Deposit Question

TommyL

I am in the process of trying to get a mortgage and am struggling to come up with the 8-10% required(around 20 grand).
I have roughly 6 grand and I have a salary of 50 grand a year.

Is there any way around it? I have heard of people getting their parents to remortgage their houses for around 20 grand and paying back that loan themselves. Is this feasable?

Johnny Bitte

Borrowing to make up the deposit is a seriously bad idea.

If you can't save for the deposit, you can't afford a mortgage.

This is partly the reason so many people in the situations they are in.

When I was saving, we were told all sorts like you can borrow from the Credit Union and the banks wont know. Or get someone else to take out the loan and pay them back.

Unless your parents are will to give it to as a gift don't bother.

If you cant save say double what your mortgage repayments will be then you shouldn't buy a house IMHO.

testicle

TommyL wrote: »

I am in the process of trying to get a mortgage and am struggling to come up with the 8-10% required(around 20 grand).
I have roughly 6 grand and I have a salary of 50 grand a year.

Is there any way around it? I have heard of people getting their parents to remortgage their houses for around 20 grand and paying back that loan themselves. Is this feasable?

What outgoings have you?

On a Salary of 50k, you're taking in over 3k into your hand a month. Put at least 1500 of this aside each month, and you should be OK in a few months

BC

Agree with previous poster, unless you have huge loans, on that salary you should be able to save 1000 - 1500 a month. More depending on your rent/outgoings. You'd have it saved in a year.

TommyL

testicle wrote: »

What outgoings have you?

On a Salary of 50k, you're taking in over 3k into your hand a month. Put at least 1500 of this aside each month, and you should be OK in a few months

I am renting at the moment and I pay €400 a month.
I have saved around €600 euro a month for the last 7 months.
At this rate its going to be a long time before I reach the kind of money required, but if its the only way then so be it.

mathie

testicle wrote: »

What outgoings have you?

On a Salary of 50k, you're taking in over 3k into your hand a month. Put at least 1500 of this aside each month, and you should be OK in a few months

Is that right?

January

50/12 = 4.1 so yes that would be right.

Nidot

The bank base your mortgage size on your ability to repay (well they're meant to do that). So theoretically the rent of €400 and the savings of €600 will leave you with a monthly ability to pay of €1000. Now you need to evaluate your expenditure to examine if it is feasible to obtain an affordable mortgage for this repayment amount.

fontanalis

testicle wrote: »

What outgoings have you?

On a Salary of 50k, you're taking in over 3k into your hand a month. Put at least 1500 of this aside each month, and you should be OK in a few months

Over 3k, seriously doubt it. More like 2.8 to 3 after tax.

testicle

TommyL wrote: »

I am renting at the moment and I pay €400 a month.
I have saved around €600 euro a month for the last 7 months.
At this rate its going to be a long time before I reach the kind of money required, but if its the only way then so be it.

So where's the other 500 quid a week going? I'd sit down and look at where the money is going. Cut out on the extras (like boozing every Friday/Saturday for example) for 6 months, and you'll have it saved in no time.

testicle

fontanalis wrote: »

Over 3k, seriously doubt it. More like 2.8 to 3 after tax.

Presuming everything is standard, and claiming no tax credits, and paying no pension, the net salary is €3,005.68 - he's renting, so therefore can claim rent relief, and bin allowance etc, so that'll bring it up more.

fontanalis

testicle wrote: »

Presuming everything is standard, and claiming no tax credits, and paying no pension, the net salary is €3,005.68 - he's renting, so therefore can claim rent relief, and bin allowance etc, so that'll bring it up more.

Ok, by over I incorrectly assumed you meant something like 3.2, my bad. To answer the original question, if you don't have the deposit now, wait and save.

D3PO

TommyL wrote: »

I am renting at the moment and I pay €400 a month.
I have saved around €600 euro a month for the last 7 months.
At this rate its going to be a long time before I reach the kind of money required, but if its the only way then so be it.

seriously if your only paying 400 quid a month in rent and can only save 600 then you cant afford a mortgage.

Become more responsible with your money then consider getting a mortgage.

ciano6

mathie wrote: »

Is that right?

it's definitely not right. i earn 51,000. today i got my fortnightly cheque and it is exactly €1145.08 so that would be about €2350 a month. A big difference between that and 3k!!

testicle

ciano6 wrote: »

it's definitely not right. i earn 51,000. today i got my fortnightly cheque and it is exactly €1145.08 so that would be about €2350 a month. A big difference between that and 3k!!

My gross pay last year was was 51k also, deductions from that were PAYE, PRSI and Income Levy, amounting to 12675, so I took home 38325 which is 3193.75 per calendar month, or as you get paid fortnightly, 1474. I had reduced tax credits from underpaying PAYE some years ago, so PAYE should be more, thus net pay more. Edit: actually, what I do have is a raised SRCOP, but it wouldn't account for 175 a week!

Someone is either rogering you up the proverbials, or I'm underpaying PAYE again.

matrim

If you use a tax calculator you can get a good idea of what you should expect to pay.

