First time mortgage application & property advice

S.M.H

Hi all. I'm a 28 year old male in the North West of Ireland on an income of 27k per annum and the (idea of the) buying bug has hit me in. I hope to apply for a first mortgage in the next 6 months so this could be an interesting journey....

Financial Background:
I've spent about 6/8 months bumping up finances the CA and the past 10 weeks I've set up a DD of €200 per week to go from my CA to Savings. In those 10 weeks I've obviously saved €2,000 but my CA capital has also risen €1,000 in the same period - hopefully proving that my day to day CA shouldn't be affected if I continue to pump €200 per week into a mortgage (even if it's unlikely I'd commit to such high repayments)
I've no credit cards, never had an overdraft, never been in debt and no dependents.
Essentially I have followed advice directed toward FTBs thus far.

Bottom line, I have saved close to €10,000 (8k in CA / 2k in savings - regular payments)

What property I'm seeking?:
An apartment or house in or after the 60/100k mark. I'm also open minded to entering the rental property market while occupying the property. Most likely purchasing in Sligo.

Other factors:
I've a permanent position for over a year in an established company and expect my wage to increase. My debt free next of kin could be a guarantor on any mortgage I go for.
A mortgage of €80,000 over 25/30 years is fine by me

---

1- Based on the above how far away would I be from securing a mortgage for say €80,000.
2- Which lender is favorable for first time buyers?
3- Is the 10% deposit guidelines for FTBs something lenders will stand by/honour based on what you know?
4- What hidden aspects of mortgage application should I be looking out for from lenders?
5- Anything else?

Thanks in advance

padjo5

Good work! Few pointers based on your post:
1) keep it up, 12 months of that savings and go talk to bank/broker
2) can you squeeze more than 200 p/w to savings? Do as much as you can without causing shortages in CA
3) Don't dip into the savings at all
4) Prepare evidence (if you have it) of source of funds/savings

Best of luck.

Paddy.

Santy2015

That's great me and my OH are in the process of applying. We applied in December and were told to bump up our savings. We've 11k saved so far and were told to at least have 16/17k in savings as we'd qualify for a mortgage of between 120/140k. Houses in our area are in those ranges so, 13k deposit 1,300 stamp duty 600 for surveyor and maybe 2k for solicitor. We are saving 330 a week.

hawkeye_bmr

Myself and OH applied for a mortgage of 150k, based on our combined earnings, savings of 22k, in our jobs about 3 months after returning from 3years in Australia. All feedback was good, application was submitted and a few days later got told it was declined on the basis of us only being back in the country 5 months and in our jobs 3months.

Has anyone had any luck getting a mortgage without being in a job for over a year? 3 years of living on your own independence makes it very hard to live back at home and we want to get our own place asap.

dobbs2210

padjo5 wrote: »

Good work! Few pointers based on your post:
1) keep it up, 12 months of that savings and go talk to bank/broker
2) can you squeeze more than 200 p/w to savings? Do as much as you can without causing shortages in CA
3) Don't dip into the savings at all
4) Prepare evidence (if you have it) of source of funds/savings

Best of luck.

Paddy.

What is CA?

athtrasna

dobbs2210 wrote: »

What is CA?

Current account

Naid23

Well Done so Far OP.

Currently saving myself and will be applying in February with my partner. I do have a quick question however if someone can help me.

We currently have 25k+ saved and have a combined salary of over 75k a year, my main worry is that i am in my current job (which is permanent) for little over 4 months.have been employed all year but recently changed. My partner has been in the same job for over 10 years.

My question is - is there a chance that we could be refused as i am new enough in my job? or will they disregard it due to his 10+ years.

thanks

Santy2015

Would you still be under probation? I'd hold out on applying until your over 6 months in your job. My OH is on a contract and has been with the company 2 years and it's 99.9% secure but the bank questioned it when we applied a month ago. It's not going to stop us getting a mortgage it's just the fact the banks hate contracts.

