Negative Equity on apartment and want to buy house. Advised to go interest only

acb

We went to see a broker today, who was extremely professional but unfortunately didn't have a whole lot of advice for us!

Bit of background.
We're back in Ireland after 3 years abroad.
Have 2 bed apartment with an estimated market rate circa 170,000e
Mortgage outstanding as at Dec 31st 202,000
Tracker with AIB, repayment currently 918euro per month

We ve 2 kids, husband started new permanent job with public service.
Salary 62k
Probation 1 year!!! Only month into it.

Im currently a stay at home mum but hopeful of getting work in September as teacher.

Savings to date 34,000. No loans or balances on credit cards owing.
Estimate we can save 2,000 p/m as living with family rent free.

......
So essentially we are hoping to sell the apartment towards the end of the yr and closer to husband seeing out his full probation period.
Reckon at that stage we ll have about 20 k negative equity , fingers crossed less.

The broker seemed to think we were an usual case...which surprised the heck out of me!
Surely there are loads of people who bought apartments in 2005, in negative equity and who now have kids and hence need to buy a house!
I think whats complicating our situation is that only my husband is working and we've a tracker. The broker said not that many have trackers.

I was of the opinion (maybe wrongly) that we could 'port our tracker' over to a new mortgage and that we'd probably be hit with an additional 1% charge.


The only thing he suggested was to perhaps ring AIB and enquire about going interest only.
Prior to emigrating,we had considered going interest only but at the time there was a lot of fear, that if we did this we'd lose our valuable tracker.
He said we'd have to put a case forward that in light of the new central bank requirements of 20% deposit that we wanted to buy and needed to go interest only to save the additional deposit.

Look, I know we were engaging with a broker quite early into my husbands probation but I feel get armed with the facts early on and put ourselves in the best position going forward.
To say I feel deflated is an understatement.
I just can't believe that we'd be that unusual!?


I've read most of the previous threads on this site and am still confused whether we will be subject to the 20% deposit requirement as neg equity holders.
Someone said AIB ARE enforcing the 20% deposit on NE holders and as we are currently AIB- perhaps we will be subject to it. If we are I guess it's batten down the hatches and skimp, skimp, skimp

I guess we are just wondering ; what do we do now?
Obviously, we need to do some more serious saving.
But have we any options?
It's so disheartening that since 2006 we've easily paid our mortgage and to still be in NG to the tune of 30k and no real route to buy a house with 2 kids is so depressing.

Is the option of going INTEREST ONLY a good idea for say 6 months to help us save a bigger deposit quickly??? Will AIB even go for it?
IS this the type of thing they'll say no way too. What pleads could we be making to support our request?
Im thinking if we did go interest only, thats a big if, we could potentially then save maybe 2600p/m. Perhaps its a good option. I would have thought going interest only might go negatively against us when we eventually look for a mortgage.

ALL ADVICE GREATLY APPRECIATED! Maybe we are a complicated case!
Thank you for reading!
A

dubrov

A few quick things:
AIB do port trackers with a 1% charge
http://personal.aib.ie/our-products/mortgages/tracker-interest-rate-mortgage

Your situation is not rare.

AIB will not let you go interest only if you have no arrears on your mortgage.

You need a new broker

mr_seer

acb wrote: »

We went to see a broker today, who was extremely professional but unfortunately didn't have a whole lot of advice for us!

Bit of background.
We're back in Ireland after 3 years abroad.
Have 2 bed apartment with an estimated market rate circa 170,000e
Mortgage outstanding as at Dec 31st 202,000
Tracker with AIB, repayment currently 918euro per month

We ve 2 kids, husband started new permanent job with public service.
Salary 62k
Probation 1 year!!! Only month into it.

Im currently a stay at home mum but hopeful of getting work in September as teacher.

Savings to date 34,000. No loans or balances on credit cards owing.
Estimate we can save 2,000 p/m as living with family rent free.

......
So essentially we are hoping to sell the apartment towards the end of the yr and closer to husband seeing out his full probation period.
Reckon at that stage we ll have about 20 k negative equity , fingers crossed less.

The broker seemed to think we were an usual case...which surprised the heck out of me!
Surely there are loads of people who bought apartments in 2005, in negative equity and who now have kids and hence need to buy a house!
I think whats complicating our situation is that only my husband is working and we've a tracker. The broker said not that many have trackers.

I was of the opinion (maybe wrongly) that we could 'port our tracker' over to a new mortgage and that we'd probably be hit with an additional 1% charge.


