Long story short

cowhands

We bought a house 2 years ago.Paid €255k. We had 8% deposit so mortgaged for €234,600. We fixed our rate for 3 years at 5.9%.

Next year our fixed rate is up with the bank...we will have €230000 remaining on the mortgage at that point. However, from looking around at neighbouring houses in the area for sale, I reckon we are about €30k in negitive equatity.

Im am just wondering what happens when we come off our fixed rate, does the bank make another offer on the interest rate? Would it be lower or higher than 5.9%? Is it possible to re-morgage with another bank in neg eq? Or perhaps switch products with existing bank?
Just wondering what happens next year so I can be better prepared to try save some money.

D3PO

cowhands wrote: »

We bought a house 2 years ago.Paid €255k. We had 8% deposit so mortgaged for €234,600. We fixed our rate for 3 years at 5.9%.

Next year our fixed rate is up with the bank...we will have €230000 remaining on the mortgage at that point. However, from looking around at neighbouring houses in the area for sale, I reckon we are about €30k in negitive equatity.

Im am just wondering what happens when we come off our fixed rate, does the bank make another offer on the interest rate? Would it be lower or higher than 5.9%? Is it possible to re-morgage with another bank in neg eq? Or perhaps switch products with existing bank?
Just wondering what happens next year so I can be better prepared to try save some money.

Firstly your numbers dont seem right to me (not that it matters). An interest and principle mortgage is slow going in the first few years but only that much principle off the mortgage sounds very strange.

Secondly a 13% drop in your house value seems very optimistic for the last 2 years.

Anyway back on topic

The bank will offer you a new rate towards the end of your fixed term. So you can either fix again or go onto a variable

A switcher mortgage in neg equity is out of the question. Most banks arent taking switchers even with equity in them much less if your in neg equity. So unfortunatly your stuck with your current providor.

The only advise I can give you is to look at your banks current fixed rate offerings for existing customers and I suggest you budget with that rate having increased by perhaps half to three quarters of a point and use this as the basis of your budgeting. What I will add is that rates peaked in 2008 I know back then my monthly payments on my tracker were 50% higher than I currently pay so theres a reasonable chance moving onto a new fixed 3 year rate might actualyl be less than your current outgoings.

cowhands

D3PO wrote: »

Firstly your numbers dont seem right to me (not that it matters). An interest and principle mortgage is slow going in the first few years but only that much principle off the mortgage sounds very strange.

Secondly a 13% drop in your house value seems very optimistic for the last 2 years.

Anyway back on topic

The bank will offer you a new rate towards the end of your fixed term. So you can either fix again or go onto a variable

A switcher mortgage in neg equity is out of the question. Most banks arent taking switchers even with equity in them much less if your in neg equity. So unfortunatly your stuck with your current providor.

The only advise I can give you is to look at your banks current fixed rate offerings for existing customers and I suggest you budget with that rate having increased by perhaps half to three quarters of a point and use this as the basis of your budgeting. What I will add is that rates peaked in 2008 I know back then my monthly payments on my tracker were 50% higher than I currently pay so theres a reasonable chance moving onto a new fixed 3 year rate might actualyl be less than your current outgoings.

Must relook at my figures but after 3 years Im pretty sure we have made little progress in chipping away at the principal amount.

Thanks very much for the advice,particularly for clearing up about the remortgage aspect.
Its hopeful news that you think a new lower interest rate might apply next year, fingers crossed anyway.

Open to any other advice or comments.

jackal

Is the standard variable rate not around 3.x% at the moment? Surely you will be looking forward to coming off your higher fixed rate, or am I missing something?

The_Conductor

Current standard variable rate is around 3.75%- 3.8% and for an LTV of greater than 80% you could fix for another 3 years @ ~4.1% or 5 years @ ~4.75%

Personally I think that fixing for the longest possible period makes most sense- given the increasing inflation levels in France and Germany, and the ECBs inflation fighting mandate.

Also- its highly unlikely that you would be accepted by another company for re-mortgaging purposes, until such time as you bring the LTV ratio below 80% at current market values.

cowhands

Thanks everyone for the responses. Its all alot clearer now.

Thanks again

Gone West

cowhands wrote: »

However, from looking around at neighbouring houses in the area for sale, I reckon we are about €30k in negitive equatity.

Are you looking at the asking price or the selling prices?
Are the houses even selling?
It would be folly to calculate your negative equity on asking prices. In many parts of the country, asking prices are still double what the houses are actually worth.
Your Negative equity could be closer to 100k than 30k if you consider that the value of your neighbors houses are what people will pay for them, not what the seller is asking.

Tigger

Fuzzy wrote: »

Are you looking at the asking price or the selling prices?
Are the houses even selling?
It would be folly to calculate your negative equity on asking prices. In many parts of the country, asking prices are still double what the houses are actually worth.
Your Negative equity could be closer to 100k than 30k if you consider that the value of your neighbors houses are what people will pay for them, not what the seller is asking.

not so much fuzzy as warm and fuzzy

cowhands

Fuzzy wrote: »

Are you looking at the asking price or the selling prices?
Are the houses even selling?
It would be folly to calculate your negative equity on asking prices. In many parts of the country, asking prices are still double what the houses are actually worth.
Your Negative equity could be closer to 100k than 30k if you consider that the value of your neighbors houses are what people will pay for them, not what the seller is asking.

Yeah good point, I was basing on asking prices, so your probably right, probably in some more than I realised. Thanks for that (I think! lol)