Risk losing new home can't get permission to let old one

kingstreet

Comms69 wrote: »

It's the negative equity that's going to cause the issues

I can think of times only mortgage amount and monthly payment are requested.

mariadingbat

We are in a difficult situation in that we live in Northern Ireland and the property crash really hit hard here, 2 in 5 properties are still in negative equity. Where I bought was in a different part of the country than where I am from and, while that was completely fine initially, over the last number of years sectarian unrest here has made me feel very uncomfortable living in the area as I have an obvious accent that makes me stand out as not from here. In order to get from the house to the where we no work we have to go through an area with painted curbstones and sectarian murals and I've had a couple of low key incidents happen that make me want to move. So as soon as we got jobs in our new fields we saved hard to get a deposit together and pay the extra 2nd home stamp duty and found a good house in a mixed area to put an offer on once we had a mortgage agreed in principle.

Finances now are not a problem, but it has taken years to get us here, years we weren't able to switch to a payback mortgage as we were mature students and paying off tuition fees. We are now financially comfortable and want to feel safe where we live. If we had consent to let there would be no issue, we can afford to be landlords, we can afford the new mortgage, we can afford to start paying back the capital of the interest only mortgage now or switch it to a repayment mortgage. We don't want to stay somewhere that doesn't feel safe anymore in a house that is too small while we do that if there is another option.

The current mortgage lender has agreed verbally that we can rent our existing house out which will cover all costs, including tax etc. but the banks approached by our broker won't lend without the consent to let letter the current mortgage lender won't give. We are stuck and don't really know what to do.

mariadingbat

Deleted_User wrote: »

God knows who your broker is going to but this shouldn't be a difficult case to place. 10% deposit with a retained property on ctl, no letter for ctl. Should be fairly easy

What lenders have you been dealing with?

Our broker has spoken to Bank of Ireland, Progressive and Nationwide. First 2 were no, Nationwide want a 15% deposit which would take us another 6 months to get and would mean losing the house we've had an offer accepted on.

AdrianC

mariadingbat wrote: »

we can afford to be landlords

Can you?
How much would you have in backup to keep paying the mortgage when you find out that your tenant has done a runner on the day of eviction for not having paid rent, and the house is a mess with a trashed boiler etc...?

Have you asked the lender about how best to settle the negative equity debt post-sale? Or are you fixated on trying to wait-out the negative equity as "accidental landlords"?

NI may well mean the mortgage market is different to elsewhere in the country.

kingstreet

mariadingbat wrote: »

Our broker has spoken to Bank of Ireland, Progressive and Nationwide. First 2 were no, Nationwide want a 15% deposit which would take us another 6 months to get and would mean losing the house we've had an offer accepted on.

If you are buying a newbuild, you can expect to need at least 15% deposit in most cases because lenders tend to top-out at 85%. This has nothing to do with your existing property, it's about the new one.

Unfortunately, I can't suggest lenders in NI as I don't know the lender criteria there particularly well. Lenders offering 90% on newbuild houses in England are (IIRC) Skipton, Leeds, Barclays, Newcastle, Virgin Money, Hanley Economic, Leek United.

Crashy_Time

theartfullodger wrote: »

Uummnnn... you CAN sell it, but at a significant loss. Sorry for you but many of us have been there in the past ...



Property prices have always bounced up & down...



Good luck, best wishes & hope things improve.

No, they went up in a more or less straight line for a long time, due to deliberate credit policy by banks, and people got used to this leading to bad decisions.

theartfullodger

Crashy_Time wrote: »

No, they went up in a more or less straight line for a long time, due to deliberate credit policy by banks, and people got used to this leading to bad decisions.

??? Doesn't look like a straight line to me...Nor does my memory bear your esteemed comment out

e.g.

https://www.allagents.co.uk/house-prices-adjusted/

Cakeguts

mariadingbat wrote: »

The current mortgage lender has agreed verbally that we can rent our existing house out which will cover all costs, including tax etc. but the banks approached by our broker won't lend without the consent to let letter the current mortgage lender won't give. We are stuck and don't really know what to do.

This is the bit that is your problem. You are assuming that letting your house will cover all your costs. That is not the way to start letting property. You have to start by assuming that letting the house will not cover any costs and in fact will cost you more. Assuming that your tenants will always pay the rent, not break anything not wreck the house etc If your tenants stop paying the rent and at the same time the house needs repairs how are you going to pay for the mortgage on two properties and for the repairs with no rent coming it?



People always assume that a house that they bought to live in will make a good rental. Often they don't. Sometimes they do. What are you going to do if it turns out that the property you bought doesn't make a good rental property and you have a continual turnover of tenants so that you have to redecorate and change the carpets at the end of every tenancy? Will that cover all your costs?



The local estate agents might well be telling you how much rent you can get. That will almost certainly be higher than you can actually get and they won't be telling you that for every 6 months the house is occupied it will also be vacant for 2 months.



If you don't want to sell this house with the extra debt or pay off the negative equity using your savings you are not going to get a mortgage for the new house because if you can't pay both mortgages without getting any rent you are much to higher a risk for the lenders which is what you have already found.



You are going to have to delay starting a family until you have sold the house and paid off the debt.

G_M

If you can afford 2 mortgages now, and afford to be a landlord, how come you have not been addressig the negative equity for 10 years by paying off in lump sums or switching to repayment mortgage. Or just over-paying monthly?

Such poor money-management does not bode well for running a letting business........

But see another broker as your current one appears to be pants!


** Tenancies in Eng/Wales: Guides for landlords and tenants

MovingForwards

You might want to edit your original post to state you are in NI. It will be easier for members who have been in your situation say what they have done.