Mortgage advice please:)

toogood

Hi There,

I'm wondering can you help me with a question with regards to a new mortgage.I am currently looking to buy a 2 bedroom apartment in sandyford. I have been following the apartments
there for over 1 year now and have seen the pricing drop.

I currently have 75,000 euro saved. the apartments are advertised at 195,000 but i saw the
same one but in a different complex in the same location sell for 175,000 two weeks ago.

Assuming i get the property price down to 175,000. I will need a mortagage of 110,000 say an extra
10,000 for legal fees ect.

• Im 24 year old male
• direct debit of 750 coming out of my account every month into savings for 19months
• dont have bad credit history
• my salary is 21,000 plus my commission is 15,000 per year which i hit every month ( i heard you only get 1/4 of your commission towards it)
• ive just completed my 3 month probation as i moved from another job.
• I would be applying for the mortgage on my own as my girlfriend lives in another country at present

Also i applied for a mortgage 6 months ago of 135,000 with 50,000 savings and a salary of 20,000 and 6,000 commission but it was turned down.
any advice, do you think i will get accepted on a mortgage on the basis of the above?
thanks

peteb2

I would say you will struggle to get 100k. Also the mortgage amount will only be for the purchase of your apartment. you can't include the legal fees. That will have to be out of your savings.

smcgiff

That you are only in your job 3 month's will mean you are unlikely to qualify.

While you've €75k in the bank and a good savings record they wont qualify the €75k a savings. It's unlikely a 24 y/o would have saved that amount from earnings.

However, I'd say you'd have a good chance 9 months time. Possibly cheaper purchase price by then too.

toogood

Ah ok i didnt know that about the legal fees, i could hustle up 10k for that somehow

toogood

smcgiff wrote: »

That you are only in your job 3 month's will mean you are unlikely to qualify.

While you've €75k in the bank and a good savings record they wont qualify the €75k a savings. It's unlikely a 24 y/o would have saved that amount from earnings.

However, I'd say you'd have a good chance 9 months time. Possibly cheaper purchase price by then too.

Im only in this job 3 months, but ive come straight from another job where i was working 4 years! believe it or not the 75,000k is from earnings

killers1

toogood wrote: »

Im only in this job 3 months, but ive come straight from another job where i was working 4 years! believe it or not the 75,000k is from earnings

AIB's policy is that you need to be in a permanent role with current employer for a minimum of 6 months, other banks have a minimum of 1 yr before they'll assess your application. You have excellent savings & a proven repayment capacity. I think the difficulty you will have with AIB at the moment is to convince them to take your commission into account when you have only been there 3 months. I think when you have a full 6 months of earning full commission at half of €15k per annum they might allow an income of €28,500 for your application which would get you the €135k you need. Your excellent savings might be what gets you over the line but the application would need to be put together in a manner that convinces the bank to lend to you.

toogood

killers1 wrote: »

AIB's policy is that you need to be in a permanent role with current employer for a minimum of 6 months, other banks have a minimum of 1 yr before they'll assess your application. You have excellent savings & a proven repayment capacity. I think the difficulty you will have with AIB at the moment is to convince them to take your commission into account when you have only been there 3 months. I think when you have a full 6 months of earning full commission at half of €15k per annum they might allow an income of €28,500 for your application which would get you the €135k you need. Your excellent savings might be what gets you over the line but the application would need to be put together in a manner that convinces the bank to lend to you.

Thanks for the post! and the useful information from everyone. How does it work its 3 times my salary plus 1/4 of my commission?:-)

killers1

toogood wrote: »

Thanks for the post! and the useful information from everyone. How does it work its 3 times my salary plus 1/4 of my commission?:-)

Don't get hung up on salary multiples... The only bank that uses them are BOI and the multiple changes dependent on your income bracket. A more crucial factor is your net disposable income must meet the minimum amount the bank see a single person with no dependents needs to have left over each month after the stress mortgage repayment and any existing loan repayments are taken into account. Also, it's only BOI who will take 25% of commission into account (and only if it's marked as guaranteed on a salary cert) whereas other banks are open to an argument being put forth as to why it should be included and then they make a call on it..

