Are banks giving second mortgages?

lauraheg

I am just enquiring does any one know are banks giving out second mortgages.

My background is I have a joint property with my sister the mortgage taken out in 2007 was for €330,000 we have been paying extra on this per month on top of €750 rent received from tenants who have lived in this property since 2006. The current mortgage balance is now approx €200,000, houses in the same estate are selling for €160/€170k so we dont want to sell it. I have €85,000/€90,000 in savings, I am just enquring what the options are for applying for a mortgage for €220,000 for a second house as a single applicant, it is a five bed house so my other sister and boyfriend will be moving in with me and paying a total rent of €700 per month on the new mortgage. my annual salary is approximately €40,000 and I am due an increase in the next month or so of annual increase of between €5,000/€6,000.

any advice on this would be greatly appreciated and if it would be best to contact a mortgage broker or my bank directly.

cork2013

In our case we were successful in securing a second mortgage from BOI. However it is worth noting that you are not liable for half the 200k owed on the house but the full 200k. therefore with your savings I take it you would be applying for a mortgage of about €130k. Your total borrowings would then be 330k which is over 4.5 times your salary. They will factor in the rent if you have a constant record of it over the last few years from the first property. Your savings are great too so when they stress test you, hopefully you will have shown that you are able to live on xxx amount should things change. A healthy current Account really helps.It's hard going though, I wish you success. Fingers crossed.

roro2

I think you would find it difficult to secure this type of mortgage, while keeping the existing property and mortgage. You would be looking to take on debts of €420k with income of €45k, which would obviously be outside the lending policies of banks. As above, you are liable for the full existing €200k from a bank's perspective. While they may take into account the rent on the first property, depending on the rental market in the area, etc, I'm not sure whether they would take account of the prospective rent on the second property as it would essentially be renting out a room in the property - how likely is it that you could secure this rent if your sister moved out? At 10 times borrowings/salary, you would be very exposed to any vacant periods on either property and increased interest rates - both negatives from a lender's point of view.

Although it would be difficult crystallising the loss on the first property, you would have enough cash to cover the shortfall. This would reduce your liabilities, increase your income as you're overpaying the mortgage each month and increase the chances of obtaining another mortgage. As it's not a straight-forward case, it would be worth talking to a broker or a mortgage advisor in your bank who could give you an indication (without actually submitting an application).

lauraheg

Thanks for your replies calling in to the bank on thursday to discuss this with them . the property im renting at the moment i receive €750 a month from the same tenants that moved in there first day in 2007 so i ve been very lucky its in a rentable area right next to a train station and 5 minute walk from town.. the property im looking to buy has a granny flat attached which has a seperate address and elec meter so hopefully the banks will view the rental income as rent and not rent a room. if im liable for the full mortgage on the first property is the full rent of €750 included on my monthly salary.thanks x

killers1

lauraheg wrote: »

Thanks for your replies calling in to the bank on thursday to discuss this with them . the property im renting at the moment i receive €750 a month from the same tenants that moved in there first day in 2007 so i ve been very lucky its in a rentable area right next to a train station and 5 minute walk from town.. the property im looking to buy has a granny flat attached which has a seperate address and elec meter so hopefully the banks will view the rental income as rent and not rent a room. if im liable for the full mortgage on the first property is the full rent of €750 included on my monthly salary.thanks x

The bank will tell you that your income is insufficient for that level of borrowing and your proposal is too reliant on rental income.

lauraheg

ive changed the appointment from thursday to wednesday to see what they say.. but they will prob agree with you killers1 . its a pity i cant get a joint mortgage with my boyfriend as his salary is €30k but he has a bad credit rating from a credit card for missing 3 payments and will not be removed from his file until 2016! i let ye know how i get on when i get back tomorrow.