Bought in 2006, now out of negative equity. Sell or stay?

karenalot

Hi, new to this so tell me please if in wrong place.

I bought a 3 bed house in North Kildare in 2006. I have wanted to move areas for a long time but my bank discouraged the move due to the property being in negative equity. Now in the last month or so my house has come out of negative in to postive (just about).

I would now like to sell and move elsewhere. My issues are:

1) Should I stay and wait for the house to increase in price and then move with a profit (providing price increases happen in 2015)
2) Should I move now in case property prices decrease? I would be stuck here even longer
3) Will I be able to purchase in another area with ease? I have a fear of selling and being stuck in limbo while waiting for the next property due to lack of supply

I know no one has a crystal ball but wondering if anyone else is in the same boat as me?

I was one of the last people to purchase in my estate of 200+ plus houses so I can only imagine all my neighbours have come out of negative equity also. On the provision of course that their mortgage payments are up to date.

Just to say, renting elsewhere is not an option for me as I have 2 dogs which would need to come with me and I would also hate the uncertainty of the current rental market.

seamus

Like you say, no-one has a crystal ball, but it's important to remember that you're not the only person in your situation. This year there will be a lot of people who bought between 2004 and 2007 who have so far been "trapped" in negative equity, but 2014 has brought the asking prices up and them out of negative equity.

And so lots of people are eyeing a move while they can, just like you are. This has the potential to kill property prices (loads of supply on the market at once), increase them (loads of demand on the market at once), or have little effect (if banks won't lend anyway, no-one's going anywhere).

Really I think all you can do is wait it out, if you can afford to. Come late Spring/early Summer 2015 we should have a slightly better idea of what the market is doing as the uncertainty over ICB rules is cleared up, and we see whether or not banks and NAMA are making land and money available for new builds.

Renting is an option, even with two dogs, you just have to be smart about it and offer incentives to landlords of rent up front. I've heard people say that a person should always buy and sell houses in the same market, but I'd be inclined to think that if you have a bit of a badly-built shoebox from the Celtic Tiger years and you can sell up and walk away with no negative equity (and possibly even a small profit), then you're in a good position from which to decide your next move.

handlemaster

I think y ou would be very lucky to sell and buy in the same period.

percy212

Sell asap and rent until the market falls again. The ECB rules and the end of CGT exemption is going to push prices down in 2015. I am not a fortune teller, but that is what I would do....

alias no.9

Start by figuring out where you want to move to and how feasible it is. Do you have the 20% deposit and can you secure the credit for the balance?
Current stress tests may dictate that you wouldn't get approved for a mortgage with payments at the exact same level as you pay now as odd as that will seem but add 2% to thw interest rates and see where you'd stand.
If you can't feasibly sell and move somewhere better and you aren't inclined to renting for a period, staying put would be the only open choice.

TheDriver

Remember if u sell for more, u will be buying for more. Also if u have a tracker, it will be gone and the current rate will be fairly higher

karenalot

seamus wrote: »

Come late Spring/early Summer 2015 we should have a slightly better idea of what the market is doing as the uncertainty over ICB rules is cleared up, and we see whether or not banks and NAMA are making land and money available for new builds.

Agreed and probably what I will have to do, but my fear of course is prices drop and the bank veto a move once again. I've just about persuaded them to let me sell even though I have savings to back up a move.

seamus wrote: »

Renting is an option, even with two dogs, you just have to be smart about it and offer incentives to landlords of rent up front.

I would be happy to go down this route if the property was unfurnished (I also have lots of very good furniture I would like to bring with me) and could offer me a longer term lease than 1 year. Unfortunately it's unlikely to find either of these.

Villa05

Sell now and take advantage of the panic to get a mortgage before the new Central Bank rules come in.

Buy this time next year. There will be alot less competition (investors pulling back, considerably less FTB's) allowing you to drive a harder bargain.

Thats how I would play it

johnp001

On the basis that there are 2 threads just on this page where people are deliberating whether to sell now I would recommend to sell sooner rather than later. Once a critical mass of owners decide that it is a good time to sell (or even just that it is possible to sell due to NE circumstances) then supply dynamics will quickly start to favour those who spotted the top of the market early.

dissed doc

I think if the negative equity is no longer an issue, then most of the payments at this stage (e.g., ona 30 year mortgage) are going to be paying off the capital. Mostly at the beginning it is interest.

