Mortgage what are the chances

TrishSimon

Hello,
Some advice needed please, myself and my husband are hoping to get a mortgage later this year possibly September he is 39 I am 37, I already own a one bed apt which I have rented out so the mortgage is covered and its not a huge mortgage either just 118K left owing.
We are looking at houses in and around the 200K-225K and will be gifted with 25K from in laws.
My husband would be a first time buyer and I purchased my apt in 2009 but I know things have changed drastically since then, I have been onto KBC my lender but to be honest I didn't find them all that helpful the advisor was very pleasant and had loads of information but their process / rules dont really work for us so here is out finances / situation:

Combined salary : € 66K
No children
Great credit history
€650.00 owing on CC
€ 695.00 combined loan payments, my loan is with the CU his is with BOI and finished early 2016.
No car loans
Renting a house at €1K per month BUT paying cash so KBC and other lenders I believe will not consider this even though we have proof because we get her to sign a receipt each month and can get the landlady to sign a legal letter also.
We are currently trying to save €800-1000 per month in the credit union whilst also paying rent in the house, we pay all our bills elec, property tax on apt, food etc.
I have an overdraft of €1K which I have been using but will be getting rid of that between the next 2 months.
I have contacted a broker for more advice or information as we don't want to rent forever as we have already paid out 22K in rent !!
Thanks

whippet

a couple of things.

Is your apartment in Negative Equity?
Banks will look at the loan repayments of €695 as eating significantly from your disposable income and level of mortgage will be affected by that.
You will have to show where the cash has come from to pay the rent.
A gift for the deposit is all well and good, but banks may look at it negatively as you will need to show a proper history of saving, usually 6 months to a year minimum of where you by your own standing can actually put cash away. A gift actually shows the opposite.


My advice would be to get saving immediately .. putting away a minimum of about €1000-1200 per month, try can clear off your outstanding loans as soon as possible and when you have these in order and at least 10k saved approach the banks with a view to getting a mortgage.

Eldarion

The apartment is the only thing not making this an easy application and I think you know it. Big question is whether the apartment's current value outweighs the existing mortgage. If it's worth more than what is owing then would you not sell, clear the existing mortgage and make it a far easier for the bank to approve?

You'll be looking at a ~25 year mortgage of 200-225k, should be under €1,100 monthly repayments and you're showing that you can save something in the region of €1800-€2000(rent + consistent saving). Your "currently trying to save" would want to become "currently saving" though. Even if you half it to €400-€500 it gets you well above what the mortgage repayments are but the figures need to be ironclad every month and never missed for any reason.

TrishSimon

The apartment I bought for 123,500.00 I owe 118K and its worth 120K now and by Feb 2015 I am told it will go up to approx 139K as the whole complex in D24 has been bought over by two brother and new shops and cafes etc will be opening plus all the other apartments will be filled my block is full with owner / occupiers bar a few people including myself I have never missed a payment on my mortgage or on anything for that matter, I am planning on selling in 2015 and told them that but it seems its still a problem.

The other fact is that we pay cash to the landlady she insists on that but we will have to have words with her because if it means stopping us from getting a new mortgage. We get her to sign a receipt book and you would see the withdrawals from my bank account every month because its always taken out by 750 first and then 250 next day.
We are very capable of paying this mortgage but I suppose places have to be overly cautious, what I dont get is I know someone who just got a mortgage owes the tax man 55K and is only paying €100 pm and who also took over the directorship of her husbands business and changed its name so how can she get a mortgage?? she also has missed payments on loads of things !!

TrishSimon

whippet wrote: »

a couple of things.

Is your apartment in Negative Equity?
Banks will look at the loan repayments of €695 as eating significantly from your disposable income and level of mortgage will be affected by that.
You will have to show where the cash has come from to pay the rent.
A gift for the deposit is all well and good, but banks may look at it negatively as you will need to show a proper history of saving, usually 6 months to a year minimum of where you by your own standing can actually put cash away. A gift actually shows the opposite.