The only thing he suggested was to perhaps ring AIB and enquire about going interest only.
Prior to emigrating,we had considered going interest only but at the time there was a lot of fear, that if we did this we'd lose our valuable tracker.
He said we'd have to put a case forward that in light of the new central bank requirements of 20% deposit that we wanted to buy and needed to go interest only to save the additional deposit.

Look, I know we were engaging with a broker quite early into my husbands probation but I feel get armed with the facts early on and put ourselves in the best position going forward.
To say I feel deflated is an understatement.
I just can't believe that we'd be that unusual!?


I've read most of the previous threads on this site and am still confused whether we will be subject to the 20% deposit requirement as neg equity holders.
Someone said AIB ARE enforcing the 20% deposit on NE holders and as we are currently AIB- perhaps we will be subject to it. If we are I guess it's batten down the hatches and skimp, skimp, skimp

I guess we are just wondering ; what do we do now?
Obviously, we need to do some more serious saving.
But have we any options?
It's so disheartening that since 2006 we've easily paid our mortgage and to still be in NG to the tune of 30k and no real route to buy a house with 2 kids is so depressing.

Is the option of going INTEREST ONLY a good idea for say 6 months to help us save a bigger deposit quickly??? Will AIB even go for it?
IS this the type of thing they'll say no way too. What pleads could we be making to support our request?
Im thinking if we did go interest only, thats a big if, we could potentially then save maybe 2600p/m. Perhaps its a good option. I would have thought going interest only might go negatively against us when we eventually look for a mortgage.

ALL ADVICE GREATLY APPRECIATED! Maybe we are a complicated case!
Thank you for reading!
A

AIB will give you a negative equity mortgage. In fact they will even let you carry your tracker rate with an additional 1% margin or so applied. You will fall outside of the CB rules. AIB will actually benefit from this as instead of a loss making tracker mortgage on a NE apt they will have a profitable, larger one on a house. You will have to use your savings as a part deposit.

I suggest that you save as much as you can while you are looking for work. Get back into employment ASAP as the bank will like to see two parents working and past probation. This will greatly improve your repayment capacity. You should be in a good position then.

I also suggest making an appointment with one of AIB's mortgage advisors. They will give you guidance on how to put yourself in the best position possible to get a mortgage. Dump that useless broker. He should have known the above

acb

Thank you both for taking time to reply.
Yeah, I knew AIB were porting trackers with additional 1%.
I'm finding it crazy now how he didn't know all this stuff, as I said we definitely can't be a special case!

Maybe he just felt there is a lot of work involved in this and what he'd be charging wasn't going to be work it?! Hard to tell.

Will take your advice and definitely go into AIB and see what they ask. I'd rather know now what we need to work towards.
Thank you both.

dixiefly

acb wrote: »

We went to see a broker today, who was extremely professional but unfortunately didn't have a whole lot of advice for us!

Bit of background.
We're back in Ireland after 3 years abroad.
Have 2 bed apartment with an estimated market rate circa 170,000e
Mortgage outstanding as at Dec 31st 202,000
Tracker with AIB, repayment currently 918euro per month

We ve 2 kids, husband started new permanent job with public service.
Salary 62k
Probation 1 year!!! Only month into it.

Im currently a stay at home mum but hopeful of getting work in September as teacher.

Savings to date 34,000. No loans or balances on credit cards owing.
Estimate we can save 2,000 p/m as living with family rent free.

First of all the very best of luck in getting a house that suits, moving over and back must be stressful as we experienced a lot of stress even moving in Ireland!

I had to comment on your estimate of saving €2k a month on a €62k salary. Tbh, I nearly choked reading it. I would earn about €10k more than that and my wife is working as a teacher and our mortgage is almost identical to yours and we are struggling to save anything. We do have 3 children with a daughter in college away from home, have commuting costs with 2 cars etc but when we pay all our various costs, property tax etc there's not much left. We dont go to pubs etc but do go out on and off. Probably spend on holidays approx €3-5k a year.

I was just thinking that if we cut out all non essential costs I dont think that we would save anything close to €1k a month. Most of the money is gone before we eve get it.

best of luck, negative equity is a bitch.

TrishSimon

acb wrote: »

We went to see a broker today, who was extremely professional but unfortunately didn't have a whole lot of advice for us!

Bit of background.
We're back in Ireland after 3 years abroad.
Have 2 bed apartment with an estimated market rate circa 170,000e
Mortgage outstanding as at Dec 31st 202,000
Tracker with AIB, repayment currently 918euro per month

We ve 2 kids, husband started new permanent job with public service.
Salary 62k
Probation 1 year!!! Only month into it.

