Mortgage Problems - advice please

liamolaighin

Hi there, my girlfriend and I are in the process of applying for a mortgage for a self build. I am being gifted the site and have approx 20% deposit. The mortgage we applied for is relatively small and indeed the bank said I am a perfect candidate except for 1 thing - I currently co-own an investment property in Cork City which has a large mortgage remaining.

I co-own that property with a friend. We are both in long term permanent employment with job security and a good wage. We both have salary protection and the house is rented out which covers approx 80% of the mortgage. The rest we split which amounts to approx €100 each per month.

I understand why the bank see me as a risk in these economic times but I was wondering if anyone has any advice for me on ways to proceed. The bank says to simply get the investment property out of my name. Would this mean selling the house or is it possible to transfer my portion of the mortgage into someone elses name thus relieving me of that debt?

Could I transfer the mortgage into my fathers name for instance and remain as the owner?

My father has also said he would go as guarenteur on the loan. Do banks still accept a guarenteur?

Are there other routes I could look at to get approval. p.s I am aware of the dangers of borrowing large sums for all concerned and my girlfriend and I are totallly confident of our ability to service the loans in question.

StillWaters

Is the investment property in negative equity? If so, by how much?

RaoulPuke

You say you have an investment property that is only covering 80% of it's mortgage, am I correct in assuming you are not living in this property?
This is a very valid reason for the bank not wanting to lend to you.
The property cannot yield enough in rent to cover the loan you took out on it, I think passing this debt on to a relative to then secure a further loan would be extremely unfair/irresponsible. Interest rates are going to rise increasing the cost of your monthly loss.
Salary protection will cover illness, not unemployment. Your perception of job security or confidence would also be of little comfort to someone lending you large amounts of money. Please look see this option as burdening someone else with your debt, rather than relieving yourself of it.
I'd try sell the property if possible. You've made a bad investment, either get out of it now cutting your losses and start again (if the other investor agrees to sell) or sit on it if you have expectation that it will improve.

tanyabond

RaoulPuke wrote: »

You say you have an investment property that is only covering 80% of it's mortgage, am I correct in assuming you are not living in this property?
This is a very valid reason for the bank not wanting to lend to you.
The property cannot yield enough in rent to cover the loan you took out on it, I think passing this debt on to a relative to then secure a further loan would be extremely unfair/irresponsible. Interest rates are going to rise increasing the cost of your monthly loss.Salary protection will cover illness, not unemployment. Your perception of job security or confidence would also be of little comfort to someone lending you large amounts of money. Please look see this option as burdening someone else with your debt, rather than relieving yourself of it.

I believe he's not planning to offload his debt to his father, but rather have it on paper that he doesn't have a debt in order to improve his chances of getting a mortgage for building his own home.

I'd try sell the property if possible. You've made a bad investment, either get out of it now cutting your losses and start again (if the other investor agrees to sell) or sit on it if you have expectation that it will improve.

What makes you think it's a bad investment? Not every investment is intended to bring returns instantly, the OP didn't give you enough information about the equity/costs etc for you to judge if it's bad or good.

Theboinkmaster

tanyabond wrote: »

I believe he's not planning to offload his debt to his father, but rather have it on paper that he doesn't have a debt in order to improve his chances of getting a mortgage for building his own home.



What makes you think it's a bad investment? Not every investment is intended to bring returns instantly, the OP didn't give you enough information about the equity/costs etc for you to judge if it's bad or good.

If currently the rent only covers 80% of the mortgage and there's a large mortgage outstanding of course it's a bad investment - a good investment would yield about 7%. And that's when interest rates are at an all-time low. Once they go up that investment is going to get worse. It's entirely possible this Cork property won't yield anything like 7% over the course of the OP's lifetime, especially when you account for the 20% top-up at present just to break even - and that's only going to increase.

RaoulPuke

Thanks Theboinkmaster
tanyabond I didn't say he was offloading it, but it may well be his father's burden. Let's consider if he was made unemployed, the relationship didn't work out or some other complication that left the applicant unable to pay the investment mortgage. His father is then responsible, his assets are now at risk. I'd call that a burden.
Everything may work out fine, but from the point of view of a lender I'd imagine it's a bad risk/investment.

ihavetogo

if my partner and i were to spit up we have a morgage how could we give keys back do any one know

dory

ihavetogo wrote: »

if my partner and i were to spit up we have a morgage how could we give keys back do any one know

You can give the keys to whoever you like, as long as they buy the house from you. We don't have a system in Ireland where you can give the keys back and walk away - you're still responsible for the mortgage. All you can do is still split the payments.

ihavetogo

what if your out of work and she is gone how could i pay morgage on my own