My advice would be to get saving immediately .. putting away a minimum of about €1000-1200 per month, try can clear off your outstanding loans as soon as possible and when you have these in order and at least 10k saved approach the banks with a view to getting a mortgage.

The apartment isnt in negative equity if anything its going up in price because the whole complex is being developed in 2014/2015, the cash you can see coming from my account as withdrawals of 750 & 250 so there is proof of that and the dates coincide with the dates on the receipts she signs, there is no way we can clear off the loans and we are saving in the credit union 800-1000 per month we just started, KBC said the gift wont be looked upon negatively as everyone is doing that. KBC offered 171K with the rent being paid via cash and 200K if we could put it through the bank account and 265K if I sold the apartment.

whippet

TrishSimon wrote: »

KBC offered 171K with the rent being paid via cash and 200K if we could put it through the bank account and 265K if I sold the apartment.

sounds about right what you are being offered.

TrishSimon

whippet wrote: »

sounds about right what you are being offered.

Yeah maybe I am going to shop around a bit even if I got the same somewhere else I want to stay clear of KBC.

pwurple

Why do you want to stay clear of KBC? They are offering the highest mortgages at the moment.

Moonbeam

I think it will be hard for you.
Your combined wages are not high and you also already have a mortgage.
I would clear all your debts and the 25k will make a nice deposit and then try .

D3PO

on your salaries with a mortgage already and no proof of rent your going to have a mighty hard time.

I also want to go back to one of your points on rent covering your mortgage. If you bought in 2009 thats not going to be the case if your rax compliant. you do realise you have to pay tax on that rent you get right ......

Trish56

OP, can you confirm how much rent you are receiving on the apartment?

If you were to borrow 200k over 26 years your stressed monthly repayments would be approx. €1328 so you need to prove repayment capacity for this amount to your lender over a 6 month period. My advice would be as follows :

1. You must show a paper trail of the rent you are paying so you need to transfer same from your bank account monthly.
2. Pay off your credit union and BOI as soon as possible instead of saving as the monthly repayments and rent will prove repayment capacity. Current €1000 rent plus €695 loan repayments = €1695.
3. You will have to provide a gift letter from the parents at the time of application stating that the gift is not repayable.
4. Manage your bank accounts in such a way that you are not using your overdraft and ensure you have no unpaid direct debits or referral fees.
5. Clear your credit card balances monthly and if possible use only 1 card between you.

Assuming that your rental income is 9k p.a and you pay off the short term loans you should qualify for a mortgage of 271k. I am also assuming that the 66k earnings is basic salaries and do not include overtime, commission or bonus and that both of you are in permanent employment.
If you do the above and have a clean credit record you should have no bother in qualifying in September for a mortgage.

TrishSimon wrote: »

Hello,
Some advice needed please, myself and my husband are hoping to get a mortgage later this year possibly September he is 39 I am 37, I already own a one bed apt which I have rented out so the mortgage is covered and its not a huge mortgage either just 118K left owing.
We are looking at houses in and around the 200K-225K and will be gifted with 25K from in laws.
My husband would be a first time buyer and I purchased my apt in 2009 but I know things have changed drastically since then, I have been onto KBC my lender but to be honest I didn't find them all that helpful the advisor was very pleasant and had loads of information but their process / rules dont really work for us so here is out finances / situation:

Combined salary : € 66K
No children
Great credit history
€650.00 owing on CC
€ 695.00 combined loan payments, my loan is with the CU his is with BOI and finished early 2016.
No car loans
Renting a house at €1K per month BUT paying cash so KBC and other lenders I believe will not consider this even though we have proof because we get her to sign a receipt each month and can get the landlady to sign a legal letter also.
We are currently trying to save €800-1000 per month in the credit union whilst also paying rent in the house, we pay all our bills elec, property tax on apt, food etc.
I have an overdraft of €1K which I have been using but will be getting rid of that between the next 2 months.
I have contacted a broker for more advice or information as we don't want to rent forever as we have already paid out 22K in rent !!
Thanks

D3PO

Trish56 wrote: »

OP, can you confirm how much rent you are receiving on the apartment?