It's not perfect but gives you a decent idea

TommyL

I come out with 2,600 every month after tax,vhi,Union membership etc.

Thanks for your help I have got more honest answers here than I have got from my mortgage advisor in the past 2 months!

Cookie_Monster

ciano6 wrote: »

it's definitely not right. i earn 51,000. today i got my fortnightly cheque and it is exactly €1145.08 so that would be about €2350 a month. A big difference between that and 3k!!

:eek::eek::eek:

That can't be right, I'm on 35k and get only 40 less a month then that.

TommyL wrote: »

I come out with 2,600 every month after tax,vhi,Union membership etc.

Thanks for your help I have got more honest answers here than I have got from my mortgage advisor in the past 2 months!

don't forget to claim relief for VHI and Union Membership, little bit extra in hand. You should be able to save at least 800-1k a month out of that tbh if rent is only major expense (ie no car loan, CC to pay off). Just need to put together a breakdown of how you spend everything and work out where to cut back on things. Turn heat down & lights off and save on bills, go out 1 night less a week, drive less etc etc

Also bear in mind you'll probably want to save more for all the fitting out of the house. The days were banks just threw money at people is long gone but I think its a good thing, at least it'll make people more aware of what they can afford.

Good luck with it

D3PO

ciano6 wrote: »

it's definitely not right. i earn 51,000. today i got my fortnightly cheque and it is exactly €1145.08 so that would be about €2350 a month. A big difference between that and 3k!!

you must be paying a fortune into your pension fund then because that is wayyyy under what you take home would be net if you on 51k.

Im on 50k and take home just under 2,800 per month after my pension contribution

D3PO

TommyL wrote: »

I come out with 2,600 every month after tax,vhi,Union membership etc.

Thanks for your help I have got more honest answers here than I have got from my mortgage advisor in the past 2 months!

well given they get a commission on your drawdown are you surprised

seriously though read cookiemonsters last post hes bang on the money with it.

take stock of your current expenses and figure out why you can only save 600 a month. With your current lifestyle you can only afford a mortgage of a grand a month.

Give interest rates will possibly go up by 2 - 3 points in the next 18 months, 1,000 will be far short of what you will need to service a mortgage.

You also need to consider the auxiliry costs to being a home owner, life assurance, home insurance premium, repairs, etc

after taking stock you might find your pissing away a lot of money on nights out etc, if so you really should adjust this lifestyle before getting a mortgage and getting into the habit of living on X amount of disposible income.

I dont want to put you off buying as for the economy to turn consumer confidence and spending associated with it need to return to get this country off its knees but at the same time its of no use if people go back spending without thinking about affordability

xoxyx

ciano6 wrote: »

it's definitely not right. i earn 51,000. today i got my fortnightly cheque and it is exactly €1145.08 so that would be about €2350 a month. A big difference between that and 3k!!

I would speak to somebody about that because I earn a little under €40,000 and my fortnightly net pay is €1,160.

John Mason

OP, i earn a bit less then you and i manage to save E700 a month after paying my mortgage, bills and loan.

i could probably save an extra E150-200 a month if i had to.

you need to sit down with your bank statements and an excel spreadsheet and do an income and expenditure sheet and figure out where you are wasting money.

Example, do you buy lunch every day ? this works out at about E50 a week, which E200 a month, getting taxis home rather then the night link etc., buying expensive pre-packaged food rather then cooking your own for half the price.

its simple little things like that which you dont even notice spending at the time.

D3PO

irishbird wrote: »

OP, i earn a bit less then you and i manage to save E700 a month after paying my mortgage, bills and loan.

i could probably save an extra E150-200 a month if i had to.

you need to sit down with your bank statements and an excel spreadsheet and do an income and expenditure sheet and figure out where you are wasting money.

Example, do you buy lunch every day ? this works out at about E50 a week, which E200 a month, getting taxis home rather then the night link etc., buying expensive pre-packaged food rather then cooking your own for half the price.

its simple little things like that which you dont even notice spending at the time.

I totally agree. Since I started bringing in my own lunch to work, and bringing in a jar of coffee rather than buying same in the coffee shop I find my expenses probably dropped by €300 or so a month thats a fair chunk of change that you dont see seeping away.

Id also suggest you look at your bills and see if you can reduce them. Shop around for car insurance, look at switching your lecky to Bord Gais, look at switching your gas to flo gas, can you get your broadband cheaper from somebody else, what about your mobile bill etc etc

You would be amazed how much you can reduce your outgoings without actually impacting your lifestyle

ellejay

Yep, some very good advice there OP.

You should also set up a "standing order" to a savings account for the day after you get paid.
Roughly the amount your mortgage will be, less your rent.
Eg if your Mortgage Repayments will be 1200 a month, less your 400 rent, you should transfer 800.

You'll have a good idea of how your standard of living will change with a mortgage and it might turn out that you'll have to set your sights lower.
(like me!!)
Ideally, you should still be able to save for a rainy day and maintain a decent social life.

