Applying for a second mortgage to build

sandal

Hi, my wife and I own an apartment (in my name) which we bought In March 08 for €248K, now worth approx €190K with very little of the mortgage paid off. We moved out of the apartment last year and it has been rented since and hopefully will continute to be rented out. We hope to obtain a second mortgage to buy and build a house for ourselves. Would probably need to get around €320K to carry this through. We are both working full time with combined salaries of €60K per annum. I am a teacher so in stable employment. Anyone else in the same boat or have any opinions as to whether there is a chance at all of us being successful in applying for this second mortgage? Anyone with advice would be great. Cheers.

Gaz

I really dont think you have a chance and to be honest thats a good thing , a combined mortgage of over half a million to a couple earning €60k is pure madness.

Sell your apartment, pay of the remaining debt and start again.

Smcgie

Gaz wrote: »

I really dont think you have a chance and to be honest thats a good thing , a combined mortgage of over half a million to a couple earning €60k is pure madness.

Sell your apartment, pay of the remaining debt and start again.

Mad advice re:selling your apartment and paying off the debt (don't think I need to tell you that) I wouldn't fancy your chances on a 500k mortgage, you would prob need 80-100k cash as its also a second home mortgage.

Good luck anyway

D3PO

pure bubble mentality and a lack of any financial responsibility.


OP your having a laugh.

1) You cant afford it
2) Interest rates are on the rise
3) Property tax, water rates etc are most likely on the way

oh and

4) you cant afford it.

Smcgie

Why is there the need to be so obnoxious? You can answer a post straight up but without sitting on your high horse. The op was looking for advice not to be tread across.

D3PO

Smcgie wrote: »

Why is there the need to be so obnoxious? You can answer a post straight up but without sitting on your high horse. The op was looking for advice not to be tread across.

Im not sitting on any high horse some people jsut dont have a clue how to be financially responsible. It shoudl be there in black and white for the OP but there not getting it. If I have to be very blunt then I will be.

People over extending themselves is why were in this mess, and myself and the others that have been financially responsible are paying for it in the guise of bank bailouts and increased taxes / stealth taxes.

So excuse me if I take exception to somebody on a pretty low salary (combined they earn less than average and with the croke park agreement the teacher aint getting a pay increse for the next few years, interest rates are rising and net income is dropping) asking if any bank will lend them over half a million euro.

As they say the truth hurts. If you think telling the truth is obnoxious then Im guilty as charged.

ricman

it would make more sense to sell the apartment,be4 it loses value.HAVE you a site bought,go to your bank ask can you borrow 200k to build ,and can you pay off the remaining mortgage over 7 years.
Prices are still going down ,interest rates going up.OR go to a mortgage broker for advice.

The_Conductor

sandal wrote: »

Hi, my wife and I own an apartment (in my name) which we bought In March 08 for €248K, now worth approx €190K with very little of the mortgage paid off. We moved out of the apartment last year and it has been rented since and hopefully will continute to be rented out. We hope to obtain a second mortgage to buy and build a house for ourselves. Would probably need to get around €320K to carry this through. We are both working full time with combined salaries of €60K per annum. I am a teacher so in stable employment. Anyone else in the same boat or have any opinions as to whether there is a chance at all of us being successful in applying for this second mortgage? Anyone with advice would be great. Cheers.

Credit is a lot more difficult to source these days than previously. The various lending institutions have gone back to 'prudent lending practices'- which in short are: 3.5 times the first income and twice the second income for a joint application- or all debt servicing to a max of 35% of NET income.

The mortgage on the first property- totally ignoring the fact that its in negative equity- is very likely to be seen as justifiable reason for not furthering you more credit. Under the rules currently in place- you wouldn't even qualify for a joint mortgage on the pre-existing apartment- much less another mortgage on top of it (totally irrespective of the fact that its let etc).

You need to pay down pre-existing debt (the mortgage on the apartment)- either by selling it and converting the negative equity into a term loan of some sort or description- or by accepting that its an investment and putting as much as you can possibly afford into paying off the principle asap.

I know its absolutely no consolation- but there are tens of thousands of people in identical trouble to you.........

_Kaiser_

D3PO wrote: »

pure bubble mentality and a lack of any financial responsibility.


