We are going to meet our mortgage advisor with the hope of getting them to allow us to sell our apartment and continue paying the balance of the mortgage on the original terms. I know it is pretty unlikely but the following will be my argument and I would be grateful if you guys could critically analyse it for me.
(as if it was written by my wife!)
We have a baby arriving in September so we are definately moving out of our apartment for good.
We have two options:
- We could rent our apartment and rent a 3 bed house or
- (Our preferred option) Sell our apartment (we hope to get €100,000) and continue to pay the balance €178,000 in the same terms as the original mortgage.
Reasons for wanting to sell apartment:
There are very few first time buyers buying one bed apartments in Dublin. They will not have much resale value and 2 bed apartments or 3 bed houses are not that much more expensive so one bed apartments are not an attractive buy for these people.
The only people who seem to be buying them are cash investors because they are achieving a good rental yield at present of around 10%.
For this reason I cannot see the value of 1 bed apartments rising even if we do have a “recovery” in house prices with other dwellings.
With no recovery in sight to the euro crisis, rising unemployment, potential rises in interest rates, further cuts to social welfare, rises in property taxes, introduction of water charges, cuts to rent allowance (resulting in lower rents and decrease in attractive of 1 beds to cash investors) etc I can only see 1 bed apartments falling further and therefore if the bank blocks our bid to sell the house they are effectively condemning us to being in further negative equity. The value could easy fall to €60,000 or lower and will unlikely rise higher than current levels in the medium to long term.
If we rent our 1 bed and rent a 3 bed we will lose our mortgage interest relief and it will cost us €812.50 a month between the balance of renting our 1 bed (best possible outcome assuming we have only one month rent free period and little maintenance required) and making mortgage payments and that value rises to €1285 when you include management fees, property tax etc.
If we sell our apartment and continue to pay the balance on the original terms of the mortgage it will cost us €887 a month which is more affordable than €1285 (best case scenario) and we wouldn’t have the worry of rental free periods, maintenance bills, property charges etc.
I may have to take a career break to look after our child(ren) and from the banks point of view option 2 would make it easier for me to make my repayments and not fall into arrears as it is more affordable.
Are there any other points that could strengthen my argument for this?