Existing Mortgage and want to buy a home of same Price

prodigy1

Hi all,

We are looking to by a new home, it s actually less than our existing home, but the banks says we cannot just shift our mortgage, its a whole new application and we would need 20% deposit. So we would need 75K..How can this be? Does anyone know of any government plans to help existing homeowners??

Kindest Regards
Patrick

Samuel T. Cogley

Sorry if this sounds a bit harsh, it's not meant to - but how can it not be?

The mortgage is a loan secured against a particular property. The new loan on the new property needs to be properly assessed etc. given your circumstances and the circumstances of the proposed purchase property. The deposit would come from the sale of your current house and any equity that you have, you may have to top that up of course.

There were some movements towards helping people with negative equity, but really now as things have recovered it's a more traditional, sell and move on type scenario. A broker might be able to come up with some options for you, but transfers are rare in practice and actually aren't transfers at all, they're new mortgages with a (relatively) seamless handover.

prodigy1

Hi there,

Many thanks for your reply its much appreciated. Unfortunately, I will not come out with much equity. So, we will need the guts of 70K which how in Ireland can you save to that amount. Its crazy.

I was hoping to hear some news of some sort of plan from the government of financial institutions to help existing mortgage holders.

Once again I appreciate your feedback.
Many thanks

johnnyskeleton

prodigy1 wrote: »

Hi there,

Many thanks for your reply its much appreciated. Unfortunately, I will not come out with much equity. So, we will need the guts of 70K which how in Ireland can you save to that amount. Its crazy.

Did you save up for the last house? I agree with you that it is not easy, but that's what needs to be done to buy a house in Dublin anyways. If someone saved €15,000 per year over 5 years they would have 75K.

I was hoping to hear some news of some sort of plan from the government of financial institutions to help existing mortgage holders.

Unfortunately they only way that they could help existing mortgage holders would be to disadvantage first time buyers. So they can't penalise the people who have spent 5 years saving 75k to favour those with existing mortgages.

Samuel T. Cogley

prodigy1 wrote: »

Hi there,

Many thanks for your reply its much appreciated. Unfortunately, I will not come out with much equity. So, we will need the guts of 70K which how in Ireland can you save to that amount. Its crazy.

I was hoping to hear some news of some sort of plan from the government of financial institutions to help existing mortgage holders.

Once again I appreciate your feedback.
Many thanks

Again this is not meant to sound harsh, if you're not in a financial position to save then you're not in a financial position to move. You're much better off than many who can't even get their foot in the door on the first place.

It's very difficult and people are getting a sharp shock in Ireland as it was easier (maybe too easy) in the past to get credit. Any plan etc. would simply keep driving prices up. As I did indicate, your bank or a broker may have some plan in place, to deal with people needing to move from unsuitable accommodation. Furthermore for first-time buyers there are schemes in place, the latest of which -arguably - simply caused prices to increase, cancelling out the benefit.

Fian

The central bank have intervened to restrict banks from issuing mortgages unless certain criteria are met. This was done to protect the stability of banks, not because of seeking to intervene in the property market.

Your bank is not allowed to issue a new mortgage to you unless certain criteria are met. If you don't have the necessary deposit they can't issue a mortgage to you.

Having said that there are exceptions to the rules. It sounds as if you are likely to be in negative equity? If so talk to them about that and point out to your bank that the proposed move would decrease your negative equity - by moving to a cheaper house. If you have a small amount of equity but less than teh deposit equally you can point out that this is securing their position.

If your mortgage is in arrears they are more likely to agree to a plan like this. That is counterintuitive and unfair if you have met your obligations, but that is how the incentives fall. They are obliged to seek to resolve mortgages in arrears.

There is no prospect of you keeping any of the money - the bank is entitled to the sale price of your house if they agree to allow you to sell, until the mortgage is repaid in full. So if they agreed to this you would have to hand over the surplus to reduce your debts.