Can I buy a new property without selling the old one?

loca

Hi Guys
I don't know if you can help me but i'm very confused!! I currently have a mortgage with my ex. We would like to sell the house as we have now broken up. We are in negative equity to the tune of 80K. thats 40K each. Our mortgage is 300K.
I have seen a house I really like that would be less than my half of the negative equity at 120K. Would the lender allow me to get a mortgage for 160K and transfer my part of the mortgage over?
I have approximately 55K in my bank account. This is part redundancy and part my own. Am I mad to think a bank would do something to help someone like me given the cash availability? :rolleyes:
I know how tough it is to get a mortgage so I would prefer to transfer half than reapply for a mortgage. As you've probably guessed I will not have a job for a short while as I am going to complete a course. I will be working part time and with such a small mortgage I should be able to make it for a year or so while i'm at college.
My ex is living in the house with tenants and I am living at home now at my parents. He also wants to sell but won't have anything to buy. We have a solicitor negotiating with the mortgage lender to see if they will absorb some of the negative equity but we haven't had any response yet.
That should be interesting!!!
I don't know if this is possible...do any of you? I know they do these types of things but they don't publicise it! should I just sit tight and wait on the legal advice? Surely the 55K might tempt them into helping me??

The_Conductor

First of all- you have no idea what the actual negative equity associated with the property is, until such time as you actually sell the property.

You will not be offered a mortgage on another property- until such time as you have discharged your current mortgage. I.e. until you and your ex sell your current property, for whatever you can get for it, you are not going to be able to purchase elsewhere.

Typically new mortgages are for a max of 80% of the purchase price of the property (or as low as 50% if the property is an apartment, or a leasehold property of any nature).

First thing you need to do is get rid of the current property. Your ex is going to have to figure how to finance her part of the negative equity- you don't explain whether she is in a position to do this or not- however it could be a stumbling block to getting rid of the property.

With respect of the new property- if you have 40k of negative equity to discharge from the current property- your net cash position is 15k so realistically you'd need to save another 10k or so, to be in a position to be considered for a mortgage in your own right on the new property.

The fact that you have saved 55k- will look great on any application- however its immediately reduced by outstanding debts, and any income is reduced by any current outgoings (which would include the mortgage on the current property).

Further to all of this- Irish lenders have pretty much closed up shop- it is appallingly difficult even for the most perfect customer to get a mortgage these days- there is no money out there.

You need to try to figure how to get rid of the current property- before you fall in love with another property- you really do not want to be in the situation where you are stuck with two properties!!!!

loca

not what I wanted to hear but makes a whole heap of sense! I'm just finding it hard to think logically about it all! My head is just racing 24/7! I definitely don't want to be stuck with 2 properties! I am just eager to move on with my life and a property like the one I like would never come on the market if I was in a perfect position to buy!!

(O btw I am the female in the case).... the ex is the male!

My ex is in a very bad position financially so am I tied to him and this house until he can come up with the goods?? This really is not a good situation for me as he is unstable.

Such a mess really! At least we're on amicable terms!!

The_Conductor

Would you be in a position to take over the current property?
You really need to get professional advice to be honest.

loca

I don't know, I dont really want a property with such high negative equity. I can approximate the NE as I know that the properties around us are selling for buttons and ours is nicely kitted out but Im told that doesnt make a huge difference at the end of the day as its only cosmetic. I could probably take on the mortgage using parents/guarantor as collateral but itd be too high a mortgage for me all my life I think! The Solicitor we have is ruthless so i'm hoping she can negotiate a % with the lender to absorb some of the NE. Its worth a try. I'd sell my soul to get rid of it for the stress alone!! Not fun having 3 young fella's living in you biggest investment!!
You live and learn though... so true!!

The_Conductor

I've not heard of any of the Irish mortgage lenders absorbing a portion of the negative equity on behalf of borrowers who are unable to sell. Some (EBS for example) brought out new products allowing you to sell in NE and bring the NE with you to a new property. There is also the new code of practice- which in effect is a different repayment scheme for those unable to afford to repay their mortgages (you repay only a portion of the interest (typically 60%) until such time as your circumstances improve and you can afford to repay your mortgage as normal. The lender takes a portion of the equity in the property in lieu.

