mileage wise? Does your move have any positive effects on your earning ability. ie less of a commute and more overtime available?

Can you come up with some funding to limit the amount you need to borrow i.e can you cover solictor/auctioneers fees and moving costs from savings. When you say it's only 15k more than you currently owe is it not 30k more than your currently owe mortgage of 280k v's outatdning amount of 250k? Can you not get an unsecured loan for this and
 
Hi,

I don't understand when you say the bank wont allow you to sell for 200,000. I know your mortage is 250 but can you not actually sell at 200,000 and finance the remaining 50,000 example through the credit union? And then apply for your mortgage on new property after?

Or do you mean that legally you cannot sell at 200,000 because your solicitor could not proceed with the sale because it would leave you with a shortfall to the bank of 50,000?

Am curious myself as had previously intended to try and sell a house which I know is in negative equity but I was just going to try and sell it and get a loan elsewhere to pay the difference back to the bank
 
The bank would need to give approval in advance because they hold the mortgage. No title could be transferred until the mortgage is cleared.

WHat you would need to do is borrow 50k from the credit union first, pay down the mortgage to 200k and then sell for at least 200k (after all costs) to clear the mortgage.
 
There's advice and advice. A mortgage lender will consider lending max 90% if you are lucky to quaify- add the 10% + costs onto your negative equity amount and you have the cost of moving. As far as borrowing short term from a credit union or other lender - well that's bubble thinking. (Apart from the cost of financing short term debt at higher interest rate levels).
 
Getting TDs to convince banks to give people 5-figure unsecured loans?

Yes, that's definitely what we need right now.
Click to expand...
lol!
How about 11-figure loans, AKA NAMA?
 
A LOAN FROM A CREDIT UNION WOULD BE OVER A MAX PERIOD OF 7 YRS. repayments for this would be 2 much for us to combine with a mortgage. only option i have is to stay where i am until the value of house goes up and levels off with the remaining mortgage amount?
 
R196 said:
A LOAN FROM A CREDIT UNION WOULD BE OVER A MAX PERIOD OF 7 YRS. repayments for this would be 2 much for us to combine with a mortgage. only option i have is to stay where i am until the value of house goes up and levels off with the remaining mortgage amount?
Click to expand...

Bingo.

That is the only feasible route out for those in negative equity. You need to save.
 
What's the maximum you can afford per month to pay off this mortgage? It's vital that the capital (plus the interest obviously) starts coming down on this as fast as possible.

How much would you get if you were to rent it out? Bearing in mind that rent has come down so it would have to be a realistic figure. Check daft.ie for similar properties for rent.

Would you consider letting it out and renting a small (cheapest possible) place instead for yourself? Use the rental income plus what you'd normally pay out each month (plus a bit more if you can afford it??) MINUS the new rent you'll need to pay - is it looking any better?

I know it sucks. But this is not the time to make another purchase anyway. Think about stamp duty and solicitors fees and auctioneers fees.

It won't last forever (little consolation I know). If you can maximise payments now by living somewhere cheaper, the balance will come down faster than you might think.

Even if you weren't in negative equity I don't think you should buy now. Be shut of this debt. Then in a few years re-assess your options.
 
would i not be better off saving anythign extra i have instead of paying more off mortgage?

if i rent it out i would only get 750 p/m max. our mortgage is 1100 but i expect this to come down to hopefully 950 wen the fixed rate expires in Dec (current rate is 4.54 - variable is 3.55 - i think)

i wud be willing to rent it then and rent for 950 approx in city or cheaper if i cud as i would be saving 200 p/m on petrol!

does anyone have any idea of approx how much stamp duty, sol and auct fees are?

only hope i have of moving in the next 5 years is to win lotto!!! unles some1 else has any idea?
 
You must log in or register to reply here.
Back
Top