Im currently a stay at home mum but hopeful of getting work in September as teacher.

Savings to date 34,000. No loans or balances on credit cards owing.
Estimate we can save 2,000 p/m as living with family rent free.

......
So essentially we are hoping to sell the apartment towards the end of the yr and closer to husband seeing out his full probation period.
Reckon at that stage we ll have about 20 k negative equity , fingers crossed less.

The broker seemed to think we were an usual case...which surprised the heck out of me!
Surely there are loads of people who bought apartments in 2005, in negative equity and who now have kids and hence need to buy a house!
I think whats complicating our situation is that only my husband is working and we've a tracker. The broker said not that many have trackers.

I was of the opinion (maybe wrongly) that we could 'port our tracker' over to a new mortgage and that we'd probably be hit with an additional 1% charge.


The only thing he suggested was to perhaps ring AIB and enquire about going interest only.
Prior to emigrating,we had considered going interest only but at the time there was a lot of fear, that if we did this we'd lose our valuable tracker.
He said we'd have to put a case forward that in light of the new central bank requirements of 20% deposit that we wanted to buy and needed to go interest only to save the additional deposit.

Look, I know we were engaging with a broker quite early into my husbands probation but I feel get armed with the facts early on and put ourselves in the best position going forward.
To say I feel deflated is an understatement.
I just can't believe that we'd be that unusual!?


I've read most of the previous threads on this site and am still confused whether we will be subject to the 20% deposit requirement as neg equity holders.
Someone said AIB ARE enforcing the 20% deposit on NE holders and as we are currently AIB- perhaps we will be subject to it. If we are I guess it's batten down the hatches and skimp, skimp, skimp

I guess we are just wondering ; what do we do now?
Obviously, we need to do some more serious saving.
But have we any options?
It's so disheartening that since 2006 we've easily paid our mortgage and to still be in NG to the tune of 30k and no real route to buy a house with 2 kids is so depressing.

Is the option of going INTEREST ONLY a good idea for say 6 months to help us save a bigger deposit quickly??? Will AIB even go for it?
IS this the type of thing they'll say no way too. What pleads could we be making to support our request?
Im thinking if we did go interest only, thats a big if, we could potentially then save maybe 2600p/m. Perhaps its a good option. I would have thought going interest only might go negatively against us when we eventually look for a mortgage.

ALL ADVICE GREATLY APPRECIATED! Maybe we are a complicated case!
Thank you for reading!
A

<Mod Snip>

Do not give recommendations on thread.

<Mod Snip> Do not argue a moderator instruction on thread.

acb

dixiefly wrote: »

First of all the very best of luck in getting a house that suits, moving over and back must be stressful as we experienced a lot of stress even moving in Ireland!

I had to comment on your estimate of saving €2k a month on a €62k salary. Tbh, I nearly choked reading it. I would earn about €10k more than that and my wife is working as a teacher and our mortgage is almost identical to yours and we are struggling to save anything. We do have 3 children with a daughter in college away from home, have commuting costs with 2 cars etc but when we pay all our various costs, property tax etc there's not much left. We dont go to pubs etc but do go out on and off. Probably spend on holidays approx €3-5k a year.

I was just thinking that if we cut out all non essential costs I dont think that we would save anything close to €1k a month. Most of the money is gone before we eve get it.

best of luck, negative equity is a bitch.

Hi dixiefly...
Don't worry , we can literally only save that because as I posted we re living rent free at the minute! Couldn't see us being able to save that ever when we move out.We have our apartment rented out so that helps too!

Neg equity to be honest doesn't really bother me...it's a small apartment when we need a house that's annoying!

ginanc

i am the person dealing with AIB at moment wrt a negative equity mortage
we bought our apartment in 2004 for 480k - outstanding mortgage is 370k - value currently approx 340k we think. we are not on a tracker so has been killing us over last few years. we have 3 kids now and had to move out of apartment a few years ago and rent a house. rent we get on apartment doesn't come close to covering mortgage repayments each month.
has been a very slow process - started back in November. we verbally got agreement to go ahead and sell apt last week. thankfully it looks like it won't take long to shift - 2 viewings this afternoon and hasn't even been advertised yet - location is very good - beside a green line Luas stop in south dublin.
AIB are applying 20% deposit rule for negative equity mortgages despite the CBI saying it did not apply - so while we had hoped to turn this in to a negative equity mortgage that is not a runner now. we are going to sell and wait until next year when we will have more saved. AIB will allow us to restructure outstanding mortgage as a loan - waiting to hear terms etc. from what i can see over last few weeks house prices are being impacted already by the new CBI rules in south dublin and are dropping so if we wait until next year there may be better value.
we will also be able to shop around next year for new mortgage.....stupid if you ask me from AIB as we would have stayed with them if they had given us a break on the deposit. they have accepted we would have no issue affording mortgage repayments on new house - both full-time, permanent, private-sector jobs, good salaries. but "head office" says we need 20%

cruizer101

Am I right in saying you have tracker on apartment which you are renting out and are living rent free in another family members house.

