Mortgage - Is there any way forward

liamolaighin

Hi I'm looking for a €200000 mortgage between me and my partner. I have been gifted a site and have full planning permission. We have approx €60000 in savings. We are both in permanent full time employment and combined wages are approx €80000.

However I co-own an investment property with an outstanding mortgage of approx 325000 in Cork city. Its probably only worth €280000 these days and in hindsight looks like it will cost me getting a mortgage in the forseeable future. My co-owner and I are both in permanent full time employment with wages in excess of €120000 combined.

The house is no burden on us and we both wish to keep it as an investment and build our own homes. But at the moment the banks are saying no to me because of the house in Cork. Is there any way for me to acquire a mortgage with my partner for our family home?

Is it possible to transfer a mortgage in a case like this to a member of family with the banks consent i.e a parent? Could I transfer for example half the value of the mortgage into my fathers name?? Thus freeing me up to apply afresh. p.s I realise the implications for my father. Are there any hidden costs if this is possible

fafy

liamolaighin wrote: »

Hi I'm looking for a €200000 mortgage between me and my partner. I have been gifted a site and have full planning permission. We have approx €60000 in savings. We are both in permanent full time employment and combined wages are approx €80000.

However I co-own an investment property with an outstanding mortgage of approx 325000 in Cork city. Its probably only worth €280000 these days and in hindsight looks like it will cost me getting a mortgage in the forseeable future. My co-owner and I are both in permanent full time employment with wages in excess of €120000 combined.

The house is no burden on us and we both wish to keep it as an investment and build our own homes. But at the moment the banks are saying no to me because of the house in Cork. Is there any way for me to acquire a mortgage with my partner for our family home?

Is it possible to transfer a mortgage in a case like this to a member of family with the banks consent i.e a parent? Could I transfer for example half the value of the mortgage into my fathers name?? Thus freeing me up to apply afresh. p.s I realise the implications for my father. Are there any hidden costs if this is possible

Best advice is to be blunt with you - get rid of the investment property, sell it, or get the other party to buy you out. It's not an investment if you are continually having to fund it, it's a liability, and lets face it, we are talking 10 years before things improve. It's a drain on your income and thats why the mortgage has been refused. You don't mention the shortfall but there is no way the rent be clearing an annuity mortgage in a 325k loan. And if you are on interest only, then thats even worse.

A friend has a similar - investment negative equity situation only much worse than yours. I and several others have told him to get rid of it. Some people don't listen, and worse, can't see the big picture,he is now stuck where he is allthough his wife wants out of there. The investment poperty liability is now making the decision that he cannot move from his current home. The longer it goes on it's just throwing more money at it, and it doesen't stop at making up the mortgage payment shortfall(from rental income) theres the maintenance, decorating, replacement of items which will happen, insurance, tax advisor fees etc. etc.

This is the harsh reality - get rid, take a little hit or around 30 to 40k(to include solicitor fees, auctioneer fees, and loss on sale), and move on.

Personally I don't think leaning on parents is the answer, not because they wouldn't do it, but because they could do without that stress, and the older they get the more stressful they become about things like this. It is possible to do this, their own assets and age are taken into account, but assuming they are almost retires, the bank would probably have their name on their family home.

P.S. I suspect that you may be overestimating what the investment property is worth. I keep in close touch with prices in Cork(from the suburbs), and they are still going down, asking prices are almost never reached, so don't take that as a guide.

P.P.S. an option in normal circumstances, might be to move into the investment property, but as you have a site sorted elsewhere, thats probably not an option.

liamolaighin

You are right in that selling makes the problem go away but it is not easy to sell at the moment and I simply dont want to sell and undo all the work of the last 6 years in the investment property at a significant loss. You are also correct about the asking price, in reality 240,000 would probably be a more likely sale price in a buyers market.

I'm just trying to weigh up all options before doing anything. Can the mortgage on the investment property be split into 2 halves so that I could be assessed on my own half and not the entirety (with banks permission again). We are on a tracker mortgage (principal & interest) and so we contribute about 120 each a month to cover the mortgage total.

Are there any other ideas on how i could proceed. My parents are happy to act as guarenteur on the loan and have their own house and family farm with no loans. And yes they are both going to be retired within 12 months, 1 from farming & 1 from teaching. I hoped the fact that I will be gifted the family farm before my 35th birthday would help with the banks but it seems not (green cert completed and currently 31).

All ideas appreciated