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House as colateral

  • 17-02-2012 5:34pm
    #1
    studdlymurphy
    Registered Users, Registered Users 2 Posts: 832 ✭✭✭


    Hi,
    What is the situation if I was apply for a mortgage with no deposit, but owning a house almost outright just about 10k left to be paid?
    Thanks for the help


Comments

  • #2
    killers1
    Registered Users, Registered Users 2 Posts: 1,443 ✭✭✭killers1


    studdlymurphy wrote: »
    Hi,
    What is the situation if I was apply for a mortgage with no deposit, but owning a house almost outright just about 10k left to be paid?
    Thanks for the help

    You could top up the existing mortgage with €10k outstanding to cover your deposit. The bank you are applying to for the new mortgage would want to be fully satisfied that your application is strong enough for them to agree to allowing you go down that road. There was a time when you could offer both properties as security for 1 total loan but the banks no longer have an appetite for this.


  • #3
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    Is the original house rented out? It might make sense to remortgage it, so you can offset the interest against your tax liability.


  • #4
    killers1
    Registered Users, Registered Users 2 Posts: 1,443 ✭✭✭killers1


    StillWaters wrote: »
    Is the original house rented out? It might make sense to remortgage it, so you can offset the interest against your tax liability.

    No, unfortunately you can't. You can only offset the interest on the mortgage used for the initial purchase of the property to offset against rental income.


  • #5
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    I stand corrected. In which case, I would say the most advantageous thing to do here really is to sell the first property and have a whack of a deposit/small mortgage on your PPR (if the first house is a straight forward PPR or rental).


  • #6
    studdlymurphy
    Registered Users, Registered Users 2 Posts: 832 ✭✭✭studdlymurphy


    My plan was to rent the existing house and buy another to live in. As the wife doesnt work I thought the extre rental income would help with the new mortgage. Is this not the sensible option.
    Thanks again


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  • #7
    killers1
    Registered Users, Registered Users 2 Posts: 1,443 ✭✭✭killers1


    studdlymurphy wrote: »
    My plan was to rent the existing house and buy another to live in. As the wife doesnt work I thought the extre rental income would help with the new mortgage. Is this not the sensible option.
    Thanks again

    It makes sense to hold onto the existing property and earn an income from the rent. It still doesn't address how you are going to fund the deposit though....


  • #8
    wexford12
    Registered Users, Registered Users 2 Posts: 451 ✭✭wexford12


    Banks have gone funny about lending for new house and keeping your first one Iv been looking to do this and have a very small balance on my home now
    But the bank say they like to see the house rented for at least 12months before using it against the new house. Where are we ment to live while waiting 12 months to show our house rents ???????????
    As they say The Law Is An Ass and so are Banks


  • #9
    killers1
    Registered Users, Registered Users 2 Posts: 1,443 ✭✭✭killers1


    wexford12 wrote: »
    But the bank say they like to see the house rented for at least 12months before using it against the new house. Where are we ment to live while waiting 12 months to show our house rents ???????????
    As they say The Law Is An Ass and so are Banks

    Basically the bank are telling you to go and rent for the equivalent of the proposed new mortgage repayment to prove you can afford both mortgage repayments at the same time. It also gives you an opportunity to get a tenant in place for your current house which you tend to use as an investment property


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