Mortgage Requirements?

discombobulate

I'm sorry if similar questions have been asked. Had a quick look but didn't spot anything. Basically I was thinking about buying a house in the next year or 2 to rent out to get on the property ladder. After rent and standard bills i'd have around 2.5k left per month. Currently saving 1k per month. Have savings of around about 7k.

No loans etc. and always paid any loans I had off before they were due to finish.

If I was to apply for a mortgage for say 80k how much would you generally expect to need in savings? I've a steady job and in a safe profession jobs wise.

I'd be buying the house to rent down the country to rent out initially.

Any advice appreciated

xper

Some lenders will still provide mortgages up to 90-92% of a house purchase price. You'll get better interest rates if the percentage the lender is providing falls below certain thresholds, e.g. 80%, 50% (varies with the lender). So if you are looking for only 80k and having savings already of 7k and increasing by 1k per month, you are well on the way.

The only thing I'd be concerned about in your post is the mindset of "get on the property ladder". There's more snakes than ladders these days.

discombobulate

xper wrote: »

Some lenders will still provide mortgages up to 90-92% of a house purchase price. You'll get better interest rates if the percentage the lender is providing falls below certain thresholds, e.g. 80%, 50% (varies with the lender). So if you are looking for only 80k and having savings already of 7k and increasing by 1k per month, you are well on the way.

The only thing I'd be concerned about in your post is the mindset of "get on the property ladder". There's more snakes than ladders these days.

Thanks for the reply. I suppose the way i see it is that the rent would pay a decent portion of the mortgage. I know plenty of people renting in the area so wouldn't have trouble getting someone in so seems like a good plan to me.

Also does rental income get taxed directly as additional income i.e. would i have to pay over 50% of the rent in tax?

D3PO

buying a house to rent whilst renting elsewhere makes no financial sense at all when you take into account the taxes on your rental income and the fact your still paying rent.

add to this that a BTL mortgage you will need a min of 20% deposit. It just doesnt stack up at all to do this. zero sense financially

discombobulate

D3PO wrote: »

buying a house to rent whilst renting elsewhere makes no financial sense at all when you take into account the taxes on your rental income and the fact your still paying rent.

add to this that a BTL mortgage you will need a min of 20% deposit. It just doesnt stack up at all to do this. zero sense financially

What are the taxes on rental income?

D3PO

discombobulate wrote: »

What are the taxes on rental income?

depends what tax band your in. if your in the 41% band then its 41% plus now PRSI is also due ontop as per the last budget

discombobulate

If i'm going to be living where I live currently and paying the rent anyway how does it not make sense?

I don't want to move from the area I live in but theres no way I could buy here and my rent is relatively low for the area I am in. The alternative would be just regular savings.

A house in the area costs approximately 80k with 600 per month rent. I can't see how it wouldn't make sense putting aside the dead money i'm paying on rent which in all likelihood i'll be paying for the next few years regardless.

xper

D3PO wrote: »

add to this that a BTL mortgage you will need a min of 20% deposit.

Duh! Yep, I should have copped that it would be a BTL mortgage which has more stringent requirements and higher interest rates.

To elaborate on my mindset comment, I don't see the pressing need to be a property owner. Prices are very unlikely to increase at any appreciable rate 'down the country', quite the opposite in fact. If you have a wedge of money to invest, there may be better returns (and less hassle) to be had elsewhere (Bonds?) for the time being and that property will still be there to purchase after whatever period "renting it out initially" might cover.

xper

Ah here, "property ladder" and "dead money" in the same thread. You're yanking our chains!

D3PO

discombobulate wrote: »

If i'm going to be living where I live currently and paying the rent anyway how does it not make sense?

I don't want to move from the area I live in but theres no way I could buy here and my rent is relatively low for the area I am in. The alternative would be just regular savings.

A house in the area costs approximately 80k with 600 per month rent. I can't see how it wouldn't make sense putting aside the dead money i'm paying on rent which in all likelihood i'll be paying for the next few years regardless.

do the math trust me it makes no sense. I havent even started to talk about CGT in future on the sale of the property, higher mortgage rate as a BTL mortgage, unoccupancy periods, etc etc.

seriously and im not having a pop but somebody that doesnt even know what taxs they should be paying on a rental should not even been considering being a professional landlord

StillWaters

Banks are not lending for BTLs outside Dublin.

Perhaps if you had >50% of purchase price, but even then I think they would say no.

kennyb3

xper wrote: »

Ah here, "property ladder" and "dead money" in the same thread. You're yanking our chains!

+1, 2005 called and wants the OP back.