2nd Mortgage

dialemma

A quick question if anybody can give me some insight.
My husband and I have a motgage on our home and we are in negative equity. We pay our mortgage in full though and have never missed a payment. We are in our mid thirties and have approx 20 years remaining on out mortgage. We would now like to trade up but would make a loss selling out existing house. I also have a 2nd house and some land in my name which is mortgage free. If we applied for a 2nd morrgage to purchase a bigger home do the bank take the property I own into consideration as an asset and is there any liklihood in us being successful in an application. We would be able to make the repayments if we rented our existing house. Obviously I will investigate this further with the bank etc if we decide to go that way but I just wanted to get an idea of what is likely or what the options might be for us

roro2

The banks have been coming under pressure to allow people in negative equity to trade up and take their negative equity with them to the new property, where affordability is not an issue. This would be more likely if the first property was being sold, especially if rent was needed to meet repayments.

While having an asset such as another property is positive, I'm not sure how much this would influence things. If it is rented, the income would help the affordability issue but, due to the Family Home Protection legislation, I don't think the bank could take this property as additional security for a new mortgage. If you keep your current home as an investment property, you could offer the unencumbered property as additional security for this mortgage to reduce/eliminate the negative equity - potentially a bargaining chip, but I'm not really sure how successful this would be.

chris85

Some banks are more inclined to allow trade ups on negative equity properties. See recent article about BOI.

http://www.irishtimes.com/newspaper/breaking/2012/0419/breaking12.html