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negative equity mortage

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  • 27-01-2013 8:53pm
    #1
    threerivers
    Registered Users Posts: 24 ✭


    Hope someone can help me on this one..My wife and I took out a mortage with Bank of Scotland Ireland for 300,000 euro in 2007,we have never missed a payment and the two of us are in full time employment, joint income of 65,000 plus bonuses and twins on the way.The thing is my parents are willing to sell us there house for 60,000 euro as its gone a little to big for them. My question is if we sold our house for example 130,000 we'd owe 170,000 and if added the 60,000 we'd be looking for a mortage of 230,000,so would BoSI give us a knew mortage or would any other mortage provider be willing to lend us a knew one.I hope this makes sense..it did in my head anyway!!


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    #2
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    threerivers wrote: »
    Hope someone can help me on this one..My wife and I took out a mortage with Bank of Scotland Ireland for 300,000 euro in 2007,we have never missed a payment and the two of us are in full time employment, joint income of 65,000 plus bonuses and twins on the way.The thing is my parents are willing to sell us there house for 60,000 euro as its gone a little to big for them. My question is if we sold our house for example 130,000 we'd owe 170,000 and if added the 60,000 we'd be looking for a mortage of 230,000,so would BoSI give us a knew mortage or would any other mortage provider be willing to lend us a knew one.I hope this makes sense..it did in my head anyway!!
    You're forgetting about interest on one hand and the payments you've made on the other, however most of the payments in the early years of the mortgage go on interest. Talk to BoSI.


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    #3
    frfintanstack
    Registered Users Posts: 117 ✭✭frfintanstack


    I'm sure it would depend on the value of your parents house.

    How much is it worth on the open market in comparison to the mortgage you'd end up with on it?


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    #4
    threerivers
    Registered Users Posts: 24 ✭threerivers


    frfintanstack wrote: »
    I'm sure it would depend on the value of your parents house.

    How much is it worth on the open market in comparison to the mortgage you'd end up with on it?
    Would it really matter how much it's worth on the open market.If that's the price they want to sell it to me then how would it depend on what it's value is?? Forgive me I'm not to good when it comes to all this kind of stuff!!


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    #5
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Simple answer here is no. If its valued at €60k and you want €230k mortgage thats a bad situation and wont get a mortgage. Bank of Ireland have looked at allowing people to carry negative equity over to other properties if they wish to scale up or down. May be worth asking BOSI if they have a similar product to offer, unaware if they have this and would be suprised if they do.


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    #6
    threerivers
    Registered Users Posts: 24 ✭threerivers


    chris85 wrote: »
    Simple answer here is no. If its valued at €60k and you want €230k mortgage thats a bad situation and wont get a mortgage. Bank of Ireland have looked at allowing people to carry negative equity over to other properties if they wish to scale up or down. May be worth asking BOSI if they have a similar product to offer, unaware if they have this and would be suprised if they do.
    Thanks I understand now.I'd say the property would easily come in around the €230 mark,or wouldn't be to far off it. If I was to get it valued by a professional would that help?


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    #7
    frfintanstack
    Registered Users Posts: 117 ✭✭frfintanstack


    threerivers wrote: »
    Thanks I understand now.I'd say the property would easily come in around the €230 mark,or wouldn't be to far off it. If I was to get it valued by a professional would that help?

    I'm sure the bank would insist on it.

    If the transaction took you out of negative equity the bank would be mad not to help you out!!


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    #8
    roro2
    Registered Users Posts: 412 ✭✭roro2


    Bank of Scotland Ireland don't actually exist anymore. Certus manages their mortgage book, but are just a servicing company and don't do any new lending. Your only option is for another lender in the Irish market to offer you a new mortgage against your parents house, but this would be a max of 92% against the value of this property (€212k if it was valued at €230k) and there'd be a pile of other obstacles, e.g. BOSI/Certus (almost certainly) won't allow the sale of your current property for €130k without confirmation that the remaining €170k would be cleared at the same time, while other lenders are slow to even look at lending to take-out existing mortgages with other banks.

    The only viable option might turn out to be to get a cash gift from your parents, maybe after selling their house for €230k, and look for a different property. This would be the same "cost" for your parents.


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    #9
    NinjaTruncs
    Registered Users Posts: 2,491 ✭✭✭NinjaTruncs


    roro2 wrote: »
    The only viable option might turn out to be to get a cash gift from your parents, maybe after selling their house for €230k, and look for a different property. This would be the same "cost" for your parents.

    Sorry but that's horrible advice, why on earth would you suggest the OPs parents sell the house to a third party, it makes absolutely no sense.

    OP you really need to talk to either a broker or some banks to find out what your options are.

    The main points is what your parents house is worth. If it's worth 230K or close, you should be OK, depending on whether your current property is actually worth 130K.

    In regard to BoS not letting you sell your property without assurances that the NE is paid, you can get around that, here's a scenario that may work for you.

    1. Your parents gift you their house
    2. Remortgage the house you have just been gifted for 230K
    3. Give your parents the 60K owed
    4. Use the other 170K to pay down a large chunk of the mortgage on your current property.
    5. Sell/Rent your current property, depending on where it is, it may be better to rent for the short term while you look for a buyer.

    Depending on the location you could make a net profit in renting out your current property. A 130K mortgage could be as little as €600 a month to finance if it's 2 bed apartment in Dublin (for instance) you could get upwards of €900 a month in rent.

    My example isn't risk free (you could be left with your current property and be unable to rent/sell it) but it shows you have options in your situation.

    4.3kWp South facing PV System. South Dublin



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    #10
    roro2
    Registered Users Posts: 412 ✭✭roro2


    NinjaTruncs wrote: »
    Sorry but that's horrible advice, why on earth would you suggest the OPs parents sell the house to a third party, it makes absolutely no sense.

    OP you really need to talk to either a broker or some banks to find out what your options are.

    The main points is what your parents house is worth. If it's worth 230K or close, you should be OK, depending on whether your current property is actually worth 130K.

    In regard to BoS not letting you sell your property without assurances that the NE is paid, you can get around that, here's a scenario that may work for you.

    1. Your parents gift you their house
    2. Remortgage the house you have just been gifted for 230K
    3. Give your parents the 60K owed
    4. Use the other 170K to pay down a large chunk of the mortgage on your current property.
    5. Sell/Rent your current property, depending on where it is, it may be better to rent for the short term while you look for a buyer.

    Depending on the location you could make a net profit in renting out your current property. A 130K mortgage could be as little as €600 a month to finance if it's 2 bed apartment in Dublin (for instance) you could get upwards of €900 a month in rent.

    My example isn't risk free (you could be left with your current property and be unable to rent/sell it) but it shows you have options in your situation.

    I didn't advise, I suggested a possible option. You also didn't say what you consider to be "horrible".

    Regarding your scenario, unfortunately a bank will still consider that to be an equity release on an unencumbered property for the purposes of (mostly) clearing another bank's mortgage, which is unlikely to work.


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