I've not heard of any lenders willing to write-down a portion of the negative equity in the Irish market (it is common practice in the US, but not here). Do please let us know what transpires between your solicitor and the bank- it would be a very interesting development were one of the lenders to break ranks as you are suggesting.

loca

yes I will definitely let you know the outcome. We have only just begun the process and are waiting on a response. The first letter from the solicitor read like "please confirm that you are willing to absorb the negative equity on the property so that the couple may move on with their lives". I'm sure we will get a big fat NO back but she will then go back to them with a compromise. The solicitor seemed quite positive but maybe that was because she was envisaging her own costs in the matter. There doesn't seem to be any beating around the bush with her so here's hoping. We are not in arrears or anything. Our circumstances have just changed.
The government has to help people out in our situation. The whole country is in the same sinking boat. We were very ill advised when we took out our mortgages being convinced to go for 5 years fixed rate. As soon as we're off fixed rate we'll be 300 euro better off a month. I blame my own naievity (SP?) but its a lesson I won't forget about in a while.
If I could transfer the NE on the property to a new mortgage on my own I would be delighted because I trust my own capabilities and have never missed a payment. Its the tie to the financially unstable, partying ex im most concerned about!!

rcdk1

Hi loca, I've no idea if this is possible but.....
Ask the bank if upon selling the house, they would be willing to transfer your ex's NE to a personal loan provided you pay your half of the NE in cash.

Your ex will have less to pay off although admittedly at a higher rate of interest. The bank gets the majority of their money back with the promise of the rest at a higher interest rate. As regards collateral, since your ex is already in NE, the bank wouldn't be in any worse a position giving him an unsecured loan but you could ask about getting his parents etc to guarantee the loan. Best of all you're out of the mess.

Three points though:
1) as smccarrick said you won't know the full extent of NE until the house is sold. Houses are selling for far less than what they're being advertised.
2) you're going to incurr taxes and fees during the sale
3) i would be happy to just get rid of the old house and would forget about the second house until you're finished college and have a stable job.

loca

rcdk1 wrote: »

Hi loca, I've no idea if this is possible but.....
Ask the bank if upon selling the house, they would be willing to transfer your ex's NE to a personal loan provided you pay your half of the NE in cash.

Your ex will have less to pay off although admittedly at a higher rate of interest. The bank gets the majority of their money back with the promise of the rest at a higher interest rate. As regards collateral, since your ex is already in NE, the bank wouldn't be in any worse a position giving him an unsecured loan but you could ask about getting his parents etc to guarantee the loan. Best of all you're out of the mess.

Thanks a million, all very good advice. I should just wait til i'm finished college but this house im interested in is right beside my mam and dads and would probably never come up again for such a price in Dublin. I think I really need some good legal advice but I don't know if I should get my own separate solicitor or get in on the one he's employed as at the end of the day he's her main client but she can't do anything without my knowlege. It would be easier for her to do everything?

rcdk1

loca wrote: »

....but this house im interested in is right beside my mam and dads and would probably never come up again for such a price in Dublin. I think I really need some good legal advice but I don't know if I should get my own separate solicitor...

Fair enough if it's a unique opportunity.

As regards solicitors, you should definately get your own. (Before I got married, we were thinking of buying a house and our solicitor refused to represent us both as legally we were still seperate individuals.) The down sides are the cost and it may sour the amicable relationship you have with your ex.

Idbatterim

Op, where is the property in dublin, and what is the asking price? you may be about to leap from one negative equity situation to another!

loca

Its an old detached property in North County Dublin with 3 bedrooms, living room, kitch, sitting room, scullery/utility, garden and 3 stone outbuildings right beside the house that could be converted onto the house with very little modification (has doors and window spaces) that part just needs roofing- all perfectly sound as its a family friends inhertited property. Off Street parking, ,south facing! And all for 120K asking price....

Too good to be true or what? I'm an engineer so I know all about the structural aspect and it is sound! I've fallen in love again!!!

robd

loca,

You have no job. No bank, even in the best of times, would give you a mortgage with no job. Nor will they re-mortgage or re-finance etc. After getting a new job wait 2 years and then you will be considered for a mortgage again.

