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Have Negative Equity property, want to buy new build & rent old property. Should we?

  • 16-10-2016 12:21am
    #1
    Househunter7
    Registered Users, Registered Users 2 Posts: 5 ✭


    Hi I'm looking for a bit of advice. My husband and I are very close to closing on an offer of a new build. It's a home I know we would be very happy in, ticks all the boxes for us. However it is 20,000 over budget. 23 were hoping the developer would knock a bit off but had only budged on 5,000. We have a home that we are going to keep and rent out. The rent will cover the majority of the mortgage. I do not foresee a problem renting it as it is in Dublin. We do not want to sell this as it's in negative equity. We have saved our asses off to get a significant deposit, 40%. I guess I'm apprehensive as I don't want to make another mistake buying a property. Should we just go for it, or is it still a time to be careful in this current climate?! It is our dream home and if needed we could cover both mortgages but I do not want to get myself in a situation that we are working to live! Any advice would be greatly appreciated!


Comments

  • #2
    Zaph
    Registered Users, Subscribers, Registered Users 2 Posts: 47,352 ✭✭✭✭Zaph


    Hi Househunter7, welcome to Boards. This forum is actually for Feedback related to Boards itself, rather than general queries. I'll move your thread to a more suitable forum where hopefully you'll get some useful advice.


  • #3
    Pkiernan
    Registered Users, Registered Users 2 Posts: 4,310 ✭✭✭Pkiernan


    Are you aware that you will be taxed on the gross rent (less 75% of the interest) and not rent minus the mortgage payment?
    If you are renting for say 1500 per month you could easily be looking at a tax bill of 8k per year.


  • #4
    sullivk
    Registered Users, Registered Users 2 Posts: 299 ✭✭sullivk


    I think you should contact a mortgage broker to see if the banks will approve you to buy a new house whilst keeping the apartment as an investment property.

    We are in a similar situation. My husband has an apt (negative equity) and I have a house (positive equity) but due to expanding family we need to upsize.
    We are (hopefully) selling my house, keeping apt (currently rented) and using the positive equity plus savings for deposit for a new build.

    We visited a mortgage broker and are hoping to hear back with a definitive yay or nay in the coming week. It would seem that one of their conditions is that we clear our car loan, so just check any other debt you have will have an impact on approval.

    We first applied at the beginning of September so it's not as quick a process as it was when I bought in 2010. Give yourself plenty of time, goodluck!


  • #5
    Househunter7
    Registered Users, Registered Users 2 Posts: 5 ✭Househunter7


    Thanks so much for your input! We have gotten a second mortgage approved and have no other loans but just something isn't sitting right with me.. I don't know am I just being extra cautious after getting burned the last time! It's not even a huge mortgage we are getting but as the builder would come down an extra few grand, and we do not qualify for the first time buyers, I just feel a bit hard done by. Maybe if dont go for it I will regret it! All for the sake of a few grand.. Oh to be able to predict the market! The builder seems very sure of himself. We have looked a few years now so it's not something we are taking lightly.. but as it's 20,000 out of the budget, I said I would walk away if they could t meet us halfway.

    Best of luck to you. At least your properties should balance each other out!


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