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2nd mortgage negative equity

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  • 17-05-2012 9:08pm
    #1
    frosty66
    Registered Users Posts: 46 ✭


    My current situation is;
    Living in Dublin bought house for 370 in boom 2 bed duplex

    want a bigger space mortgage is 300 thousand at the moment and
    have 50 grand in savings

    house is currently worth 200'000 ish

    really want to buy a 2nd home..have 2 kids need more space
    bank say no way not to even bother applyin

    does anyone have any ideas or know what the bank's stance might change in the future

    REALLY keen to move:(


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    #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Enquire at other lenders. The Central Bank have recently approved schemes for negative equity mortgages- whereby you'd sell your property for whatever its worth, and carry the loss onto a new mortgage- aka- in your case you'd carry a net 50k loss into a new loan (the savings would be offset against the loss also- you don't get to keep them separately)

    Alternatively- accelerate repayments- until your no longer in negative equity- and then try to sell (nothing to say the price won't fall as fast as your accelerated payments though- so you could be chasing a moving target).

    Don't focus on just one lender- you have other options.


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    #3
    frosty66
    Registered Users Posts: 46 ✭frosty66


    thanks for ur reply

    Im currently stuck to this lender as Im fixed into a very very low rate which means my mortgage payments on house are only 1000
    I cud easily rent my house for 1000 I just cant see why the bank wouldnt let us get another mortgage. we are both in very secure jobs have saved a new deposit never missed a payment have no other loan not even a euro in credit card debt.


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    #4
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    frosty66 wrote: »
    thanks for ur reply

    Im currently stuck to this lender as Im fixed into a very very low rate which means my mortgage payments on house are only 1000
    I cud easily rent my house for 1000 I just cant see why the bank wouldnt let us get another mortgage. we are both in very secure jobs have saved a new deposit never missed a payment have no other loan not even a euro in credit card debt.

    Irrespective of your repayment capacity- and the fact that you both have good jobs- were your lender to give you more money- you'd have a staggering amount of debt outstanding to you. If there were vacant periods in property 1- a manageable repayment could rapidly become a millstone- irrespective of anything else- and keep in mind, you'd probably be moved onto an investor rate mortgage- which is significantly higher- were you to go down this road.

    Book an appointment with an independent financial consultant- and get a feeling for what your options are- it would be money well spent.


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    #5
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    frosty66 wrote: »
    My current situation is;
    Living in Dublin bought house for 370 in boom 2 bed duplex

    want a bigger space mortgage is 300 thousand at the moment and
    have 50 grand in savings

    house is currently worth 200'000 ish

    really want to buy a 2nd home..have 2 kids need more space
    bank say no way not to even bother applyin

    does anyone have any ideas or know what the bank's stance might change in the future

    REALLY keen to move:(

    Rent out your property and go rent somewhere bigger? This would actually help a future mortgage application....


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    #6
    bath handle
    Banned (with Prison Access) Posts: 370 ✭✭bath handle


    killers1 wrote: »
    frosty66 wrote: »
    My current situation is;
    Living in Dublin bought house for 370 in boom 2 bed duplex

    want a bigger space mortgage is 300 thousand at the moment and
    have 50 grand in savings

    house is currently worth 200'000 ish

    really want to buy a 2nd home..have 2 kids need more space
    bank say no way not to even bother applyin

    does anyone have any ideas or know what the bank's stance might change in the future

    REALLY keen to move:(

    Rent out your property and go rent somewhere bigger? This would actually help a future mortgage application....
    is this a joke. Move to investor mortgage rate, lose money every month. Pay a rent higher than current mortgage, so losing more money every month. . No prospect of being in positive equity with two properties combined. The banks wouldn't touch it with a barge pole.


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    #7
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    bath handle wrote: »
    is this a joke. Move to investor mortgage rate, lose money every month. Pay a rent higher than current mortgage, so losing more money every month. . No prospect of being in positive equity with two properties combined. The banks wouldn't touch it with a barge pole.

    It was just an option... like the thousands of other couples who are renting a bigger house and enjoying tracker rates on their 'family homes'.... As for banks lending to people who are in negative equity on an existing property believe it or not, they do - regularly....


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    #8
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    killers1 wrote: »
    It was just an option... like the thousands of other couples who are renting a bigger house and enjoying tracker rates on their 'family homes'....

    Do you not think this is going to come back and bite them all on the arse at some stage?
    Bank says "hey by the way, you owe us the difference between that tracker for your PPR and the BTL interest rate you should have been on".