In regards to bank helping you. I'm sure they'll help you to spend your 55k, on repaying the negative equity on your mortgage. That's about it though. Also, I think you're collectively liable for the negative equity. In other words, if your ex can't pay you must pay, the full amount. It's not a 50/50 split.

I don't know how you could possibly think you could get a mortgage in your situation in the best of times, let alone given all recent news on the banks.

loca

I can live in hope! I have no problems paying my mortgage going forward as the rent covers my half of the mortgage and I have my savings if I need to dip into it. Its true we are joint and severent but I'm willing to sort my side of it out if I can come to some sort of an arrangement. And as for having no job, I do have a job, I won't have one in 3 months but I will be doing some work on the side. I realise I won't be able to apply for a new mortgage that Is why I would like to transfer my existing mortgage. It seems unlikely from all the replies I will be able to do this but I want to try every avenue before I keep throwing money at a propertyh thats never going to be worth its previous so called "value" ever again!

Kimia

Unfortunately that was the risk you took when you bought the house.

As others have said, that 55K means nothing because you and your ex's negative equity will swallow that up (depending on what it turns out to be).

I would keep going as is - at least the mortgage is getting paid - and have another look at your situation in 5 years or so.

rcdk1

robd wrote: »

loca,

You have no job. No bank, even in the best of times, would give you a mortgage with no job. Nor will they re-mortgage or re-finance etc. After getting a new job wait 2 years and then you will be considered for a mortgage again.

In regards to bank helping you. I'm sure they'll help you to spend your 55k, on repaying the negative equity on your mortgage. That's about it though. Also, I think you're collectively liable for the negative equity. In other words, if your ex can't pay you must pay, the full amount. It's not a 50/50 split.

I don't know how you could possibly think you could get a mortgage in your situation in the best of times, let alone given all recent news on the banks.

harsh..... but fair

EnoughSaid

I think that the only bank that is likely to lend you any money is the bank of mummy and daddy!

If your parents are in a good position financially and this house is in the perfect location close to them, then perhaps you should ask your parents to help you. However, as property prices continue to fall, what seems like a bargain today is likely to end up being another negative equity ball and chain!

loca

EnoughSaid wrote: »

I think that the only bank that is likely to lend you any money is the bank of mummy and daddy!

If your parents are in a good position financially and this house is in the perfect location close to them, then perhaps you should ask your parents to help you. However, as property prices continue to fall, what seems like a bargain today is likely to end up being another negative equity ball and chain!

There aint no bank of mummy and daddy! Any money I have is hard earned! They're not in a position to help me out and by the looks of things there's no point in me even hoping!
Going to go see a solicitor this week on my own to see what the story is! Thanks for the input though!

Lollymcd

loca wrote: »

would probably never come up again for such a price in Dublin

I think this presumtion is what has got a lot of people into financial hot water in the last decade, to be honest, we really don't know what is going to happen. The banks are slow to lend so chances are this property could remain on the market for some time.

Just a point to note, a friend found this out the hard way, if you end out with, lets say, €80K negative equity then you are personally responsible for this, not half of it, all of it. You are relying on your ex to pay his half but if the doesn't the bank will insist you do. Just mentioning it as your ex sounds like a bit of a boyo.

Best of luck

loca

Yea he is a boyo!

So glad im away from that!! Minimal contact now and its all working out well! Have 2 people renting in the house so have less than 200 to pay each month now thank god. He still pays his half as normal but im back at my parents. Hard settling in because I miss my space but you can't have it every way! I'm no longer wanting to go for a new house but I know this one wouldnt come up again because Nama are selling it off to pay debts of a builder for 120K and the builder bought it for 650K a few years ago and did nothing with it!! Prime apartment space in a village. Aw well... there'll be others!! Sort out one mess before making another!! Thanks guys!

Lollymcd

Best of luck for the future loca!

29bull

Hi Loca,

Any further developments since you last posted ? I'm in negative equity (small hse rented out now) and hoping to apply for a mortgage sometime as I'm also paying rent on where I live. I searched and came across your thread. I do hope things are better for you now.

Eldarion

You might be better off private messaging her directly 29bull. Although it's been over 5 months since she last posted anywhere on boards so I wouldn't keep your hopes up.