If you were to borrow 200k over 26 years your stressed monthly repayments would be approx. €1328 so you need to prove repayment capacity for this amount to your lender over a 6 month period. My advice would be as follows :

1. You must show a paper trail of the rent you are paying so you need to transfer same from your bank account monthly.
2. Pay off your credit union and BOI as soon as possible instead of saving as the monthly repayments and rent will prove repayment capacity. Current €1000 rent plus €695 loan repayments = €1695.
3. You will have to provide a gift letter from the parents at the time of application stating that the gift is not repayable.
4. Manage your bank accounts in such a way that you are not using your overdraft and ensure you have no unpaid direct debits or referral fees.
5. Clear your credit card balances monthly and if possible use only 1 card between you.

Assuming that your rental income is 9k p.a and you pay off the short term loans you should qualify for a mortgage of 271k. I am also assuming that the 66k earnings is basic salaries and do not include overtime, commission or bonus and that both of you are in permanent employment.
If you do the above and have a clean credit record you should have no bother in qualifying in September for a mortgage.

you have made a hell of a lot of assumptions here and I dont think that was a very advisable thing to do.

You have no idea what mortgage rate is applied to the apartment.

Also re the 9K rental income where did that come from ? I doubt its 9k anyway based on the rental yield that would give them but are you trying to suggest the bank will just look at the rental income as a flat calculation regarding income ?

Id be very dubious about that regardless of what your mortgage calculator is telling you.

you have made some good suggestions but on 66k with a mortgage already at almost 100% LTV I think you are dismissing this factor far too easy.

Trish56

I have made very little assumptions actually as the OP gave quite a lot of information and I am sure she will confirm the rental income. I don't need to know the rate of interest on the apartment as the lender applies their own stress tested rate. I am giving advice on a lenders credit policy and criteria and based on the advice I gave the OP if they follow same they should have no problem in getting a mortgage of 200k even if the rental income is 5k/6k.
The OP asked 'What are the chances in getting a mortgage' my response is a positive one based on the information given and on my experience in the mortgage business.

D3PO wrote: »

you have made a hell of a lot of assumptions here and I dont think that was a very advisable thing to do.

You have no idea what mortgage rate is applied to the apartment.

Also re the 9K rental income where did that come from ? I doubt its 9k anyway based on the rental yield that would give them but are you trying to suggest the bank will just look at the rental income as a flat calculation regarding income ?

Id be very dubious about that regardless of what your mortgage calculator is telling you.

Mrs OBumble

TrishSimon wrote: »

€650.00 owing on CC
€ 695.00 combined loan payments, my loan is with the CU his is with BOI and finished early 2016.

Have other posters given enough thought to this: Is your 695 loan repayment monthly for your existing mortgage, or for something else? I'm assuming his portion if for something else, so yours may be too. Must be quite a sizeable debt to have a repayment that large ....

TrishSimon

My loan with cu owing is 9500; he owes 10k so combined the repayments are 695 and yes I know I have to pay tax with the rented apt the revenue told me to wait until.it was rented 18months before sorting this we are selling in Feb 2015. We are very capable of making payments on 200k whilst also paying the apt mortgage. The suggestion to pay the loans off we will think about but probably not realistic my husband's finishes early 2016. I'm going to see a mortgage consultant this week.

TrishSimon

Mrs OBumble wrote: »

Have other posters given enough thought to this: Is your 695 loan repayment monthly for your existing mortgage, or for something else? I'm assuming his portion if for something else, so yours may be too. Must be quite a sizeable debt to have a repayment that large ....

Our mortgage on the apt is 601.88 pm and the combined payments for both me and my husband is 695 we don't have any other loans or car loans I hope that is clear enough for you.

TrishSimon

pwurple wrote: »

Why do you want to stay clear of KBC? They are offering the highest mortgages at the moment.

I want to stay clear of KBC as I have dealt with them for 5 years now with the mortgage on the apartment and they can get very difficult on certain issues so I would prefer to get the mortgage elsewhere, we hope to see the apt Feb 2015 so that would be me finished with them.