So, unless you really need to offload it, and the payments are killing you, calculate what rent is needed after costs and taxes to break even, and see if you can come close to it on the private rental market. The worst part is probably over, and as you have been paying for many years, the most vilnerable interest period is also over.

Is there a good profit in selling? If it is enough to pay the 10% on a new place then I would go for it, otherwise, just treat it like a pension scheme for the future.

karenalot

dissed doc wrote: »

So, unless you really need to offload it, and the payments are killing you, calculate what rent is needed after costs and taxes to break even, and see if you can come close to it on the private rental market. The worst part is probably over, and as you have been paying for many years, the most vilnerable interest period is also over.

My mortgage is €800 a month and rents in the area are around the €1200 mark.

dissed doc wrote: »

Is there a good profit in selling? If it is enough to pay the 10% on a new place then I would go for it, otherwise, just treat it like a pension scheme for the future.

Im not looking to make a profit (would be nice though of course!), just not lose money. A pension scheme is a nice idea but I cant keep the property if I don't have somewhere else to live. Im desperate to buy elsewhere not hang on.

karenalot

Another question please.

A quick jot on a mortgage calculator shows that if I were to sell now and then take out another mortgage in lets say a years time for the same amount owed (€240k over 27 years) my repayments would then be €1200 a month. As mentioned Im only paying €800 a month on a tracker

Does this sound correct?

kenmccarthy

Stay where you are..........give that sweet tracker mortgage a nice hug...........why bring a bucket load of hassle& cost(surveyors & lawyers etc.) onto your shoulders.......if the area you are is within reasonable distance to work why would you even consider moving????
Personally I cant see a rowback on house prices in 2015....there's enough cash buyers the keep market buoyant

johnp001

kenmccarthy wrote: »

Personally I cant see a rowback on house prices in 2015....there's enough cash buyers the keep market buoyant

Anyone buying a non PPR will have already done so by the end of this month in order not to lose a large proportion of any capital appreciation. Cash buyers would mainly have been those buying non PPR property and my guess would be that the cash buyer is now gone from the market for the foreseeable with the expiry of CGT exemption.
Tracker is good to have alright but NE can come back. If there was a sustained fall in house prices then house may become unsaleable again for a time until you have repaid more of the capital.

kenmccarthy

It's all a bit like going into boylesports on a Saturday afternoon and betting on the geegees.....crystal ball stuff....I believe there's enough money in circulation to keep things where they are.....but who's to say how central bank rules will affect the market??

Villa05

karenalot wrote: »

My mortgage is €800 a month and rents in the area are around the €1200 mark.

Thats a game changer. Mario Dragi is subsidising your accomodation costs. Think very carefully about letting that subsidy go.
Where do u want to move to and what are the going rents there

Beaner1

Enjoy your golden cage funded by the rest of us.

Why do you want to move? You will will never get as good a mortgage again. How many years do you have left on your current mortgage?

Edit: The monthly difference adds up to an extra €130k over 27 years.

Senecio

With the information you've provided you would need very strong personal motivation for moving because financially it makes sense to stay where you are.

MarkAnthony

This seems pretty simple to me. If you want to move - move.

Any increase you see will be offset by the increase in the house you buy. IF there is a decrease you end up in a the same situation as before.

MouseTail

MarkAnthony wrote: »

This seems pretty simple to me. If you want to move - move.

Any increase you see will be offset by the increase in the house you buy. IF there is a decrease you end up in a the same situation as before.

no, it is not as simple as that, if OP moves, he will be surrendering a tracker which is worth €400 a month. That's a lot of money over the course of the mortgage.
I would read the mortgage documentation to see if the tracker is lost if the house is rented.

Daemonic

karenalot wrote: »

Another question please.

A quick jot on a mortgage calculator shows that if I were to sell now and then take out another mortgage in lets say a years time for the same amount owed (€240k over 27 years) my repayments would then be €1200 a month. As mentioned Im only paying €800 a month on a tracker

Does this sound correct?

