What to do.?.

unklerosco

At the moment I'm working full time as a sole employee for a small multinational company. Steady job blah blah blah. My missus runs a Montessori thats doing well enough given the climate we're in.

We're both living at home with parents and about the clear off all our debts n continue saving for a mortgage. We're hoping to start looking towards buying at the end of this year.. Its either that or start renting...

Now my question is this, I figure with our current situation and a decent deposit we should be able to get a mortgage later this year. The only problem is that the area we want to live in(malahide) is too expensive at present and I'm guessing it could be next year before houses out that way start becoming decent value...

Now we both run another company thats doing extremely well at present and expanding quite quickly, I'm hoping to leave my full time work later this year to devote all my time to it... At present I'm working full time and doing my own thing when I can but it will get to a stage where I wont be able to do both at the same time... My worry is that if I leave full time employment that we won't get a mortgage...

I know banks usually look for 3yrs accounts for the self employed. My thinking was that myself and the missus will list ourselves as partners for the Montessori and bring the new business in under that name. That will give us 4 years of accounts and a good forward projection... But even at that I'm a bit dubious as to how the banks would treat us.

What I'm thinking is that if we can't apply for a mortgage while I'm in full time employment its gonna be tricky to get one when I leave.. What you guys think??

And before u ask why I don't just stay at home, we rented for 2 yrs and moved back home to save.. We're coming up on year 2 with the folks n its starting to get on our nerves. That and we're hurtling towards 30 and have a wedding coming up and would ideally like to start a family in the next year or so...

kenbrady

unklerosco wrote: »

At the moment I'm working full time as a sole employee for a small multinational company. Steady job blah blah blah. My missus runs a Montessori thats doing well enough given the climate we're in.

We're both living at home with parents and about the clear off all our debts n continue saving for a mortgage. We're hoping to start looking towards buying at the end of this year.. Its either that or start renting...

Now my question is this, I figure with our current situation and a decent deposit we should be able to get a mortgage later this year. The only problem is that the area we want to live in(malahide) is too expensive at present and I'm guessing it could be next year before houses out that way start becoming decent value...

Now we both run another company thats doing extremely well at present and expanding quite quickly, I'm hoping to leave my full time work later this year to devote all my time to it... At present I'm working full time and doing my own thing when I can but it will get to a stage where I wont be able to do both at the same time... My worry is that if I leave full time employment that we won't get a mortgage...

I know banks usually look for 3yrs accounts for the self employed. My thinking was that myself and the missus will list ourselves as partners for the Montessori and bring the new business in under that name. That will give us 4 years of accounts and a good forward projection... But even at that I'm a bit dubious as to how the banks would treat us.

What I'm thinking is that if we can't apply for a mortgage while I'm in full time employment its gonna be tricky to get one when I leave.. What you guys think??

And before u ask why I don't just stay at home, we rented for 2 yrs and moved back home to save.. We're coming up on year 2 with the folks n its starting to get on our nerves. That and we're hurtling towards 30 and have a wedding coming up and would ideally like to start a family in the next year or so...

The reason why banks want 3 years account is to make sure the income is sustainable.
That is a good thing. So many people falsified mortgage applications to get more money out of banks and are now whinging. Saying they are in negative equity, but it's the banks fault for lending them the money.

Mortgages are not a competition you have to win. You can either afford the mortgage you want or can't. You should rent and continue saving until you can afford a mortgage on a house you like.

For once I'd trust the banks. If they say you can't afford the mortgage, I'd go with their opinion.

unklerosco

I know we can afford a mortgage... I've no intention of doing this the wrong way, sure I'm basing what we can afford on an interest rate of around 7% to make sure we're covered down the line. And I know that my annual income will more than double if I can put all my time into the new business, which is most definitely sustainable... I'm just wondering how the banks view self employed people in the current climate...

With regards saving etc for a house we like... There's plenty of houses we like, its just the owners are living in a fairy land when it comes to pricing them.

kenbrady

unklerosco wrote: »

And I know that my annual income will more than double if I can put all my time into the new business, which is most definitely sustainable...

You don't know that unless you can predict the future. It's 3 years account for self employed to reassure the banks. No way around it.

unklerosco

kenbrady wrote: »

You don't know that unless you can predict the future. It's 3 years account for self employed to reassure the banks. No way around it.

Ok, so we have the 3 years of accounts(well 4 actually)... Would banks view self employed people to be more of a risk than those that are employed or does it depend on the area your business is in etc etc?

Gurgle

unklerosco wrote: »

Ok, so we have the 3 years of accounts(well 4 actually)... Would banks view self employed people to be more of a risk than those that are employed or does it depend on the area your business is in etc etc?

In theory it depends on the area your business is in, your accounts will show that its going well...

In practise, you will probably find a much smoother path if you stay in PAYE employment until the sale is complete.