TrishSimon

Trish56 wrote: »

OP, can you confirm how much rent you are receiving on the apartment?

If you were to borrow 200k over 26 years your stressed monthly repayments would be approx. €1328 so you need to prove repayment capacity for this amount to your lender over a 6 month period. My advice would be as follows :

1. You must show a paper trail of the rent you are paying so you need to transfer same from your bank account monthly.
2. Pay off your credit union and BOI as soon as possible instead of saving as the monthly repayments and rent will prove repayment capacity. Current €1000 rent plus €695 loan repayments = €1695.
3. You will have to provide a gift letter from the parents at the time of application stating that the gift is not repayable.
4. Manage your bank accounts in such a way that you are not using your overdraft and ensure you have no unpaid direct debits or referral fees.
5. Clear your credit card balances monthly and if possible use only 1 card between you.

Assuming that your rental income is 9k p.a and you pay off the short term loans you should qualify for a mortgage of 271k. I am also assuming that the 66k earnings is basic salaries and do not include overtime, commission or bonus and that both of you are in permanent employment.
If you do the above and have a clean credit record you should have no bother in qualifying in September for a mortgage.

I spoke to the advisor in KBC and asked about clearing off the loans and then having more income free, he said it was up to me but that he didn't really advise it as it can look bad if you dont have any savings for an emergency so now I am really confused.

Trish56

You didn't answer the question ' how much rent are you receiving monthly' or confirm that income you specified is gross basic and does not include bonus, commission or overtime so very hard to advice you without that information. I understood you're not interested in dealing with KBC again. €695 is quite a big repayment for short term loans and will definitely affect the amount you can borrow by approx. 100k.

TrishSimon wrote: »

I spoke to the advisor in KBC and asked about clearing off the loans and then having more income free, he said it was up to me but that he didn't really advise it as it can look bad if you dont have any savings for an emergency so now I am really confused.

TrishSimon

Trish56 wrote: »

You didn't answer the question ' how much rent are you receiving monthly' or confirm that income you specified is gross basic and does not include bonus, commission or overtime so very hard to advice you without that information. I understood you're not interested in dealing with KBC again. €695 is quite a big repayment for short term loans and will definitely affect the amount you can borrow by approx. 100k.

I receive 740.00 pm rental come my mortgage is 601.88, maintence fee is 100.00pm and Life Assurance for mortgage is 49.70pm so basically the rental covers all that.

Salary is basic gross I earn 33K and so does my husband earn 33K we dont receive overtime, bonus or commission.

The loan breakdown is he pays 375 pm with a balance of 9k on a personal loan he took it out over 7 years I originally thought it was 5 but he told me it was 7 last night and this is due to finish early 2016, I pay € 320 to the credit union with a balance of just under 9K on my loan with shares of 3k this is an ongoing loan I have with the credit union as I am with them years it was topped up to buy a car etc.. and other things over the years including clearing a visa card a few years back.

Trish56

TrishSimon
How much savings have you now?

TrishSimon wrote: »

My loan with cu owing is 9500; he owes 10k so combined the repayments are 695 and yes I know I have to pay tax with the rented apt the revenue told me to wait until.it was rented 18months before sorting this we are selling in Feb 2015. We are very capable of making payments on 200k whilst also paying the apt mortgage. The suggestion to pay the loans off we will think about but probably not realistic my husband's finishes early 2016. I'm going to see a mortgage consultant this week.

TrishSimon

Trish56 wrote: »

TrishSimon
How much savings have you now?

We have just started since January so we only have 3k in the credit union as we put away 800-1k per month, we did have more last year but due to some unforseen circumstances we had to use it. We can't show the rent as affordability even though we pay 1k per month as its paid via cash the landlady wont allow us to pay by bank which we should have insisted on.

