Can I buy a new property without selling the old one PART II

Johnny Favourite

I have a similar question for the previous thread except my financial situation is slightly different.

Basically I bought an apartment for 320k in 2005(cringe). I reckon it is now worth about 175k and hope it does not go below 150k. I have 250k outstanding on my mortgage so am about 100k in negative equity.

However I would like to buy a house preferably a big house as I would like to start a family in about 5 years.

I work overseas and am paid well. I hope to save 50k in 2011 and 75k every year after that for a few years. Basically I plan to have saved around 300k by the beginning of 2015.

My apartment is rented out at the moment and will remain so. It’s in a good location and the rent has not fallen as much as in other parts of Dublin. I currently get 1k a month in rent for it.

So..... in 2015 I would like to pay off 100k on the apartment mortgage and use the remaining 200k for a deposit on 450k house. Thus leaving me with 100k mortgage on the apartment and 250k mortgage on the house. The rental income would easily cover the apartment mortgage repayments.
Is this possible or would I have to sell the apartment to be considered for another mortgage even though I will have saved so much??

Or could I just pay enough off the apartment mortgage to bring the repayments down below the rental income, say around 50k. This would still leave me 50k of negative equity but would that matter if the rent covered the mortgage for the apartment. Doing this would allow me to put another 50k into the house purchase...

Anyway any advice or opinions would be greatly appreciated.

Victor

If you have a strong saving ability, you might consider paying off the mortgage sooner - the lower the debt:equity ratio, the lower the interest rate you will pay. Going from an 80% to a 50% loan should save you at least 0.5%.