toogood

killers1 wrote: »

Don't get hung up on salary multiples... The only bank that uses them are BOI and the multiple changes dependent on your income bracket. A more crucial factor is your net disposable income must meet the minimum amount the bank see a single person with no dependents needs to have left over each month after the stress mortgage repayment and any existing loan repayments are taken into account. Also, it's only BOI who will take 25% of commission into account (and only if it's marked as guaranteed on a salary cert) whereas other banks are open to an argument being put forth as to why it should be included and then they make a call on it..

thanks for all the useful info and taking the time to help me! I dont know about the 6month and 1 year stable job thing, as if i had known that i wouldnt have changed jobs and then applied. its a bit strange working 4 years and then going straight into another job with more pay and a letter from the manager saying my probation period is up and my 3 wage slips with 1,500 every month commission?:(

toogood

Also do you think i should make an offer on the property and if it gets accepted get invoiced from then and then apply for the mortgage so it really shows im intrested to buy it once the mortgage is approved or im being stupid?

killers1

toogood wrote: »

thanks for all the useful info and taking the time to help me! I dont know about the 6month and 1 year stable job thing, as if i had known that i wouldnt have changed jobs and then applied. its a bit strange working 4 years and then going straight into another job with more pay and a letter from the manager saying my probation period is up and my 3 wage slips with 1,500 every month commission?:(

I'd say you'd have a good chance now of AIB making an exception to their policy on this if the application is presently correctly..

killers1

toogood wrote: »

Also do you think i should make an offer on the property and if it gets accepted get invoiced from then and then apply for the mortgage so it really shows im intrested to buy it once the mortgage is approved or im being stupid?

I would suggest holding off until the New Year to make an offer on the property...but you could apply for the mortgage before that particularly if you have 4 months payslips behind you at that stage with €1,500pm Comm on each.

Henry Ford III

I think that even if you were given approval for the money you are looking for OP it might be a mistake to make such a huge committment.

You'd be better advised to rent for now, continue save, and get your salary up (it's pretty low).

No offense meant in any of the above btw.

toogood

Henry Ford III wrote: »

I think that even if you were given approval for the money you are looking for OP it might be a mistake to make such a huge committment.

You'd be better advised to rent for now, continue save, and get your salary up (it's pretty low).

No offense meant in any of the above btw.

I know my salary is pretty low, but combined with my commission its 37,000 before tax. its still not ideal but it looks bad on paper when applying for paper.

Not offense taken- I appreciate everyones opinion and critism on this.

thanks

afatbollix

If you have saved 75k over 4 years couldn't you save for 4 years more and nearly pay with cash out right? Hell you would only need a little top up loan to buy the apartment.

Interest on a 100k over 10 years would be about 50k straight to the bank!

toogood

afatbollix wrote: »

If you have saved 75k over 4 years couldn't you save for 4 years more and nearly pay with cash out right? Hell you would only need a little top up loan to buy the apartment.

Interest on a 100k over 10 years would be about 50k straight to the bank!

Yeah but the problem is I've wanted to buy the apartment for the last 4 years. The work I had to do save the money nearly killed me. I want to slow things down, and buy now. But i appreciate your input!

phormium

I don't think a bank will take any large amount of that commission into account.

Interestingly on another money forum at the moment there are posters asking what was a bank doing back in the boom giving a mortgage to a 22 yr old, you're not that much older!

toogood

I was talking with BOI today. Your right you have to be in your current job for 6 months and its 1/4 of your commission. I was told that if I apply in 3 months time that they couldn't even gurantee me 50,000K :S

toogood

phormium wrote: »

I don't think a bank will take any large amount of that commission into account.

Interestingly on another money forum at the moment there are posters asking what was a bank doing back in the boom giving a mortgage to a 22 yr old, you're not that much older!

Most of those 22 year olds didnt have 75,000 deposit and everyone and anyone was given a mortgage. There are still some succesful 21 year olds hanging about and why should they be penalized because of there age? Surely with a good track savings, a good deposit, and a stable job it doesnt matter so much about age? As the younger they are the younger they complete the mortgage surely this is in their favour?

