Is it a waste of time to apply for a mortgage

curious6810

Looking for some advice.

I am considering applying for a mortgage though neither myself or other half are in permanent positions. I am a contract employee (coming to the end of my third year) and OH is a teacher (not yet entitled to a CID).

We have €100k saved for a deposit, which we saved ourselves over the last few years and a gift of €20k which we have agreed we will put into a rainy day fund so that if the worse ever happened we would have buffer of at least two years mortgage repayments available.

We would be looking for between €140,000 and €150,000 euro of a mortgage which I think would give us repayments of about €750 per month which is the same as our current rent (this is the reason we are even considering buying).

Please ignore this if it is a stupid question but is it even worth the hassle of arranging a meeting with a bank given that neither of us are in permanent positions as of now?

gigino

Would'nt you be better off waiting for another year or 2 until property prices are lower? Why will prices go lower ?

• Interest rates are historically low, they can only go up.
• Property tax and water rates will increase.
• More austerity will come in future budgets.
• probable break up of CPA causes less demand
• Break up of the euro possible / 2 tier europe
• Tension in Suez / Iran blockade causes oil price rise

Most people would dearly love to get rid of their mortgage, not take one on. Bear in mind if you are not in secure permanent employment that a mortgage can tie you down more than if you are renting and need to move to a different area or even country.

Dr. Dodger

I'm not saying people are wrong about this but can nobody post a mortgage question anymore without it being turned into a "whether they should or shouldn't buy a house to begin with" thread.

OP's question was basically will they get a mortgage.

OP I'm not an expert on the matter but my 2 cents would be that no matter what the deposit you have, you are going to really struggle to get any kind of mortgage if at least one of you are not in permanent employment. I would say bordering on impossible.

curious6810

Thanks Gigino and Dr. Dodger for responding,

For what its worth I agree with Gigino, things will probably get considerably worse in this country before they get slightly better and not being tied to a mortgage would be pretty sensible in that case.

Dr. Dodger is right though, I was really only trying to gauge whether a bank would even entertain an application from the likes of us. The full story is that my OH has found her "dream house" which would probably cost €240,000 as I said and she wants to arrange a viewing. And the problem I have with this is that I really do not feel comfortable asking a vendor to scrub up his/her house and leave for a few hours just so an agent can show us around, if realistically there is no hope in us being able to purchase. I would imagine many sellers are at their wits end and I don't feel it's right for me to cause them any undue hassle if it can be avoided. If it will be impossible for us to get the loan we would need to buy right now I think I will just talk herself out of going to view the house, to avoid getting her and the vendors hopes up for no reason. An open viewing would have been ideal I guess but there are none.

One other thing I am actually delighted in one other way to know that we would have great difficulty in getting a mortgage, if it is an indication that banks are being prudent as to who they lend out to. It is in no ones interest for the madness of the last decade to return even in a small way. In my field I am not likely to have any job security for a long time and if this means I am unlikely to be in a position to get a mortgage then I am happy to accept it.

CricketDude

I know of several people who have drawn down mortgages lately. Each one wasnt going to even apply, because they assumed they would be refused.
Best people to ask are the banks.

helimachoptor

i know a couple who have recently got approved for a mortgage. in 3 years they have saved 10k, the deposit is a gift. however in a couple of months she will go on maternity leave (state benefit only) and most likely wont go back to work as paying child care would eat up about 60% of her salary. the man in the picture earns a small bit more.<br />
<br />
have tried to talk sense into them but its falling on deaf ears<br />
<br />
they are going to really struggle on when the woman is on maternity leave. however if she doesnt go back to work it will just take one interest rate rise to send them over the edge.<br />
<br />
if she goew back to work theyll probably sustain 2 rises and then its curtains.

Midnight Sundance

I don't think there is a harm in applying, go to a broker and they will tell you if there is a point or not.

Just a suggestion , but what about waitin another few years and buying the house outright ? Ye seem like good savers and managed a 100k deposit, how long would it take to get the other 100k? Only a suggestion and best of luck with the application!!!!

killers1

curious6810 wrote: »

Looking for some advice.