Have you checked if you can get a mortgage for €240k and will you have a 20% deposit saved? With the stricter lending policies now when compared to 2007, unless you have a large deposit or salary of €60k plus, you may have to look at spending less than you did 7 years ago.

tigershould

It's a tough one. You clearly would like to move and may have the deposit and salary to buy (and afford) a new home but you may lose your tracker mortgage which will be the cheapest money you'll ever borrow.

In an ideal scenario you would probably rent your existing place, thereby keeping the tracker and having the place paid off by the tenants. Obviously that's not so easy and not everyone wants to be a landlord.

I'd check whether you can carry over the tracker to your next mortgage. I know EBS offer +1% carry over

MarkAnthony

MouseTail wrote: »

no, it is not as simple as that, if OP moves, he will be surrendering a tracker which is worth €400 a month. That's a lot of money over the course of the mortgage.
I would read the mortgage documentation to see if the tracker is lost if the house is rented.

With the greatest respect that wasn't the question posed by the OP. I assume he/she is an adult that has already made the decision that the higher payments are worth it for the move that they want to make.

I completely agree with you, of course, it simply wasn't the question the OP posed.

Sala

If you really want out of that house if sell now. If you can break even, have a deposit, can afford the type of house you want, it makes sense. If house prices drop you are stuck again. If they go up, you are not going to benefit I.e if your house is 150k and goes up 10% you gain 15k, the house you are buying at say 200k goes up 10% it costs you 20k more so you're still at a loss. If you can keep the tracker it'd be brilliant. If not, you have to factor that into whether you can still afford the new house.

If you are genuinely unhappy and this is the first time you are in a position to move you are taking a risk waiting.

karenalot

Deleted User wrote: »

Why do you want to move? You will will never get as good a mortgage again.

The usual reasons. I am from Dublin, moved to Kildare 8 years ago when I was priced out of the Dublin market. I have been looking to get back to Dublin for about 6 years now. My bank always said no. Now they have agreed in principal to let me move. My application has to be approved by the brokers first.

I was not looking to get on any ladder by the way, just hated the thoughts of renting and not being able to do up my own place and live comfortably with my pets etc.

karenalot

tigershould wrote: »

I'd check whether you can carry over the tracker to your next mortgage. I know EBS offer +1% carry over

Im with Ulster bank and from what I have read they offer ECB+2.00% for the first 5 years of moving the tracker. It then reverts to standard variable. Customer service were vague with me on the phone so I am waiting for broker to confirm.

kenmccarthy

2% over the ecb for 5 years isn't too bad a deal......that jump upto the variable(assuming 4.3%) would be a serious kick in 5 years though. Commuting ( cost per/annum & time spent commuting) also a big factor.....if losing the tracker meant closer to work& family maybe it is a good idea to 'bite the bullet' and put up 'for sale' sign.......best of luck..tis a tricky one

TheDriver

If you are out of neg equity then bank doesn't need to give permission. Otherwise you are in neg equity and this may turn buyers off as can be seen by neg equity thread.

hfallada

If you are on a tracker stay!!! You wont be able to get a cheaper mortgage anywhere. A tracker mortgage is like winning lottery. You will have super cheap mortgage repayment for the foreseeable future,as there is no chance the ECB is increasing rates for the next few years as the eurozone economies are so weak

i think you should try and strike a deal with ulster bank if you really wanna sell. Ulster bank are losing a ton of money each month with your mortgage. You should look for a lump sum to give up your tracker to sell your house to move.

Have you seen anything in Dublin you can afford to buy? With 2 dogs there is no chance you can move into an apartment complex(banned by most management companies). Most houses might be out of your price range.

Mr. teddywinkles

kenmccarthy wrote: »

It's all a bit like going into boylesports on a Saturday afternoon and betting on the geegees.....crystal ball stuff....I believe there's enough money in circulation to keep things where they are.....but who's to say how central bank rules will affect the market??

No offence what ur saying makes no sense. Ur sayin there's lots of cash buyers out there yet the 20% deposit thing will be a problem. Surely if ur a cash buyer 20% of the value of the property is not a problem.