TrishSimon

I said Sept in my first post for buying but we know it probably will stretch to Dec or even Jan 2015. The apartment will be going up for sale Feb 2015 so we wont have that to pay either although I dont worry about that as it pays for itself, then we will also be gifted 25K from in laws.
I don't want a huge mortgage we just want to buy something in and around 200-225K

Trish56

As previously advised is it important to show a paper trail of your rent and lenders usually look to see it coming out of your bank account. If you think that you will wait until your apartment is sold well then you will be in a better situation as you will have some equity from the sale which can clear one or both of the short term loans. I would try and pay down at least one of the short term loans asap.

TrishSimon wrote: »

We have just started since January so we only have 3k in the credit union as we put away 800-1k per month, we did have more last year but due to some unforseen circumstances we had to use it. We can't show the rent as affordability even though we pay 1k per month as its paid via cash the landlady wont allow us to pay by bank which we should have insisted on.

TrishSimon

Trish56 wrote: »

As previously advised is it important to show a paper trail of your rent and lenders usually look to see it coming out of your bank account. If you think that you will wait until your apartment is sold well then you will be in a better situation as you will have some equity from the sale which can clear one or both of the short term loans. I would try and pay down at least one of the short term loans asap.

We want to buy this year or get mortgage approved but the apartment won't be going on the market until February so there will be a slight overlap but that shouldn't be a problem.
As previously stated the landlady wont allow us to pay through her bank but we do have a receipt book she signs and you can see the money been taken out of my account but we are discounting the rent payments as they cannot be taken into account due to paying via cash so we will have to work around it. I think I will concentrate on paying off my credit union loan as after shares of €3k we need to clear down 6500.00 where as the husband owes just under 10K on his BOI loan.
We will then have the 25K gift from inlaws to use as a deposit.

joe316

I really think you need to look at your figures as I really dont think you will be getting mortgage approved unless you dramatically change things.

Based on your salary, you probably take home 3700 between you each month?

- Banks will take 2000 off this figure for a couple so you are left with 1700 (max, this is the first thing they do) for a mortgage.
- The bank will take away the 695 from this - 1000 thats your mortgage figure, no ifs and buts will change this until the loans are cleared or within a few months of being cleared. And they especially wont entertain you if you are using an overdraft.

- Based on the oldest age (39) you can apply for a 26 year mortgage and at stress tested levels that is approx 150000 mortgage (stress tested at 6.6% i.e. 2% over the current interest rate).

So over the next couple of months

- get rid of the overdraft
- pay your landlord via ebanking or move to somewhere where the landlord is not trying to fiddle the revenue
- clear down as much of the loans as possible, spend the next 6 months using your savings to clear the loans rather than your savings account, you are p33ing into the wind otherwise.
- dont use your credit card

Also the "potential" value of your apartment is meaningless, as we've learnt over the past decade property values mean nothing, the bank will see this at its current value not anything else.

TrishSimon

Our take home pay is more than 3700, I have spoken to two mortgage advisors who said we will get a mortgage I'm am going to clear down my loan and clear and get rid of my overdraft using the money we were going to save with. The credit card is fine to use once it's usage is not abused and ran up. My apt is in a sought after area in Dublin 24 and yes there are areas like that in d24 the value has already gone up and predictions and valuations from a property and building company day it will go up more that doesn't matter as we are selling it next February. I am very organised when it comes to finances I got my first mortgage and I have spoken to some banks who also see no problem provisionally approving us. On the landlady we have requested bank details to pay her via transfwe but she isn't giving them. I'm not moving somewhere else for 6-9 months and having to pay another deposit we will insist on bank details from her. Are you a mortgage advisor ?? Also we can get a 29 year mortgage not a 26 year one plus they work out each individual persons differently they don't just take off 2k . For the mortgage we want we need to be left with 1310 which we are but as I said I'm taking the advice of a previous poster who gave e good solid simple advice thank you !

joe316

TrishSimon wrote: »

