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Some Mortgage Advice please

  • 07-03-2008 10:50am
    #1
    BoozyBabe
    Registered Users, Registered Users 2 Posts: 1,724 ✭✭✭


    Hi all.

    My partner & I are planning on building our home in the near future & will be shortly starting the whole planning process, mortgage, etc.

    We already have the land, so only require a loan for the actual building.

    The thing is, & I don't know if this is a help or a hindrance for us:- I already own a property & so I already have a mortgage. (less than 100k)

    I have the property less than 4 years, so I wouldn't have much of the actual loan paid off, but I'd imagine the property has increased in value by approx 30k.

    It is a rental property & the total monthly mortgage repayments are being covered by the rental income.

    So, in a nutshell, if we both had no loans, (i.e. my existing mortgage), our salaries & our savings would allow us to get the amt of money we need no problem, going by all the guidelines on the net.
    But, my question is, will the fact that I already have a mortgage mean we'll be able to borrow more than normal, less than normal, or more or less unaffected?

    Thanks,
    Hope I'm making sense!
    BB


Comments

  • #2
    Ralph2
    Closed Accounts Posts: 6 ✭Ralph2


    Because you have a property already have you looked into stamp duty. You may have to pay stamp duty as well. Also as you are not a first time buyer you wont qualify for full tax relief.

    On the mortgage front the banks will consider you existing mortgage as a loan but will also consider the rent you receive as additional income. It varies on banks but most will onlt take approx 70% of rent received as there is no guarantee that the property will be rented for full each year.

    However on a mortgage of 100000 your repayments should not be to high. It usually means you could borrow less than if you have no loan. On the plus side as you have the land already the loan to value on new property will be low so bank will usually consider this and lend a little extra.


  • #3
    faceman
    Moderators, Category Moderators, Arts Moderators, Entertainment Moderators, Social & Fun Moderators Posts: 16,663 CMod ✭✭✭✭faceman


    It will depend on your current financial circumstances.
    The price of you building your home will be far cheaper than a new home but i expect the banks may want to secure the new loan against your existing assets.


  • #4
    beeno67
    Registered Users, Registered Users 2 Posts: 1,218 ✭✭✭beeno67


    The fact that you own a rental property should not affect the amount of money you can borrow as long as the mortgage is less than 70% of the property's value as in your case. Also if you are willing to move mortgage to keep both mortgages in same bank it may work in your favour. Look to remortgage investment property as interest only if you have not already done so.


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