To be fair to broker this is a bit unique.

The main point I want to raise is you are probably not meant to be renting out your apartment. One of the conditions of your mortgage is most likely that it is for your primary residence. I would check this out and look for more advice before going into bank and saying you are renting it out, they will wonder how you are saving so much.

Maybe some other will give advice here regarding this as I'm not too familiar but know it is a common condition, how bank will treat it I'm not sure. I think some of above posters may have missed that fact also.

air

cruizer101 wrote: »

Am I right in saying you have tracker on apartment which you are renting out and are living rent free in another family members house.

Where did you get that idea?

ginanc wrote: »

we have 3 kids now and had to move out of apartment a few years ago and rent a house.

ginanc

don't think that post was directed at me
was directed at OP

acb

cruizer101 wrote: »

Am I right in saying you have tracker on apartment which you are renting out and are living rent free in another family members house.

To be fair to broker this is a bit unique.

The main point I want to raise is you are probably not meant to be renting out your apartment. One of the conditions of your mortgage is most likely that it is for your primary residence. I would check this out and look for more advice before going into bank and saying you are renting it out, they will wonder how you are saving so much.

Maybe some other will give advice here regarding this as I'm not too familiar but know it is a common condition, how bank will treat it I'm not sure. I think some of above posters may have missed that fact also.

We went through all the terms contained in the mortgage and we couldn't see anything about asking bank for permission to rent out our apt or about seeing terms like PPR Principal primary residence etc contained.

We were very anxious at the start that once we told the revenue to cancel our TRS that the bank would know and take us off a tracker.
Anyway the TRS has been cancelled years.


I have heard that in order to bring our tracker with us, we might have to move back to the apartment for a couple of months.
We ll wait and see what happens.

dialemma

OP we are in an identical situation to you. Own an apartment in negative equity to the tune of 20K which we rent out. In the meantime we rent a larger house elsewhere. We now want to buy, husband is self-employed and I have a job with similar salary (slightly less) to your DH in the public sector. Spoke to a broker in January as we wanted to be 'mortgage ready'. He was very optimistic, and advised us to save at our maximum capacity for 6 months, and at no cost touch our savings and continue to add to them. We also aim to save in the region of 1800 a month which includes our rent proportion. We do owe some money to a credit card which he said not to worry overly about so long as we keep it maintained and going downwards and don't allow the balance to increase. He suggested we keep our apartment and continue to rent it out either as we are to existing tenants or to consider the Fingal Co Co longer term lease scheme (10 years). In our case this makes some sense due to my husbands self-employed status as he does not have an alternate pension. He did not feel that the negative equity would unfairly hinder us in gaining a second mortgage although maybe he was being overly optimistic. We also hold a Tracker but with Bank of Scotland so no option to port that, similar to you we cancelled or TRS at source years ago and advised BoS of that and were not required to release our Tracker. If I were you I think I would speak with another broker. Best of luck, its a nightmare - wish I could fast forward to this time next year

AprilMayJune

Just wondering if you have an update on this? Did aib enforce the 20% deposit? We would love to move both public servants we had 20% deposit with our house that we are in now on a low tracker etc we have excellent credit rating could sell our house no problem but getting together a 20% deposit would take us a long time.

Jen44

I have just got approval as a second time buyer with only 10%. However AIB wouldn't entertain us they were, in their own words, iron clad on the new mortgage rules. Our first mortgage is with Bank of Scotland who are no longer in Ireland so our new mortgage is with a different bank altogether. However they were happy to give us the mortgage at 90% LTV as we were looking to borrow below below 3.5 times our combined salary.

Pac2015

Your not complicated you are like alot of people out there, you can't carry over you tracker mortgage to the new mortgage you will just have to lose that and take on a new mortgage also if you are in neg equity you can qualify for 10% desposit on first 220K and 20% on the remaining balance of what you want to buy I am with KBC and they are allowing people with neg equity to qualify for the full deposit needed at the 10% rate.
I would get better advice from a different broker I can PM you the name of one I used he is really good.