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A few unbiased opinions please...

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  • 18-08-2010 8:29pm
    #1
    dan_d
    Closed Accounts Posts: 2,819 ✭✭✭


    Hey guys, I don't normally start threads around here, but I can't seem to get this info anywhere else. .

    Right, well we are thinking of emigrating. Nothing's decided, we're just looking at all our options. We have a house in north county Dublin, 4 bed, decent size, in a well settled estate. We are, I think maybe 50k in negative equity.

    If we were going to emigrate, we'd either rent or sell obviously. If we can rent, fine. But if we sold, what would be the implications of that?

    Please don't give me a list of all the reasons about people being stupid enough to buy, etc,etc. I literally just want a list of pros and cons, preferably not biased. We are literally just considering our options here, and it's hard to find out what exactly the implications of selling in our situation might be.


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    #2
    whippet
    Registered Users Posts: 7,684 ✭✭✭whippet


    the simple reality is, if you do choose to sell you will have to make up the shortfall of 50k.

    When your buyer's solicitor requests the deeds from your solicitor it is the bank who will pass them over. The bank will not release the deeds until they have been paid in full. Obviously the cheque from the buyer won't cover the debt and the bank will not release the deeds.

    As your are leaving the country I doubt if any bank in the country will lend you the 50k to make it up.

    It isn't nice but that is the reality.


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    #3
    RATM
    Closed Accounts Posts: 3,591 ✭✭✭RATM


    Would you have a shortfall on your mortgage if you rented it? You need to allow for 11 months rent, not for 12 too.
    If there's no shortfall or its negligible then rent it, provided you can find good tenants.


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    #4
    dan_d
    Closed Accounts Posts: 2,819 ✭✭✭dan_d


    At this point in time, the shortfall in rent would be negligible, given what we could be earning/paying in living costs in the country we would like to go to.

    Thanks for explaining that whippet, I didn't know exactly what happened if you did find a buyer and had to make up a shortfall.

    Our other option would be to rent for a period and save as much money as we can while abroad, using that to pay off any shortfall. Or simply use it to knock off the mortgage at some point in the future.

    We would prefer to keep the house, as it's our home, and was bought with that as a long-term view. However, as I said I'm looking at our options.

    Is it possible that the shortfall in the mortgage would be transferred to a loan, or some other form of credit, leaving a buyer free to take the house?

    None of this sounds good, but at the end of the day it is what it is and I just want some rational answers on it. We are weighing up our options.There are people around the country who are far worse off than we are, we are not missing payments, or struggling with money.

    Edit: RATM - what do you mean when you say I've to allow for 11 months rent instead of 12?


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    #5
    whippet
    Registered Users Posts: 7,684 ✭✭✭whippet


    dan_d wrote: »
    Is it possible that the shortfall in the mortgage would be transferred to a loan, or some other form of credit, leaving a buyer free to take the house?

    I would imagine it would be next to impossible to get any sort of unsecured finance on 50k at the moment .. even car loans for older cars are difficult to get.

    I am in the process of selling my house at the moment, it looks like I will be about 10k in Negative and I am going to finance that short fall from my own savings.


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    #6
    groom
    Registered Users Posts: 1,104 ✭✭✭groom


    dan_d wrote: »
    Edit: RATM - what do you mean when you say I've to allow for 11 months rent instead of 12?

    You need to allow for void (empty) periods and 11 months is a rule of thumb to factor in. If you rent it out the place is unlikely to occupied 12 months of any year between changing tenants and renovating.

    Though I know my previous LL didn't suffer any void days before or after our tenancy so that would mean he didn't suffer a void day in 4 years. He priced well.


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    #7
    variety
    Registered Users Posts: 152 ✭✭variety


    dan_d wrote: »
    Our other option would be to rent for a period and save as much money as we can while abroad, using that to pay off any shortfall.
    Three important points:
    1. When you move, your bank will change the terms of your mortgage from PDH (private dwelling house) to RIP (residential investment property).
    Generally speaking, RIP rates are 2-3% higher than current variable rates. And all rates are rising! If you are on a tracker, you will lose out big time.

    2. As an overseas landlord, your tenant would have to deduct 20% of the rent and pay it directly to Revenue, so make sure you take that decreaseed rent into consideration when you do your finances.

    3. Being a landlord is not easyand it's certainly NOT a cost-free option. You may well have to pay an agency management fees, there's the cost of maintenance (remember that tenants get the property maintained for free. Even if you're happy with a few smudges on a painted wall or a cracked tile in the bathroom, a tenant might well not be - since it doesn't cost them anything- and will get you to fix it), maybe an accountant for your tax returns, NPPR tax, the possibility of water rates, etc etc.
    dan_d wrote: »
    Is it possible that the shortfall in the mortgage would be transferred to a loan, or some other form of credit, leaving a buyer free to take the house?
    Highly unlikely. 50k is a huge loan to have unsecured. You will have to raise the funds privately (ie friends/family) and pay off your negative equity.


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