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I want to sell house and pay off negative equity over remaining mortage term.

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  • 16-08-2011 2:02pm
    #1
    Some Help Please
    Banned (with Prison Access) Posts: 41 ✭


    I bought an investment property 7 years ago with a good friend of mine and paid interest only for 5 years. Stupidly instead of selling then we kept the property against our better judgment and are now crippled by repayments some 900euro above the rental income. There is 18 years left on the mortage with ACC.

    My prediciment is that I'm getting married next year and want to buy a house but have no chance of getting a mortage I fear with this apartment I half own. I have met with ACC and have asked them to consider us selling the property and taking on the negative equity (60-80k) over the remainder of the mortage term at similar rates. I have a number of questions about doing this:

    Can/Has this been done and if so how and with whom?

    Will such an agreement increase my chances of getting a mortage? Ultimately i would like to place my share of the negative equity with a future mortage.

    I have worked abroad for the past few years and have been able to secure a nice nest egg which I propose to use for purchasing a house. I should have more then the 10% deposit required but am reluctant to invest more then that the way the current market is. I don't want to tie up all my savings in a home with potentially further negative equity to come.

    Your observations/advice is most welcome.


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    #2
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    Some Help Please wrote: »
    I bought an investment property 7 years ago with a good friend of mine and paid interest only for 5 years. Stupidly instead of selling then we kept the property against our better judgment and are now crippled by repayments some 900euro above the rental income. There is 18 years left on the mortage with ACC.

    My prediciment is that I'm getting married next year and want to buy a house but have no chance of getting a mortage I fear with this apartment I half own. I have met with ACC and have asked them to consider us selling the property and taking on the negative equity (60-80k) over the remainder of the mortage term at similar rates. I have a number of questions about doing this:

    Can/Has this been done and if so how and with whom?

    Will such an agreement increase my chances of getting a mortage? Ultimately i would like to place my share of the negative equity with a future mortage.

    I have worked abroad for the past few years and have been able to secure a nice nest egg which I propose to use for purchasing a house. I should have more then the 10% deposit required but am reluctant to invest more then that the way the current market is. I don't want to tie up all my savings in a home with potentially further negative equity to come.

    Your observations/advice is most welcome.

    I would imagine that with the level of default out there, banks would be willing to talk to someone who proposes a way in which they (the bank) get their money back.

    I wouldn't make any mention of the fact you have savings for a deposit. Rather, I'd suggest that your fiance has savings which can go towards a deposit.

    Would not ACC be the best bet to approve a mortgage (which includes the negative equity) for you given that they would be the beneficiary of your preparedness not to default on your loan?

    I doubt the wisdom of not tying up own funds in property that is falling in value is the preserve of just yourself. Consequently, you will find you won't get a 90% loan - even if you hadn't the issue of negative equity to add to your woes. 75% would be more like it - as the banks seek to insulate themselves from the falling market by using your deposit money as a buffer.

    Perhaps you could bargain 50/50 or something. They they finance 75% (or whatever their standard max mortgage is) + half the negative equity* as a single mortgage and you plump up the 25% standard deposit + half the negative equity as extra deposit.

    *your share of whatever it is. Of course you need to take account of what your financial partner wants to do.


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    #3
    chicken fingers
    Closed Accounts Posts: 645 ✭✭✭chicken fingers


    With a big loan like that you wont be getting a mortgage at 10% maybe if you have 30% down.
    Only real advice is to clear one huge crippling debt before getting into another?


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    #4
    gigino
    Closed Accounts Posts: 2,350 ✭✭✭gigino


    Some Help Please wrote: »
    .... negative equity (60-80k).....

    Some Help Please wrote: »
    I have worked abroad for the past few years and have been able to secure a nice nest egg


    IMHO clear one loan before starting another. Keep it simple. Pay off your share of the negative equity + sell the apartment, before the next step of another property / mortgage. By then your next property will probably be cheaper.


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    #5
    Some Help Please
    Banned (with Prison Access) Posts: 41 ✭Some Help Please


    Thank you all for the sound advice.

    Clearing the loan as much as it pains me is probably the best option alright. I would happily keep the place as it is in a good location and will always be rented if the repayments weren't so high. ACC will not entertain extending out the mortage term IOT reduce monthly repayments.


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