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    #9
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Zamboni wrote: »
    Do you not think this is going to come back and bite them all on the arse at some stage?
    Bank says "hey by the way, you owe us the difference between that tracker for your PPR and the BTL interest rate you should have been on".

    For now the banks are putting all their resources into collections and aren't too bothered about performing loans... It could happen in the future but if I was a betting man I doubt it...If the worst came to the worst and they started kicking up a fuss, what can they do if you move back in? How will they prove the property was rented? Ok the owner may have registered with the prtb but they could always say after a couple of months they decided to move back home.... I just think it's way to complicated for the banks to pursue and prove and if the loan is performing I think they are relatively happy to turn a blind eye.

    and besides, a lot of banks were offering the same margin on their buy to let trackers as homeloans in those days...so are they really out of pocket??


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    #10
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    killers1 wrote: »
    For now the banks are putting all their resources into collections and aren't too bothered about performing loans... It could happen in the future but if I was a betting man I doubt it...If the worst came to the worst and they started kicking up a fuss, what can they do if you move back in? How will they prove the property was rented? Ok the owner may have registered with the prtb but they could always say after a couple of months they decided to move back home.... I just think it's way to complicated for the banks to pursue and prove and if the loan is performing I think they are relatively happy to turn a blind eye.

    and besides, a lot of banks were offering the same margin on their buy to let trackers as homeloans in those days...so are they really out of pocket??

    Banks are going to know if someone is not living at a house. Once the house is let at all without permission there is a breach of covenant. They are desperate to escape from trackers. They will immediately change the status of the loan. banks do regular credit checks and will know if someone has another mortgage. They are not required to get involved with MARP if it is a non PPR. Banks are not lending for second properties particularly if there is a negative equity situation. You are letting your imagination run away with you.


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    #11
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Kosseegan wrote: »
    Banks are going to know if someone is not living at a house. Once the house is let at all without permission there is a breach of covenant. They are desperate to escape from trackers. They will immediately change the status of the loan. banks do regular credit checks and will know if someone has another mortgage. They are not required to get involved with MARP if it is a non PPR. Banks are not lending for second properties particularly if there is a negative equity situation. You are letting your imagination run away with you.

    Where did I mention buying another property...?


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    #12
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    killers1 wrote: »
    Where did I mention buying another property...?

    In case you hadn't noticed this is a thread about buying another property!


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    #13
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    killers1 wrote: »
    and besides, a lot of banks were offering the same margin on their buy to let trackers as homeloans in those days...so are they really out of pocket??


    The banks are seriously out of pocket on trackers. The costs of funds to them has risen but the cant increase their interest rate charge to accommodate that, because it is linked to the ECB rate.


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    #14
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Kosseegan wrote: »
    In case you hadn't noticed this is a thread about buying another property!

    Just curious why you quoted me in relation to banks doing credit checks and seeing that someone might have a second mortgage. Not very relevant...


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    #15
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Kosseegan wrote: »
    The banks are seriously out of pocket on trackers. The costs of funds to them has risen but the cant increase their interest rate charge to accommodate that, because it is linked to the ECB rate.

    If a bank that offered buy to let mortgages at the same margin as homeloans they are not out of pocket by someone renting out their property as this is the same margin would have been applied if it was rented from day 1. You're just looking for ways for the banks to start penalising people to recoup some of their massive losses....


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    #16
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    killers1 wrote: »
    Just curious why you quoted me in relation to banks doing credit checks and seeing that someone might have a second mortgage. Not very relevant...

    Because you were commenting that the bank wouldn't know or be able to prove a property was being let out.


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    #17
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    killers1 wrote: »
    If a bank that offered buy to let mortgages at the same margin as homeloans they are not out of pocket by someone renting out their property as this is the same margin would have been applied if it was rented from day 1. You're just looking for ways for the banks to start penalising people to recoup some of their massive losses....

    The banks offered trackers when they made money on them. Now they are losing money on them. They have the right to change the terms when the house is being used for a different purpose. That is what they are doing. They do not accept that they have to lend money ad infinitum. they are trying to get householders of trackers if possible as well.


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    #18
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    The bank really isn't bothered about performing loans. Too much else to fry. It's also possible there will be measures to support reluctant landlords brought in, so banks are sitting tight til then.


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    #19
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Kosseegan wrote: »
    Because you were commenting that the bank wouldn't know or be able to prove a property was being let out.

    If the owner is renting elsewhere.....


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