Taylor Solicitors Cork: Ireland has experienced one of Europe’s most dramatic property crashes in the last few years.
Hundreds of thousands of homeowners have been left saddled with properties that are in negative equity. But life goes on… couples that bought that one bed apartment now find themselves with two kids, no room and with a property in negativity equity. Until recently, these families had no prospects of being able to move to a bigger home. It is estimated that between 300,000 and 350,000 homeowners are burdened with negative equity properties here in Ireland.
There is however some light at the end of the tunnel. With the permission of the Central Bank, several banks have announced that they will offer new mortgages to customers allowing them to sell their negative equity property and move their mortgage to the new property being purchased.
The Central Bank has stated that stringent measures must be in place when approving these mortgages. This is to ensure that the mortgages are only offered to people who can make the payments; otherwise borrowers could fall into even deeper debt. There is also a requirement that customer’s current property must be sold before they can move the mortgage to their new property, however there is some flexibility regarding this. One of the most important factors is that the mortgage can only be given if what is owed is at most 25% greater than the value of the property. For example, if a person wishes to move to a two bedroom house valued at €100,000, the borrower can only owe a maximum of €125,000 (this would include transferring a negative equity of €25,000 from their first property).
In summary, there are clearly drawbacks to the new mortgages being offered, but for the ideal candidate, this may provide a much desired opportunity to move to a new home.