OP your having a laugh.

1) You cant afford it
2) Interest rates are on the rise
3) Property tax, water rates etc are most likely on the way

oh and

4) you cant afford it.

Smcgie wrote: »

Why is there the need to be so obnoxious? You can answer a post straight up but without sitting on your high horse. The op was looking for advice not to be tread across.

I have to competely agree with D3PO on this.. what the OP is asking is madness.

As for being "obnoxious", I disagree.. as I said in the Rent to Buy thread, by the looks of things a lot of people in this country have learned nothing from the last 2 years! Now that we're being told we've "turned the corner" (by the same government that presided over the system that got us into this mess), everyone is itching to buy property and "get on the ladder" :rolleyes: again!

As 3DPO says, there's worse to come before things will REALLY start to improve in this country, but the days of the "celtic tiger, free credit, spend spend spend" mentality are (or SHOULD be) long gone!

I'm sorry but people need to wake up and realise that you can't just keep borrowing more money indefinitely. Sooner or later it WILL have to be repaid!

OP: Forget this idea - as others have said, concentrate on clearing your existing debt before you even THINK of something like this... I'm sorry if that's not what you want to hear but a lot of people need to cop on and realise the reality of where we are now!


As a side note, threads like this are exactly why I'm against ANY sort of "debt forgiveness" for mortgage holders.
Yes, their banks need to work with them to restructure the payments so that there is a chance of the person actually being able to pay back the money the owe, but under no circumstances should that debt be "written off" (no more than the developers should have gotten away with it!)

No one FORCED people to take out mortgages they couldn't afford, and despite what they may have been told, there was NEVER a guarantee that property values would continue to rise indefinitely - that's just not how economies work! It was ALWAYS a gamble, and like any gambling you occasionally have to take losses!

Yes I feel genuinely sorry for those who were taken in by the "dream" and are now in serious trouble, but it was THEIR decision to sign the papers and neither you or I should have to pay for it now (no more than my car loan for example will be "forgiven" even though I was made redundant last year!)

But as I said above, even more than anything else, this idea that we can continue right where we left off before the economy came crashing down needs to be stopped dead here and now - people need to start living within their means and WORK and SAVE for what they want (just as our parents and grandparents would have) rather than expecting everything to be handed to them, and someone else to take the fall when it goes wrong!

fontanalis

Kaiser2000 wrote: »

I have to competely agree with D3PO on this.. what the OP is asking is madness.

As for being "obnoxious", I disagree.. as I said in the Rent to Buy thread, by the looks of things a lot of people in this country have learned nothing from the last 2 years! Now that we're being told we've "turned the corner" (by the same government that presided over the system that got us into this mess), everyone is itching to buy property and "get on the ladder" :rolleyes: again!

As 3DPO says, there's worse to come before things will REALLY start to improve in this country, but the days of the "celtic tiger, free credit, spend spend spend" mentality are (or SHOULD be) long gone!

I'm sorry but people need to wake up and realise that you can't just keep borrowing more money indefinitely. Sooner or later it WILL have to be repaid!

OP: Forget this idea - as others have said, concentrate on clearing your existing debt before you even THINK of something like this... I'm sorry if that's not what you want to hear but a lot of people need to cop on and realise the reality of where we are now!


As a side note, threads like this are exactly why I'm against ANY sort of "debt forgiveness" for mortgage holders.
Yes, their banks need to work with them to restructure the payments so that there is a chance of the person actually being able to pay back the money the owe, but under no circumstances should that debt be "written off" (no more than the developers should have gotten away with it!)

No one FORCED people to take out mortgages they couldn't afford, and despite what they may have been told, there was NEVER a guarantee that property values would continue to rise indefinitely - that's just not how economies work! It was ALWAYS a gamble, and like any gambling you occasionally have to take losses!

Yes I feel genuinely sorry for those who were taken in by the "dream" and are now in serious trouble, but it was THEIR decision to sign the papers and neither you or I should have to pay for it now (no more than my car loan for example will be "forgiven" even though I was made redundant last year!)

