Trading down

pocketpolly

Hi all,

Just looking for some advice on trading down and how that works if you have arrears on your mortgage?

I am currently paying full payments on my mortgage but I wasn't for a period of about 5 years so there are arrears of about 20k.

If I want to trade down how does it work?

I want a smaller house with less expenses, just don't know how it works mortgage wise.

Thank you in advance for any advice.

Claw Hammer

Are you in positive or negative equity?

pocketpolly

Claw Hammer wrote: »

Are you in positive or negative equity?

Just about positive I'd say.

Claw Hammer

pocketpolly wrote: »

Just about positive I'd say.

If there is enough to clear the amount outstanding including arrears, that is one hurdle. The problem is that you have no equity for a deposit on another house. You will need a 100% loan on another house. That will be problematic.

pocketpolly

Claw Hammer wrote: »

If there is enough to clear the amount outstanding including arrears, that is one hurdle. The problem is that you have no equity for a deposit on another house. You will need a 100% loan on another house. That will be problematic.

You see that's what I'm wondering. Is it like starting all over again? Selling the house, paying off the mortgage and applying for another one?

If that's the case then surely I can't ever do it because given my credit history I would never get another mortgage, deposit or not?

Claw Hammer

pocketpolly wrote: »

You see that's what I'm wondering. Is it like starting all over again? Selling the house, paying off the mortgage and applying for another one?

If that's the case then surely I can't ever do it because given my credit history I would never get another mortgage, deposit or not?

You will have to pay down the existing mortgage and hope for a rise in values. That will then create enough equity to make you a proposition for another mortgage. You could talk to a mortgage broker and see if there is any kind of negative equity product available. I have my doubts that there is as you don't want to end up in subprime.

pocketpolly

pocketpolly wrote: »

You see that's what I'm wondering. Is it like starting all over again? Selling the house, paying off the mortgage and applying for another one?

If that's the case then surely I can't ever do it because given my credit history I would never get another mortgage, deposit or not?

Essentially yes.

pocketpolly

Claw Hammer wrote: »

You will have to pay down the existing mortgage and hope for a rise in values. That will then create enough equity to make you a proposition for another mortgage. You could talk to a mortgage broker and see if there is any kind of negative equity product available. I have my doubts that there is as you don't want to end up in subprime.

Yeah, it looks like I'm stuck for a long time yet which is such a pity as it's a very large house, very expensive to run and I'm starting to hate it as it's gets older, requires more maintenance etc. Feel very stuck.

Claw Hammer

pocketpolly wrote: »

Yeah, it looks like I'm stuck for a long time yet which is such a pity as it's a very large house, very expensive to run and I'm starting to hate it as it's gets older, requires more maintenance etc. Feel very stuck.

If it is bigger than you need, avail of the rent a room scheme. Put some of the tax-free rent against the outstanding loan and create some wriggle room.

goofy141

If you were in negative equity, depending on what products are offered from your bank, you could get a negative equity trade down mortgage.