Advice Needed Re: House Sale & Mortgage

gemsgirl

Hi, I would really appreciate advice on this.....
My husband and I have a mortgage just over 10 yrs now. About 2 yrs ago we got into difficulty and couldn't pay our mortgage for 3 months. ( The reason we got into difficulty was because we have a little boy with autism and he wasn't able to start school at aged 4 and a half so we had to pay to send him to pre school for an extra year) My husband works full-time and I'm a full-time mummy as both our boys have autism.
Ok so here's the problem.....we want to put our house up for sale and move to another house with more room for our boys. We are on a "mortgage restructure" which won't finish until next year. We asked our building society last year could we put our house up for sale. We are NOT looking for any extra loans from them...but they said no not untill the end of the "mortgage restructure".
We have seen a few houses that would be really suitable for our boys...but it's really frustrating not being able to put our own house up for sale.
I'm sorry for the big long story but I just wanted to try explain this properly.
I would really appreciate anyone's advice on this....please x

phormium

The bigger question is how are you financing the purchase of the new house? If you are applying for a new mortgage on that property whether or not it is more or less than the one you have then your recent difficulties could be a problem. You won't be able to just transfer the mortgage from one property to another, a new mortgage will need new underwriting.

Whatever about them not allowing you to sell right now make sure they are going to approve a new mortgage as well when the time comes if you are going to need one. If your house was going to sell now for sufficient to clear the mortgage then there is no good reason why they would not allow you sell, my guess is it's the granting of a new mortgage that's the problem rather than the clearing of the existing one by selling.

metrostation

Do you really need to take out a new mortgage? When you can port the mortgage that you currently owe, banks dont like doing it but under certain circumstances it can be done. I have heard of cases over in the UK where lending institutions have refused people to port their mortgages then they go to the financial ombudsman who overturn the banks decision.

gemsgirl

Hi....I'm sorry I should have said....
We do not need another loan from the building society as my father in law has given us a sum of money which would be enough to put towards another house.
So we are not asking for any money at all from the building society...and we are keeping up with our repayments and have done so apart from the 3 months that we didn't pay.

Mrs OBumble

Building Society. Mummy. ... Ahh what country are you based in? I suspect most people here know about things in the Republic of Ireland, which may be different from where you are.

gemsgirl

Mrs OBumble wrote: »

Building Society. Mummy. ... Ahh what country are you based in? I suspect most people here know about things in the Republic of Ireland, which may be different from where you are.

Sorry...i don't understand? I'm in Ireland!

phormium

So just to be clear you want to sell this house, pay off the mortgage in total and buy the new house with cash you have so you will have no borrowings at all to the existing bank?

If this is the case then there is no logic between them not allowing you to sell, in fact how can they stop you! If you put it up for sale and get a buyer then your solicitor will undertake to clear the full mortgage to the bank on receipt of the sale proceeds. The bank could refuse to release the deeds but why would they if the loan was being cleared in full?

There must be a misunderstanding somewhere along the line here. If you have the cash to buy the other one then can't you just go ahead and buy it before selling the existing one if it came to it.

august12

phormium wrote:

There must be a misunderstanding somewhere along the line here. If you have the cash to buy the other one then can't you just go ahead and buy it before selling the existing one if it came to it.

No, I think the OP has enough money to purchase the new house after the sale of existing house but will still have the outstanding mortgage, that's my understanding it it anyway.

gemsgirl

gemsgirl wrote: »

Hi....I'm sorry I should have said....
We do not need another loan from the building society as my father in law has given us a sum of money which would be enough to put towards another house.
So we are not asking for any money at all from the building society...and we are keeping up with our repayments and have done so apart from the 3 months that we didn't pay.

When you say another loan do you mean that you intend to keep the current loan, and that your father in law will pay the difference to get a bigger house? If so it doesn't really work like that here. The mortgage on the new house would be considered a new loan and you would have your circumstances reviewed again. Missing payments and mortgage restructuring would count against you in a new application.

Would the sale of your current house payback the outstanding mortgage?

gemsgirl

phormium wrote: »

So just to be clear you want to sell this house, pay off the mortgage in total and buy the new house with cash you have so you will have no borrowings at all to the existing bank?

If this is the case then there is no logic between them not allowing you to sell, in fact how can they stop you! If you put it up for sale and get a buyer then your solicitor will undertake to clear the full mortgage to the bank on receipt of the sale proceeds. The bank could refuse to release the deeds but why would they if the loan was being cleared in full?

There must be a misunderstanding somewhere along the line here. If you have the cash to buy the other one then can't you just go ahead and buy it before selling the existing one if it came to it.

Hi, thank you for getting back to me. Sorry about the confusion. My father in law in giving us the extra cash needed to buy a bigger house but we will still have the same mortgage.

gemsgirl

august12 wrote: »

No, I think the OP has enough money to purchase the new house after the sale of existing house but will still have the outstanding mortgage, that's my understanding it it anyway.

Yes that's exactly it.

phormium

So you mean you need the same amount as you owe now as a new mortgage on the new property. There is where the issue is with the lender, you can't move the mortgage you have over to the new house (well I only know of one mortgage type where this is possible and that was old current account mortgages and I doubt you have one). When the existing house is sold the mortgage attached to it must be cleared and you will have to make a new mortgage application for the new house.

This new application will be subject to the banks present lending criteria and the fact that you already had a mortgage of that amount granted in the past will mean practically nothing.