But as I said above, even more than anything else, this idea that we can continue right where we left off before the economy came crashing down needs to be stopped dead here and now - people need to start living within their means and WORK and SAVE for what they want (just as our parents and grandparents would have) rather than expecting everything to be handed to them, and someone else to take the fall when it goes wrong!

To quote Alan Partridge "exactabloodylutely"

mylittlepony

+1

The_Honeybadger

sandal wrote: »

Hi, my wife and I own an apartment (in my name) which we bought In March 08 for €248K, now worth approx €190K with very little of the mortgage paid off. We moved out of the apartment last year and it has been rented since and hopefully will continute to be rented out. We hope to obtain a second mortgage to buy and build a house for ourselves. Would probably need to get around €320K to carry this through. We are both working full time with combined salaries of €60K per annum. I am a teacher so in stable employment. Anyone else in the same boat or have any opinions as to whether there is a chance at all of us being successful in applying for this second mortgage? Anyone with advice would be great. Cheers.

That amount of debt would be completely unmanageable based on your income, interest rates will be rising considerably in the next five years but there is no guarantee that ye're salaries will rise, or even not be cut further. I don't think you need to worry in any case, as no bank will lend you the money. As for your apartment that you say is worth 190k, that may be what similar apartments are asking for on DAFT, but put it up there and see what offers come in, reports suggest that property prices have fallen much further than that. My advice would be sell the apartment (prices will not bounce back any time soon) and repay as much of the remaining debt as you can, we are not at the bottom of the property market yet so rent and see what happens. Best of luck whatever you choose to do, but in answer to your OP, it would be sheer and utter madness to even think about taking on another mortgage with an income like that, if you could get a bank to lend it to you the repayments would be very large, leaving you with hardly any disposable income and very little by way of quality of life.

royston_vasey

The OP is a teacher, hopefully not a maths, economics, accountancy or business teacher otherwise we really are doomed :eek:

the_syco

OP, you can't get a mortgage to build.

You can only get a mortgage on a fully built house. The reason for this is that if your payments fell though, they (the bank) would only get a half built shell, that is totally worthless and unsellable.

You may get a loan, but you'd need more than €320, as f**ks can and do happen, such as the company building your house going bust, taking your money with it like a sinking ship taking it's cargo to the bottom of the sea.

Raskolnikov

Is anyone even going to try and answer this guys question? :rolleyes:

If doing a self-build is what you really want to do, then the first thing you need to do is to sell the apartment and clear the negative equity. Once that's done, I'd say you should just about be in a position to take a self-build mortgage out (assuming you have some savings). A friend of mine was recently able to secure a similar figure to what you're looking for on a self-build. He said that EBS were by far the easiest lender to deal with.

Raskolnikov

the_syco wrote: »

OP, you can't get a mortgage to build.

You can only get a mortgage on a fully built house. The reason for this is that if your payments fell though, they (the bank) would only get a half built shell, that is totally worthless and unsellable.

Completely untrue. Most lenders do self-build mortgages. Unlike regular mortgage, money is released in stages at the start of each phase in your build.

the_syco

Raskolnikov wrote: »

Completely untrue. Most lenders do self-build mortgages. Unlike regular mortgage, money is released in stages at the start of each phase in your build.

Didn't know that. Cheers.

tullyhumphrey

Hi

We have nearly completed our self build and our mortgage is €340,000 (4000 sq ft house). Our combined salary is €108k with no debts and some savings. I am semi state employee and my wife is a teacher. We struggled to get a mortgage for that amount in April 2010 and my bank manager has told me were lucky to get in when we did as it is getting more difficult by the week.

It is unlikely that you will qualify for a mortgage of over 300k but it might be worth speaking to a mortgage broker anyway. If you own the site you are planning to build on you might have some hope as it will provide some equity. It will depend on the value the banks architect/ engineer puts proposed self build.

If you can sell your apartment and you make a loss (30-40k) you may be able to refinance it with you new mortgage using site as equity (depending on valuation and estimated final valuation of new house).

I really think that you will need to look at the amount you are planning to borrow for the self build. Allow €100 sq ft when estimating the cost of building your house. You may have to reduce the size but it would be worth it if you really want to move out of the city. We went with IFG but any mortgage broker would be able to advise you about your options at no cost.