Refinancing your way out of negative equity – The return of the 125% LTV Mortgage. In order to have some form of normally functioning property market, people have to be able to trade their homes. The residential property market relies on this to function correctly, both to free up starter homes for new first time buyers coming … into the market and to provide demand for homes further up the price scale. In many cases people are prevented from being able to trade in the market, even if they have the income and ability to repay a larger loan and they cannot move because of the negative equity.
In the UK, the Nationwide Building Society currently offers a “service” (not a mortgage product) to existing customers which allows them to remortgage and carry forward negative equity debt to a new property, effectively a 125% mortgage in certain circumstances.
Given the increasing number of people falling into negative equity in the Irish market, should something similar be made available at some point in the future in Ireland to facilitate trading in the market for people who meet the very strict lending criteria?
- Or would it simply be a case of refusing to learn from the mistakes of the past and another example of reckless lending on behalf of financial institutions?
- Or is transferring property debt into a type of personal debt going to be a necessary evil that we will have to consider in order that people can move?
- Should the couple who are Teachers or Gardai be prevented from relocating for work purposes because they are in negative equity – would that be of benefit or detriment to society and the economy?
Have your Say
- Should there be a facility available for home owners in negative equity who are looking to remortgage?