Status on getting 2nd mortgage Q..read on!

veryangryman

Ok heres the situation...

I bought a new place last year - got a mortgage with the help of my dad as guarantor. The mortgage is around €220K

So a year on, my gf wants to get one herself (she works/lives 80 miles away). Her problem is that her parents are too old to act as guarantors.

We are both in full time jobs earning decent money (circa 30K each).

We have thought about putting out eggs in one basket and trying to drum together a mortgage for the house she wants (i.e half and half) - perhaps getting one for upto €150K, possible lower.

My question is... what would i expect from the bank if i came in with this proposal. Is my position snookered by the fact that i already have one?

Any advice would be brill - thanks in advance!

unclebill98

Its all about the abilitly to repay your debt.

If after all you outgoings inc the 2 mortgages etc you have more than 50% of you joint income left over it could be a runner.

stepbar

The yard stick is 4.5 times your earnings (assuming that you have no other deby out there). So that would give you 92% @ 270k => c250k. If you want to live in Dublin you aren't going to get much of a house for that. You have to also bear in mind the salability of your present property. How much is it worth now? And how much are you going to be left with when you pay off the mortgage? Of course you could rent out your existing property, but how much will you have to pay to make sure the mortgage is covered? Do you want to even go down the road of being a landlord? It might not even be an option due to revenue clawbacks etc. Also, if you go jointly you would loose your first time buyers status. So many questions.

veryangryman

I am a landlord (i have people living in the place im in now, which pays around €600 a month of the mortgage. An extra tenant would beef that up to say, €850-900 of a €1300 per month mortgage. So id only be paying about €400 of my own pocket. Plus id be paying less for day to day costs to the place what with not living there.

Neither place is in Dublin. Wouldnt live in Dublin. Nice to head out in occasionally, but I havent the patience for traffic/queues etc, not to meniton the price of gaffs. The 2 places im talking about are in midlands and the west.

What id like to do with the current place is wade out the current property slump and wait at least 5 years to sell the place, perhaps longer if the market delays in recovering

Other factors to include are that i dont have other debts. Considering getting a new car, but that could wait another year or so if necessary.

Thanks for the advice sofar. Food for thought

Supercell

If everyone needs a house.
If wages dont outpace inflation or roughly track it.

How can housing be a good long term investment?

unclebill98

We are a nation of people with the need to own our house.....

Not the case elsewhere, but Its simply an Irish thing.

House prices will go up again, just at a more sustainable level.

ircoha

I would think that in the current market, with unemployment rising etc, and heavy focus on credit quality, the 2nd mtg for you wont fly because while the first mtg is essentially secured by the gtee ur ass is out the window since .
220/30 is 7 times.

Am amused at the line 'get the house SHE wants'

What size trousers does she take?:)

veryangryman

You might also have noticed the "half and half" comment plus the fact that i own my own place and have already halved the term of it to 18 years. I appreciate your input; however i dedect some cynicism.

Working on the theory of unclebill98, we would still have enough change each for 50% of the salaries. That would make it a runner?

More opinions (positive and negative) welcome

ircoha

veryangryman wrote: »

You might also have noticed the "half and half" comment plus the fact that i own my own place and have already halved the term of it to 18 years. I appreciate your input; however i dedect some cynicism.

Working on the theory of unclebill98, we would still have enough change each for 50% of the salaries. That would make it a runner?

More opinions (positive and negative) welcome

I do this kind of stuff for a living so I was trying to be gentle: the lid is being kept on the level of foreclosures even now and that is before the IMF report of today

this link shows that at the moment 2 by 30 will get 270k
http://www.mortgageplus.ie/howmuch.htm

I have re-read your original post and I dont see anywhere clearly that u already own a place that is debt free.
I get the impression u are living in the house on which u owe 220k and pay 1300 a month

Is the 1300 a month based on the new term of 18 years: so 12 months a go the term was 36 years and now it is 18: That information should have been posted originally as u could extend it back out to say 40 years and reduce the payments

In addition u say that u will save money by not having the overheads in the house u are in now: will there be no overheads in the half and half house?
You detected cynicism
never:D: but this did spring to mind

"Love Of The Common People"

Living on free food tickets
Water in the milk from the hole in the roof
Where the rain came through
What can we do

Tears from your little sister
Crying 'cause she doesn't have a dress without a patch for the party to go
Oh but you know she'll get by

'Cause she's living in the love of the common people
Smiles from the heart of the family man
Daddy's gonna buy her a dream to cling to
Momma's gonna love her just as much as she can
And she can

unclebill98

Well, as pointed out by Stepbar with the multiples of salarys etc you might not be able to get the loan.

But, not all banks do it that way and as I did mention the DSR(Debt Service Ratio) must be less than 50%. Because of the boom in house price the DSR is more of a standard in approving mortgages than multiples, if every bank just used the multiples 10000's would just simple not earn enough, hence 100% mortgage etc.

But with the current market banks will be very wary of giving loans out, and given that your already exposed this could be a factor. Some banks are no longer doing 100% mortgages and they've lowered the DSR. some banks will not even consider a mortgage where the DSR is more than 40%.

Can you get a deposit to lower the LTV? Most banks want your business so going to them armed with all your figures is a good starting point.

Getting a good deal on house prices is happening all over the country. Here in Cavan some houses that where 500k are now selling for 400k, so the market is still there. You can now get a 3b SD in Kells for 200k, 200k was just enough for the same house in Cavan town in Q1 2007. There are good deals to be had.

Do you need a 100% mortgage? If so, do you meet the criteria for one? You no longer a FTB, but depending on your profession you might be able to get one.

Another good point by ircoha, your 1st mortgage is only there due to a gtee. This would be a negative factor. How would the gtee feel about you doing this and exposing yourself to another hefty loan?

60k income with mortgages close to if not over 2k p/m seems like alot. Plus Life cover, house insurance and running costs. Plus any loan will be stress tested.

So you'll have to take your current mortgage and add 2% to the interest rate and do the same with the new mortgage. In theory that could be 2 mortgages stressed at close to 7%, so what are the repayments now? If its still keeping you under the 50% DSR then approach the bank and get AIP. At least its better than listening to us

Ok, i is off to bed.

veryangryman

Any more opinions?

unclebill98

veryangryman wrote: »

Any more opinions?

What more do you want....

Go ask the bank. I've re-read everyones post and they pretty much covered all angles here. Your better of getting a straight answer of bank.

stepbar

I think that pretty much everything has been covered in this thread. Experinced bankers are talking here However, have a chat with your bank and see how it goes.