Our take home pay is more than 3700, I have spoken to two mortgage advisors who said we will get a mortgage I'm am going to clear down my loan and clear and get rid of my overdraft using the money we were going to save with. The credit card is fine to use once it's usage is not abused and ran up. My apt is in a sought after area in Dublin 24 and yes there are areas like that in d24 the value has already gone up and predictions and valuations from a property and building company day it will go up more that doesn't matter as we are selling it next February. I am very organised when it comes to finances I got my first mortgage and I have spoken to some banks who also see no problem provisionally approving us. On the landlady we have requested bank details to pay her via transfwe but she isn't giving them. I'm not moving somewhere else for 6-9 months and having to pay another deposit we will insist on bank details from her. Are you a mortgage advisor ?? Also we can get a 29 year mortgage not a 26 year one plus they work out each individual persons differently they don't just take off 2k . For the mortgage we want we need to be left with 1310 which we are but as I said I'm taking the advice of a previous poster who gave e good solid simple advice thank you !

Well thats told me!!

Sure go ahead and listen to other people who only tell you what you want to hear, you arent the first and wont be the last!!

Predictions, predictions, whose making these predictions, these the same that they said the good times would never end. You said that its worth XX now and thats all its worth to the bank, nothing more.

Dont know how your net pay is over 3700, since I earn more than 66 and its not over that.

Anyhow I'll leave it to the so called "experts".

See you about 6 months when you come back moaning that the bank didnt give you a loan.

groovyg

I think one of the major issues for you will be the fact you have no paper trail or debit from your account to show that you have been paying your landlord €1000 a month in rent.
Can your guarantee they will write a letter to prove you have been paying €1000 in rent? I find it a bit strange your landlord wants payment in cash? Is this to avoid revenue? are they registered with PRTB?

A friend of mine was in a similar situation, living in a house for four years and paying rent in cash, when he went looking for a mortgage the bank wouldn't give him or his partner a mortgage because they had been renting from in-laws and paying in cash. There was nothing to say they had been paying rent or contributing towards the household so they had to move out and show they were paying rent.

leelee77

I agree with the others. I think you need to start paying your rent via standing order, as from what I have been told (looking to buy as well), you will need a paper trail/standing order evidence for rent.

Good luck! We are a similar age to yourselves and need to sell a flat and get rid of a credit card before we can buy too.

TrishSimon

@Joe316 I won't be back here in 6 months moaning I didn't get a mortgage because as stated I have spoken to TWO mortgage advisors and I am following their advice, they are not telling me what I want to hear in fact I was told, clear my loans, get rid of overdraft, create a trail for the rent and we are doing all that as for the apt the valuation was done by Grant Thornton, comer properties and savills the complex where my apt is was purchased by two brothers who bought the remaining 400 apts and all the shop units. I am however as stated previously not banking on making a profit on the sale but more so breaking even. I find your attitude rude and unmannerly and we take home 4400 between us because we are both on 33k so the lower tax bracket.....
Leelee we are insisting on paying our rent via standing order and thanks for your support I hope it all works out for you too.

TrishSimon

Just to update everyone I have found a broker who we are using he is very helpful and we are going for a mortgage once we have everything in place later this year or in January.

leelee77

TrishSimon wrote: »

Just to update everyone I have found a broker who we are using he is very helpful and we are going for a mortgage once we have everything in place later this year or in January.

That's great to hear Trish. We are also dealing with a very helpful broker (Killers from here) and we are also going to apply for a mortgage Late this year/early next year. We just completed the sale on our UK flat this week too.

Best of luck

Kaizersoze81

leelee77 wrote: »

That's great to hear Trish. We are also dealing with a very helpful broker (Killers from here) and we are also going to apply for a mortgage Late this year/early next year. We just completed the sale on our UK flat this week too.

Best of luck

Hi could you PM me his details please?
Thanks

TrishSimon

leelee77 wrote: »

That's great to hear Trish. We are also dealing with a very helpful broker (Killers from here) and we are also going to apply for a mortgage Late this year/early next year. We just completed the sale on our UK flat this week too.

Best of luck

Thanks yes we are delighted as we are sick of renting and wasting money on a house that is falling apart so fingers crossed we'll be moving in Jan/ Feb

TrishSimon

Update for everyone we are in the process of buying a house we used a broker over in Phibsboro who is brilliant he gave us some great advice and we followed it and are currently viewing and bidding on houses.