Scortho

phormium wrote: »

I don't think a bank will take any large amount of that commission into account.

Interestingly on another money forum at the moment there are posters asking what was a bank doing back in the boom giving a mortgage to a 22 yr old, you're not that much older!

Nothing wrong with a 22 year old getting a mortgage if they've a good job with a decent wage.
If you look at starting wages for professionals out of college during the boom, some were fairly high! You go in at 17 to do pharmacy, your fully qualified and registered as a pharmacist by the time you're 22.

Op you may have 75000 saved but the bank will question where this is coming from? The fact that you're saving 750 a month for the last 19 months will look good. However they will still question where 60000 came from.

Also are you living at home or renting. If renting it will add to your case.

lastly is the apartment in the city centre (D1/D2) or in the suburbs (sandyford ballinteer santry etc.) An apartment in the city wont be to hard to shift in 10 years time if you want to buy a house. One in the suburbs will be.

If it was me I'd take henry fords advice.
Who knows what the next 2-3 years will throw up! Predicting house future house prices is tricky but i think we'll get a better opinion of the market come June 2013. We'll know for sure by then whether its a dead cat bounce recently or a modest recovery in the market as the effect of mortgage interest relief ending may be having implications on the market at the moment.

toogood

Scortho wrote: »

Nothing wrong with a 22 year old getting a mortgage if they've a good job with a decent wage.
If you look at starting wages for professionals out of college during the boom, some were fairly high! You go in at 17 to do pharmacy, your fully qualified and registered as a pharmacist by the time you're 22.

Op you may have 75000 saved but the bank will question where this is coming from? The fact that you're saving 750 a month for the last 19 months will look good. However they will still question where 60000 came from.

Also are you living at home or renting. If renting it will add to your case.

lastly is the apartment in the city centre (D1/D2) or in the suburbs (sandyford ballinteer santry etc.) An apartment in the city wont be to hard to shift in 10 years time if you want to buy a house. One in the suburbs will be.

If it was me I'd take henry fords advice.
Who knows what the next 2-3 years will throw up! Predicting house future house prices is tricky but i think we'll get a better opinion of the market come June 2013. We'll know for sure by then whether its a dead cat bounce recently or a modest recovery in the market as the effect of mortgage interest relief ending may be having implications on the market at the moment.

The apartment is based in Sandyford, so I really don't see it being so hard to shift,like you said!

I'm currently living at home. The other 60,000 came from 3 years prior work of just saving constantly as I was just living at home and working all the time.

I know, but It know looks impossible for me to get a mortgage anyway with just a salary of 21,000 + 15,000 commission of 100,000k are BOI the only ones lending at the moment?

Scortho

toogood wrote: »

The apartment is based in Sandyford, so I really don't see it being so hard to shift,like you said!

I'm currently living at home. The other 60,000 came from 3 years prior work of just saving constantly as I was just living at home and working all the time.

I know, but It know looks impossible for me to get a mortgage anyway with just a salary of 21,000 + 15,000 commission of 100,000k are BOI the only ones lending at the moment?

I'd say theyre all lending but only to those who are meeting their very stringent criteria.

It might be a kick it the balls to you and a bit of a downer but renting would nearly be the same. While renting you can build up a larger nest egg for yourself. And I'm one of the renting is dead money brigade (over the long term).
Your only 24. As another poster has said if you were to save for another few years you'd have a massive nest egg built up to buy what you want.
At 24 a 2 bed apartment might meet your needs.
At 28 you could have kids on the way. A 2 bed apartment may not suffice! Also you'd have a yearly maintanance fee to calculate in on top of your loan repayments.
Ask yourself when buying is this somewhere I could live the rest of my life.

Also you're income may have risen significantly which may allow you to borrow more and get a better property in a better location. If you're getting a monthly commission averaging around 1500 you're obviously decent at your job. You may even be able to buy for cash.

As I said in my previous post we dont know what way property prices are going at the moment. We cant be certain that theyre going to fall another 10 percent, bump a long the bottom for a couple of years or slowly rise with inflation. So don't let the idea of cheap property prices convince you to buy just yet. Unless its for the long term (+15 years)