deisedays

My own experience-
I tried all the banks, some are more risk averse than others, but I don't want to name names.
The bank will generally look for 1 yrs plus employment and a definite prospect that you will continue to be employed for the foreseeable future.
I would have concerns about the level of your salary- banks generally look for stronger earning capacity as they will stress test your application by + 2% of an interest rate rise and don't want to see more than 35% of your take home pay going on mortgage repayments. Remember that property tax, utilities (e.g. water charges!!), house insurance etc all have to be paid when you move in...a seemingly affordable mortgage payment may not seem so affordable when you take this into account
10% deposit is the bare minimum. You will also need to budget for a structural survey (approx. €300), valuation (€160ish), legal fees and related stuff (€2000) and stamp duty @ 1% (e.g. €1000).
After this lenders might like to see that you have a small nest egg for emergencies and that the mortgage process hasn't left you with literally a spare cent....so maybe budget for 3-4 months mortgage payments to have aside.
Add to that, the cost of furnishing and ongoing maintenance ( a replacement oil boiler could cost €2000- do you have this money aside??)

Sorry to be negative but I think you are earning far too little money at the moment to consider a house purchase. Unless you expect yur income to dramatically rise, I would keep saving away but hold off from buying right now.
Don't be fooled by the seemingly low price of houses without taking into account the cost of paying for and maintaining a property

Santy2015

Does solicitor fees have me going cuckoo, we've 12k saved now bank said come back when you've at least 16/17k as we'd need money left for solicitor, stamp duty etc. Houses we would be going for are between 100/140k

Jen44

but you will need to have the money to pay for the solicitor before you close on the house aswell as stamp duty so that's why they are telling you to come back when you have more saved. you simply wont be able to buy the house unless you have factored in stamp duty and solicitors fees in your savings

_davidsmith_

Quick question, generally how is the maximum mortgauge amount worked out, ie a couple with 70k combined earnings with 60k savings?

Jen44

no more then 3.5 times your combined annual salary is the amount you can borrow

Laura_A

Planning on going for a mortgage this year too - have just over 20K saved and enough in combined salary for a mortgage of about 240K (saving 2K p/m so will have enough for deposits and fees etc by the end of the summer). Bit worried though as I have an overdraft I am clearing but have used quite a bit last year. Has anyone applied and been successful with an OD on the account? Hoping to have it removed by March but dont want to have to wait 6 months after that before I can apply.. Thanks & good luck everyone...

0gac3yjefb5sv7

I'm just wondering how typical people afford a house. I would imagine a significant part of the population are earning 20-30k a year so I always wonder how has house prices risen so far out of reach of regular workers?

Santy2015

@jen44 I know that I need the money to cover solicitor and stamp hence why I said we'd actually need 16/17k before going back to the bank. The other things like making sure we're not broke after the sale will be saved hopefully once we get approval. Should have 16k start of March but the typical house sale being 3/4 months to close we'd have another 5k saved in the meantime as we are saving 1600 a month now. As for incomes, I'm on 27k and my oh is on around 16k and we were told we'd be fine as the mortgage we are able to afford comes within all the stress tests. 120/140k mortgage.

hawkeye_bmr

Pretty much in the same boat as you Santy2015, itching to get our own place. Best of luck!

Santy2015

hawkeye_bmr wrote: »

Pretty much in the same boat as you Santy2015, itching to get our own place. Best of luck!

Add your reply here.
Itching isn't the word. Pushing hard with savings but still have money to go for a meal or a few pints.

john the one

I am waiting on contracts now on a house, sole buyer with average income.

I had an overdraft which was continuously overdrawn for the last few years, the bank I'm with overlooked this once it was paid off and in fact only wanted 3 months worth of savings record to get my approved. Luckily I have more than that!

Solicitors fees with stamp duty will probably come in at about 3500, keep another few hundred for new locks etc and I shook have some cash to do the bathroom up and get new windows if I'm lucky.

Pheonix10

Pheonix10 wrote: »

I'm just wondering how typical people afford a house. I would imagine a significant part of the population are earning 20-30k a year so I always wonder how has house prices risen so far out of reach of regular workers?

Couples both on €25/30k would have been able to borrow almost €200k after saving a combined €1k/month for 2/3 years.

A single person on 20-30k a year would have less property options of course.

