Mortgage and upsizing advice

islander222

Hi,

We bought our house back in 2006 before the property bubble burst and now find ourselves in negative equity. Its a 3 bed semi and I reckon its worth about 80k less than what we owe on the mortgage.

Our initial plans when we bought it (its in a town) was to stay there for 5 or 6 years and then sell up and buy a bigger house outside of town (a house on its own)... but that hasn't happened due to the property market changes in the last 6 years.

Up until recently I had felt we were trapped and had no choice but to stay putt because we would be losing money if we sold up, but lately I've been thinking that maybe we could still be in a position to do something so this is where I'm looking for advice :-)
I've been lucky in that my salary has increased by 15% in the last 6 months (My job is pretty secure) and I suppose it would have increased about 20% since I first took out the mortgage (The wife's would have remained unchanged)..

We are on a tracker mortgage (which was a 100% mortgage spread over 35 years).
1) Is it possible to get a new mortgage to upsize in homes?
2) We would need to save up a deposit over the next year or two but would it also make sense to also pay extra per month on our mortgage to decrease its term?
3) Or would selling up and renting be a better option?

Many Thanks!

islander222

Just realised this was the wrong forum to post this - so can the mods mark it as closed (or can I?)

chris85

AIB seem to have a mortgage product to suit. A negative equity trade up mortgage. With this you will lose your tracker. KBC offer similar and I think remember BOI doing similar in the past. Again very much likely to lose the tracker with this. Both AIB and KBC are clear in the product brochure that tracker would not be carried over.

http://www.aib.ie/personal/mortgages/negative-equity-trade-up

You will need the normal 8-10% deposit and stamp duty and solicitors fees also. In terms of whether to put some money saved against mortgage or not thats up to you really.

Also you mention would it be best to just sell and rent. If you sell you are liable for the shortfall and will carry this debt around with you so remember if you go for a mortgage next year or two and probably still have a lot of this debt left you will find it harder to get a mortgage with it.

sillysocks

We are in the same situation, spoke a broker recently who said that most banks will facilitate the negative equity. We're with TSB, she said that TSB are making arrangements with people where the negative equity would be carried forward as a loan (maybe 10-15 years, not full term), and new mortgage would be taken out at current rates. For assesing whether you'd get the mortgage the negative equity would obviously be taken into account as well as the new mortgage payments. For us the cost of the negative equity plus the higher mortgage meant it wasn't possible at the moment but it's good to know the options are there.

islander222

Thanks for the responses - we are with TSB so its good know there are options for us. But with the negative equity loan and current rates I fear we'll also find it not possible but good to know we aren't completely trapped :-)