So what you need to clarify with the bank and get it in writing is that they will approve a new mortgage in the same amount as your existing one on the clearing of your existing one when the house sells. This would probably have to be an exception to their lending policies as obviously there is a blemish on your credit rating and if you were a new customer they more than likely would not approve such a mortgage.

As the new house is going to be worth more than the existing one they have as security (I presume) you should point out to them that they will be even better covered security wise than they are now.

However security is only ever number two criteria on a loan application, ability to pay i.e. income is number one so if you don't qualify under their present criteria for the amount you want even though it's the same as what you have then it could be a problem. They could decide to overlook your previous issue if the income criteria was ok but if there are two problems with a new application then it's a biggie.

gemsgirl

phormium wrote: »

So you mean you need the same amount as you owe now as a new mortgage on the new property. There is where the issue is with the lender, you can't move the mortgage you have over to the new house (well I only know of one mortgage type where this is possible and that was old current account mortgages and I doubt you have one). When the existing house is sold the mortgage attached to it must be cleared and you will have to make a new mortgage application for the new house.

This new application will be subject to the banks present lending criteria and the fact that you already had a mortgage of that amount granted in the past will mean practically nothing.

So what you need to clarify with the bank and get it in writing is that they will approve a new mortgage in the same amount as your existing one on the clearing of your existing one when the house sells. This would probably have to be an exception to their lending policies as obviously there is a blemish on your credit rating and if you were a new customer they more than likely would not approve such a mortgage.

As the new house is going to be worth more than the existing one they have as security (I presume) you should point out to them that they will be even better covered security wise than they are now.

However security is only ever number two criteria on a loan application, ability to pay i.e. income is number one so if you don't qualify under their present criteria for the amount you want even though it's the same as what you have then it could be a problem. They could decide to overlook your previous issue if the income criteria was ok but if there are two problems with a new application then it's a biggie.

I really appreciate your advice..thank you! But sh** .....i think we might be in trouble because when we first took out the mortgage over 10 yrs ago I was working full-time but I'm not working now, although my husband is still in the same job. So the bank might be a bit picky about giving us a new mortgage even if it's just for the same amount (which is actually quite small).

phormium

Yes unfortunately . It will be underwritten based on their present rules at stress tested repayments.

If the particular bank has an online mortgage calculator put your income figure and other details into it and see what your max loan is. Or if you want to post it here I'm sure someone knows the up to date bank requirements, it's a while since I have worked in lending but it's easy enough find the info online if you know where to look.

For example last I heard a couple must have between 1,850/2000 left per month plus 250 per child left to live on after paying all loan repayments and also must come in under the income multiple rules. This may vary a bit between banks so you'd need to check your particular one, borderline might get you through but if you're way below then it doesn't look good.

That's not to say it's totally impossible, I have seen it done in the past but that was back in tiger days and if it has to be an exception to the banks lending rules then it is hard to find anyone in the banks anymore willing or capable or allowed to make a decision that is outside criteria. You would need someone on your side to put a strong case for it based on your personal circumstances.

Trish56

Phormium is correct that after paying repayments on the new mortgage stress tested at approx. 6% you will need to have approx. €2550 net disposable income per month. Lending will also be subject to 3.5 times your husbands gross income.

You mention Building Society the only Building Society lending now is the EBS. They can't stop you from selling your house once the proceeds pay off the mortgage however they do not have to lend to you again unless you meet their criteria and policy.

Just wondering if you need more room, can you extend your existing property from the cash you are receiving.

Best of luck

gemsgirl

[Deleted User] wrote: »

When you say another loan do you mean that you intend to keep the current loan, and that your father in law will pay the difference to get a bigger house? If so it doesn't really work like that here. The mortgage on the new house would be considered a new loan and you would have your circumstances reviewed again. Missing payments and mortgage restructuring would count against you in a new application.

Would the sale of your current house payback the outstanding mortgage?

Hi....yes it would but we would have very little left after that.

gemsgirl

Trish56 wrote: »

Phormium is correct that after paying repayments on the new mortgage stress tested at approx. 6% you will need to have approx. €2550 net disposable income per month. Lending will also be subject to 3.5 times your husbands gross income.

You mention Building Society the only Building Society lending now is the EBS. They can't stop you from selling your house once the proceeds pay off the mortgage however they do not have to lend to you again unless you meet their criteria and policy.

Just wondering if you need more room, can you extend your existing property from the cash you are receiving.

Best of luck

Hi, sorry I meant to add that we are with Permanent TSB....No unfortunately we can't build on because there's not much garden space etc for the boys...also the area we live in isn't great
Thanks you for your good wishes x

gemsgirl

phormium wrote: »

Yes unfortunately . It will be underwritten based on their present rules at stress tested repayments.

If the particular bank has an online mortgage calculator put your income figure and other details into it and see what your max loan is. Or if you want to post it here I'm sure someone knows the up to date bank requirements, it's a while since I have worked in lending but it's easy enough find the info online if you know where to look.

For example last I heard a couple must have between 1,850/2000 left per month plus 250 per child left to live on after paying all loan repayments and also must come in under the income multiple rules. This may vary a bit between banks so you'd need to check your particular one, borderline might get you through but if you're way below then it doesn't look good.

That's not to say it's totally impossible, I have seen it done in the past but that was back in tiger days and if it has to be an exception to the banks lending rules then it is hard to find anyone in the banks anymore willing or capable or allowed to make a decision that is outside criteria. You would need someone on your side to put a strong case for it based on your personal circumstances.

Thank you for your advice...i really appreciate it. Maybe someone will take pity on me and help us out....or else we are f****d
If anyone would like to loan me €100,000 please let me know