I am considering applying for a mortgage though neither myself or other half are in permanent positions. I am a contract employee (coming to the end of my third year) and OH is a teacher (not yet entitled to a CID).

We have €100k saved for a deposit, which we saved ourselves over the last few years and a gift of €20k which we have agreed we will put into a rainy day fund so that if the worse ever happened we would have buffer of at least two years mortgage repayments available.

We would be looking for between €140,000 and €150,000 euro of a mortgage which I think would give us repayments of about €750 per month which is the same as our current rent (this is the reason we are even considering buying).

Please ignore this if it is a stupid question but is it even worth the hassle of arranging a meeting with a bank given that neither of us are in permanent positions as of now?

The fact that both of you are employed on a contract basis makes it more difficult to obtain a mortgage but it is certainly not impossible. The bank will take into account the industry you're employed in, the length of time you have been with your current employer, the likliehood of your contract being extended and the possibility of you being able to service loan repayments on the mortgage should your contracts not be renewed and what they feel your chances of gaining alternative employment with a sufficient income to repay the loan. At the end of the day each case is assessed on it's own merits. The fact that you have managed to save €100k from your own resources whilst paying €750pm in rent certainly displays good financial management on your part. Given the large deposit that you are willing to put towards the purchase the bank see a big investment on your part in buying the property. There are other variables that will enhance/reduce your chances i.e. your salaries i.e. is the loan amount required dependent on both your full incomes being taken into account, maybe one person qualifies in their own right which would give the bank more comfort as there are 2 applicants, what the chances are of both of your contracts not being renewed at the same time and both parties not being able to secure alternative employment at the same time, your ages, whether you have children, previous borrowing history, length of time renting etc etc. .

In short, I think it will be difficult but your savings & repayment capacity appear to be very strong. To some banks it would be an automatic decline because of the lack of permanent roles but to others they may decide that your profile & financial management warrants a positive decision.

I would be wary of just applying through one bank though, as that lender may be the one whose policy doesn't allow them to lend to contract employees. Then you assume all other banks will come to the same conclusion which may not be the case....

shoegirl

Thats an excellent point - different banks have different policies.

However I cannot help being impressed with fact that you have saved 100k between you. Even if things are very good salary-wise, you've done very well. I'd suggest considering continuing on saving for a bit longer as the dream house might not be all it seems to be. Why not go for an even smaller mortgage or even consider aiming to buy for cash when prices fall lower?

curious6810

Thanks to all for your responses.

We save €1500 pre month out of a combined net wage of €4250 which we are delighted with but we would be a long time getting to cash buyer status. Neither of us are interested in accumulating too much crap we don't really need and we live happily off the remaining wages after rent and savings are taken out first. We have to move out of our current rented accommodation in the next two months and in keeping with the advice here I think we will look for somewhere new with a view staying there for at least a year and then weigh up the options again.

That said, I rang the estate agent and he explained that we would be one of three viewings on the day so I think we will still go to view the house I mentioned previously as I guess it will give us a good feel for how estate agents are dealing with potential buyers these days.

killers1

curious6810 wrote: »

Thanks to all for your responses.

We save €1500 pre month out of a combined net wage of €4250 which we are delighted with but we would be a long time getting to cash buyer status. Neither of us are interested in accumulating too much crap we don't really need and we live happily off the remaining wages after rent and savings are taken out first. We have to move out of our current rented accommodation in the next two months and in keeping with the advice here I think we will look for somewhere new with a view staying there for at least a year and then weigh up the options again.

That said, I rang the estate agent and he explained that we would be one of three viewings on the day so I think we will still go to view the house I mentioned previously as I guess it will give us a good feel for how estate agents are dealing with potential buyers these days.

Go and view the house and see what you think... from a mortgage point of view the only hurdle you have is the contract nature of your employments and given your substantial deposit and the fact the you are currently showing that you can afford to pay out €2250pm via rent & savings I reckon your chances of convincing a bank to lend you €150k are very good if that's the road you decide to go down....In a absolute worst case scenario you will have no difficulty in obtaining approval once the teacher is on a CID as some banks view this the same as a permanent job..