Victor

unklerosco wrote: »

At the moment I'm working full time as a sole employee for a small multinational company.

So closing the operation will be easy for them?

My missus runs a Montessori thats doing well enough given the climate we're in.

I imagine lots of families who have lost an income will be finding it more important to drop child care.

We're both living at home with parents and about the clear off all our debts n continue saving for a mortgage. We're hoping to start looking towards buying at the end of this year.. Its either that or start renting...

This sounds like a bit of a rush. You need to demonstrate and ability to pay. Loans and living at home need to be managed.

The only problem is that the area we want to live in(malahide) is too expensive at present and I'm guessing it could be next year before houses out that way start becoming decent value...

You realise that Malahide has its costs? High cost of living (linked to the highest average income in the country), one medium-sized supermarket, over-subscribed schools, very small employment base meaning commuting is obligatory.

unklerosco

Victor wrote: »

So closing the operation will be easy for them?

True, but I'm fairly sure they wont. When I started it was run as a franchise but the main company has taken over and invested quite a bit into it... They've also increased the business by a huge amount, will most likely be looking to employ more staff this year as the workload increases...

Victor wrote: »

I imagine lots of families who have lost an income will be finding it more important to drop child care.

We haven't found that, infact we've near doubled our numbers from last year, we've gone from having 2 members of staff to 5 and will be taking on another 2 this month. There's also the new E.C.C.E grant which gives children a free preschool year, although we're not dependent on it(sure it only started last week)

Victor wrote: »

This sounds like a bit of a rush. You need to demonstrate and ability to pay. Loans and living at home need to be managed.

What do you mean by this exactly?? At present we're paying €3100 a month into a credit union acc. Some of that goes into savings and the rest off a loan. When the loans finished it all goes into savings... Other than that we have mobile bill, TV, phone/internet bills each month that we pay...

Victor wrote: »

You realise that Malahide has its costs? High cost of living (linked to the highest average income in the country), one medium-sized supermarket, over-subscribed schools, very small employment base meaning commuting is obligatory.

The reason we've picked Malahide is that thats where the school is and my office is currently out there. From working out there we've made a good few friends etc. I know the situation with the living costs, schools etc...

Victor

unklerosco wrote: »

What do you mean by this exactly?? At present we're paying €3100 a month into a credit union acc. Some of that goes into savings and the rest off a loan. When the loans finished it all goes into savings... Other than that we have mobile bill, TV, phone/internet bills each month that we pay...

The only reason you can save €3100 a month is because you aren't currently paying rent / mortgage. Banks are currently looking for 10-20% deposits. With a wedding to be paid for, all thats going to be difficult in the time frame.

unklerosco

Victor wrote: »

The only reason you can save €3100 a month is because you aren't currently paying rent / mortgage. Banks are currently looking for 10-20% deposits. With a wedding to be paid for, all thats going to be difficult in the time frame.

I see where your coming from... We do pay rent tho, all be it €400pm, along with that we also have a small business loan which is €750pm. Both of them together along with the CU loan total €4250pm. Surely if we can continue to make these payments(which we can and have been for 7 months now) does that not show that we could pay a mortgage?

And regards the wedding, budget is around €2-3k for it...

murphym7

If you are planning to buy at the end of the year I would consider staying in your job until Mortgage approval comes in - even if you go full time into your new business and combine the 2 businesses' accounts into one you will have accounts for 3/4 years but it will be clear without too much investigation that the second business has only contribiuted X amount into the combined business - kind of like just presenting the books of two seperate companys really. The bank will know what is going on.

To add some positivity into it - the amount of cash you can free up each month to pay into the CU on top of the other loans and outgoings is very impressive, I'm jealous!! €3,100 is a nice lump to go into that CU account each month. With the fact that all that €3,100 will eventually just go into the savings account after the loan is completed, you should be in excellent shape. In fact in 12 months you would have €37,200 on top of any other savings you have accumulated, nice place to be.

I would go for it if that is what will make you happy - I do not buy into the wait until the last possible cheapest moment to buy thinking thats out there. Sure, if you wait even longer you will get a cheaper house but there are many other considerations too - like basic happiness. Do you want to live with your parents for even longer (not easy after living away from home for years!!). Yeah you can rent but do you want to begin your family in someone else's house and then move to the nice cheap house? Yeah, if you buy now you most likely will go into negative equity - maybe, nothing is certain folks, it is likely though. If you are planning to be taken out feet first in a box in 50 years there should not be a problem. I know I know, what if you lose your job, what if your wife loses her job, what if you have to move. If we lived out lives in the what if mode then we would never leave the house.

You should do what fits into your life plan. I see nothing irresponsible or dangerous in buying a house at the moment, especially with your financial circumstances, and I know that financial circumstances can change but that just goes back to my what if theory.

Doomb's day sayer's do your worst!!:D:D