Also, are you claiming back any medical expenses incurred throughout the year?
Med 1 and Med 2 for dental. Think you can claim for previous years also.
Think it's 20% of expenses for physio, doctors, etc.
-Might help boost your savings

One thing though, as I'm sure you've heard, interest rates are due to rise, so don't forget that when calculating repayments!!!

BC

D3PO wrote: »

you must be paying a fortune into your pension fund then because that is wayyyy under what you take home would be net if you on 51k.

Im on 50k and take home just under 2,800 per month after my pension contribution

Doesn't sound way off to me?
I'm on 54K and my take home pay is about 2800 per month. Thats pension, tax, prsi, income levy, vhi & public sector pension levy.

ZYX

BC wrote: »

Doesn't sound way off to me?
I'm on 54K and my take home pay is about 2800 per month. Thats pension, tax, prsi, income levy, vhi & public sector pension levy.

Problem here is people are forgetting a person on 50K a year will take home significantly less if they are a public servant. Still shows how undertaxed we are in this country.

Cookie_Monster

ZYX wrote: »

Problem here is people are forgetting a person on 50K a year will take home significantly less if they are a public servant. Still shows how undertaxed we are in this country.

but that person will be on considerably more for the same role than someone in the private sector so it balances out

ciano6

D3PO wrote: »

you must be paying a fortune into your pension fund then because that is wayyyy under what you take home would be net if you on 51k.

Im on 50k and take home just under 2,800 per month after my pension contribution

i checked at work. its right alright. i'm public sector so there are a few extra deductions. not complaining by the way.
and OP, you really should be able to save way more than you do.

Jo King

TommyL wrote: »

I am in the process of trying to get a mortgage and am struggling to come up with the 8-10% required(around 20 grand).
I have roughly 6 grand and I have a salary of 50 grand a year.

Is there any way around it? I have heard of people getting their parents to remortgage their houses for around 20 grand and paying back that loan themselves. Is this feasable?

There is a way around saving the deposit. It was very common years ago. It is also most likely illegal, so I won't describe it.

Senna

Jo King wrote: »

There is a way around saving the deposit. It was very common years ago.

and look where that got us.

The OP has been saving for 7 months and now wants a mortgage, i was saving for years before i even considered buying a home.
If you cant afford the deposit, you cant afford the house, start saving.

Jo King

Senna wrote: »

and look where that got us.

The OP has been saving for 7 months and now wants a mortgage, i was saving for years before i even considered buying a home.
If you cant afford the deposit, you cant afford the house, start saving.

The old system caused no trouble, it prevailed in the time of the 2.5 times annual income loan. It was the later 100% loans with massive salary multiples being lent, that led to all the trouble.

Idbatterim

undertaxed in this country?! you have to be joking! if you earn anything over 37k you pay over 50% in PAYE, Income Levy, PRSI etc! The higher earner are over taxed, middle earners probably ok and half the workers in the country arent taxed at all! go figure! Also how necessary is the Union membership and VHI? both a bloody waste of money IMHO!

Senna

Jo King wrote: »

The old system caused no trouble, it prevailed in the time of the 2.5 times annual income loan. It was the later 100% loans with massive salary multiples being lent, that led to all the trouble.

I though you were on about credit union loans, what are you on about?

Jo King

Senna wrote: »

I though you were on about credit union loans, what are you on about?

I have already said that I am not going to describe it because it is of dubious legality. What is illegal about credit union loans?
The system I am describing depended on an arrangement between the solicitors.

Jinxi

my partner and I are in the same boat. I earn 35,000 a year and he has a commision based job earning 18,000 base salary. It is very frustrating that banks do not take paying rent into account. \if we can afford 650 pm on rent as well as 700 pm in savings then doesn't it make sense we could afford 800 per month mortgage when rent is no longer an outgoing?
Why then is it so important to have 10%

The_Conductor

Jinxi wrote: »

my partner and I are in the same boat. I earn 35,000 a year and he has a commision based job earning 18,000 base salary. It is very frustrating that banks do not take paying rent into account. \if we can afford 650 pm on rent as well as 700 pm in savings then doesn't it make sense we could afford 800 per month mortgage when rent is no longer an outgoing?
Why then is it so important to have 10%

Because ECB base rates are only 1% at present- and normalisation of rates, which is expected to commence later this year, as inflation is edging upwards in France and Germany- is 4.3%. Irish lending institutions are massively increasing the margins they charge on funds- as their borrowing costs are substantially higher than previous- so you're EUR800 a mortgage could double to EUR1600 a month- as rates increase (more likely it would only go to around 1350- which would reflect a 3% rise).

Further- banks do not like negative equity- as the asset which is backing their loan to you- is then less than the outstanding amount on the loan. It is prudent business practice to minimise this by incentivising people to have as large a deposit as possible.

90% mortgages are not common even now- 85% would be normal- and banks are a lot happier with lower than this......

Times- they are a changin'........