Thursday 20 June 2019

How can I sell up or move on if still in negative equity?

How can I sell up if I'm still in negative equity?
How can I sell up if I'm still in negative equity?

The more than 200,000 homeowners who are still in negative equity are the only ones who can escape the Central Bank's new lending rules.

Borrowers in negative equity applying for a new mortgage are not bound by the rules which prevent second-time buyers from borrowing more than 80pc of the value of a home - or more than three-and-a-half times their income.

Many of those in negative equity have been trapped in their homes since the property crash hit - because they cannot clear their mortgage by putting their homes up for sale.

Renting out your home is an option if you're in negative equity and want to move elsewhere - but with it comes the headache of dealing with tenants and tax on rental income.

Negative-equity mortgages - where you take out a mortgage to buy a new home and carry forward the negative equity that has built up in your previous home - may be an option if you really wish to move. The drawback of these mortgages, however, is that you are ultimately taking the hit for the negative equity which has built up in your property - and you are also taking on a lot of debt.

AIB, Bank of Ireland, EBS Building Society, KBC Bank, Permanent TSB and Ulster Bank offer negative-equity mortgages to those trading up and down. With Ulster Bank, you can borrow up to twice the value of a home using a negative-equity mortgage - which is the highest loan-to-value ratio (LTV) - the percentage of the price of a home which is borrowed) offered by any of the lenders.

The maximum LTV with AIB and EBS is 175pc. Bank of Ireland also has an LTV limit of 175pc - or 125pc for self-builds. With KBC, the most you can borrow is 175pc of the value of the home if trading up - or 125pc if trading down. With Permanent TSB, the maximum LTV is 125pc if trading up - or 175pc if trading down.

Those in arrears will usually find it hard to get negative-equity mortgages - although some lenders allow you to trade down as a solution to your arrears.

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