Hope of a Mortgage?

Cess

Hi,
Wondering if anyone can help advise me - before I go asking the banks...

I want to buy a house that is on the market at €185k. It will cost in the region of €65k-€70k to make the house habitable, so we will need a mortgage loan of 250k. We would be able to manage the repayments just fine.

I have a UK property with a "Dibor Loan" (not quite a mortgage but kindof - I think) of £85k which is Interest Only for the term of the loan (GREAT!).

I take home about 1500 per month (€500 of which is "Expenses" - but it's not if ya know what I mean...) and it's every month. (and I will be getting a quarterly bonus too!)

My husband is self employed and takes about €450 per week. (plus bonuses which are inconsistent and therefore would prob not be considered.

What do we have to do/say in order to get the mtgt of €250k considering at the moment we most likely don't earn enough to qualify for that amount ?
We have about 20k in savings.
I'd appreciate any feedback.
Thanks

jethrothe2nd

The fact that your husband is self employed creates a much bigger risk for the bank and I would say that a mortgage of 250K on your current combined incomes is unlikely. I base this on what I was approved for on similar take home pay, without being self employed.

In the event of your husbands work drying up, would you be able to afford the repayments on a mortgage worth a quarter of a million, on your salary alone?

Also, most lending institutions, if not all, will look for at least a 10% deposit, so 20K savings will not be enough on a 250K mortgage. Not sure how the UK property would come into the equation in terms of your application, but presumably you are making monthly repayments? If so, this would be taken into consideration - the bank would probably insist that the loan is cleared, or they would significantly reduce the amount they offer. If you have dependants, this may also be a factor

chris85

Do it up houses are not getting mortgages easily. The bank will base the application on the current value of the house and will not give more than 92% of this value so getting way above 100% of the value of the house as a mortgage is just not being realistic.

killers1

chris85 wrote: »

Do it up houses are not getting mortgages easily. The bank will base the application on the current value of the house and will not give more than 92% of this value so getting way above 100% of the value of the house as a mortgage is just not being realistic.

Banks will give up to 92% of the contract price and will lend up to circa 75% of the additional works cost providing the value on completion is still below 92%.

In the case of the OP's original question, your income is insufficient to borrow €230k (92%) of €250k. Your 'expenses' of €500pm if not being paid & taxed as income will not be factored into your application so with a net monthly income of €1k gives you an annual income of around €16k. Your partner is earning around €28k per annum. Combined incomes therefore are €44k. This means you are looking to borrow in excess of 5 times salary. Not impossible but your existing loan in the UK will need to be considered if repayments are evidenced in your bank account. Int only for term loans are great until you get to the end of the term and need to repay the capital. Do you have a plan on how the £85k loan will be paid? The banks here will stress the repayments on the £85stg loan @ around 6% on a capital & interest basis which works out at around £600pm so when this is taken into account you will not be able to show you have the ability to take on a debt of anywhere close to €230k.

Cess

Hi, Thanks for your replies. My Husband's business is doing very well and they are fully operational and employ 10 people so is in no fear (dare I say..) of drying up any time soon. But I def take your point - I would barely manage the repayments alone should that unlikely situation present itself.
We would be able to put together 25k by way of deposit.....but it would be "gifted" by some poor relative that I would talk very nice to.....tee hee.

Regarding the UK loan/mortgage... It was organised here through an Irish bank but through their UK branch (although I have been trying for weeks to get a copy of the agreement to determine if it IS in fact Interest Only for the Term - but the irish bank in question can't seem to track down a department to take responsibility for this loan!!!!) & the property was purchased at a reduced price (vendor had to sell quickly) and as it stands currently the property would most likely fetch, at very worst, £110k. It is let (and will always be lettable from what i gather from the area) and rental income is £580pm. The rent is being paid into a stg Current a/c in my name (And we are fully tax compliant with the income -one and only perk to being a "low-earner") So i believe (am i being naieve?)that it is taking care of itself. and hopefully by the end of the term (about 17yrs) either I will have squirrelled away the rent paid into the UK STG Current A/c and after all the interest has been paid - it could almost have paid for itself. or I sell and hopefully in 17yrs it would be worth more than it is now....(dare to dream???)
When deciding to make this purchase I believed that the banks would see this as an asset and it would be a good thing. I am devestated to be having conversations with my husband about selling what we originally felt to be a great investment.
But we REALLY want this house.....
You mentioned that it was "not impossible" to get what we are looking for..... so what to do? Would we just not mention that we have the UK property considering there is no link between my irish a/c's & UK a/'s....?
I would rather be upfront to all parties involved as you would appreciate. I did speak to one person in a bank that advised me not to tell anyone that I had this as there was nothing tying any of my Irish a/c's to this..... I didn't know whether to believe this person or not!!! and I'd hate to take that advice from a banking professional only to discover they were WRONG!!! and we would be black-listed so to speak.

killers1

Cess wrote: »

Hi, Thanks for your replies. My Husband's business is doing very well and they are fully operational and employ 10 people so is in no fear (dare I say..) of drying up any time soon. But I def take your point - I would barely manage the repayments alone should that unlikely situation present itself.
We would be able to put together 25k by way of deposit.....but it would be "gifted" by some poor relative that I would talk very nice to.....tee hee.

Regarding the UK loan/mortgage... It was organised here through an Irish bank but through their UK branch (although I have been trying for weeks to get a copy of the agreement to determine if it IS in fact Interest Only for the Term - but the irish bank in question can't seem to track down a department to take responsibility for this loan!!!!) & the property was purchased at a reduced price (vendor had to sell quickly) and as it stands currently the property would most likely fetch, at very worst, £110k. It is let (and will always be lettable from what i gather from the area) and rental income is £580pm. The rent is being paid into a stg Current a/c in my name (And we are fully tax compliant with the income -one and only perk to being a "low-earner") So i believe (am i being naieve?)that it is taking care of itself. and hopefully by the end of the term (about 17yrs) either I will have squirrelled away the rent paid into the UK STG Current A/c and after all the interest has been paid - it could almost have paid for itself. or I sell and hopefully in 17yrs it would be worth more than it is now....(dare to dream???)
When deciding to make this purchase I believed that the banks would see this as an asset and it would be a good thing. I am devestated to be having conversations with my husband about selling what we originally felt to be a great investment.
But we REALLY want this house.....
You mentioned that it was "not impossible" to get what we are looking for..... so what to do? Would we just not mention that we have the UK property considering there is no link between my irish a/c's & UK a/'s....?
I would rather be upfront to all parties involved as you would appreciate. I did speak to one person in a bank that advised me not to tell anyone that I had this as there was nothing tying any of my Irish a/c's to this..... I didn't know whether to believe this person or not!!! and I'd hate to take that advice from a banking professional only to discover they were WRONG!!! and we would be black-listed so to speak.

Hi Cess,
If you want to thrash out the figures on this nobody can give you an accurate assessment of your chances without knowing the following;
Ages?
No of dependents?
How long has your partner been in business?
Occupations? Gross annual incomes as per your P60 & Payslips & his Notice of Assessment?
Where do you live currently? Rent? How much pm? Since when?
Savings? How much? Monthly contribution? built up over what period of time? Or is the full €25k a gift & you have no savings?
Any other borrowings?
If you don't want to answer these questions publicly send me a PM and I'll go through it & send you some feedback on how you are fixed...