0gac3yjefb5sv7

Agree here but 200k is most likely an apartment price (in Dublin area). How are there so many houses going for 300-800k? That seems to be the standard rate which is well outside most peoples earnings.

Pheonix10

Pheonix10 wrote: »

........... How are there so many houses going for 300-800k? That seems to be the standard rate which is well outside most peoples earnings.

€300/€400k homes being bought by better off couples or people trading up.

One must remember that up to and prior to 2000/2002 lots of people bought houses for relatively small money compared what they were going for.

Though there may be many houses going for upwards of €500k that wouldn't be most houses, that accepted there is a significant minority of people that have lots of cash reserves &/or high incomes from employment or business interests.

deisedays

Easily explained. My brother and his wife have a combined income of 135K with "ordinaryish" jobs... accountant (85K) and nurse (50K).
Cleared for a mortgage of 500K, add on your deposit and you are easily in the market for a 550k plus house.
Lots of folks like that in Dublin so I'm sure that accounts for the properties in this price range in the "better" parts of town, even for first time buyers.
IMHO even if cleared for a mortgage of 500k it makes far more financial sense to buy a (perfectly adequate) residence for 200k and put the rest of the funds, if borrowing money is your thing, into an investment property or two, to rent out. This way, if things work out, you might be able to sell up all in 10 years and trade up, or if things go pear shaped, dispose of the investment properties and not find oneself lumbered with one massive mortgage.

0gac3yjefb5sv7

deisedays wrote: »

Easily explained. My brother and his wife have a combined income of 135K with "ordinaryish" jobs... accountant (85K) and nurse (50K).
Cleared for a mortgage of 500K, add on your deposit and you are easily in the market for a 550k plus house.
Lots of folks like that in Dublin so I'm sure that accounts for the properties in this price range in the "better" parts of town, even for first time buyers.
IMHO even if cleared for a mortgage of 500k it makes far more financial sense to buy a (perfectly adequate) residence for 200k and put the rest of the funds, if borrowing money is your thing, into an investment property or two, to rent out. This way, if things work out, you might be able to sell up all in 10 years and trade up, or if things go pear shaped, dispose of the investment properties and not find oneself lumbered with one massive mortgage.

Great post. Only thing I disagree on here is surely the majority of couples aren't accountants and nurses. For example teachers are only on 30k odd starting out...and most regular jobs, bar men, basic office work are only 25-30k.

Jen44

an accountant earning 85k is not an ordinaryish job, at 85k he is a very senior level accountant maybe even a partner?

zl1whqvjs75cdy

If your working for one of the big 4 80 k is not massive. A friend of mine is four years out of college and on 68 k with deloitte. I'm mad jealous.

Jen44

thats my point tho a person with four years experience is on 68k therefore the person on 85k is hardly what you would call in an ordinary job. Anyway its a bit off topic just caught my eye as hubby is an accountant at management level and is not earning near 85k granted its not one of the big 4 firms but a decent practice all the same. Same goes for the nurse on 50k. I happen to be a nurse in middle level management (CNM 2) and earn 50k so its quite far off the salary a staff nurse would be on, hardly ordinary jobs.

zl1whqvjs75cdy

Agreed. Hopefully the market prices will start to reflect wages more closely in the next couple of years. Or we all get massive salary bumps.

deisedays

I'm sorry but why would I lie?
That's what they earn and that's the kind of mortgage they can get even with the new rules. That's the point I'm trying to make and show why houses in Dublin have buyers at prices of 500k plus, no problem.
A lot of professions, esp those based in Dublin would regard 80 k as a sort of "minimum wage"

Jen44

deisedays wrote: »

I'm sorry but why would I lie?
That's what they earn and that's the kind of mortgage they can get even with the new rules. That's the point I'm trying to make and show why houses in Dublin have buyers at prices of 500k plus, no problem.
A lot of professions, esp those based in Dublin would regard 80 k as a sort of "minimum wage"

I was not suggesting that you are lying I was saying that those salaries are not what you would consider ordinary

SarahMollie

deisedays wrote: »

I'm sorry but why would I lie?
That's what they earn and that's the kind of mortgage they can get even with the new rules. That's the point I'm trying to make and show why houses in Dublin have buyers at prices of 500k plus, no problem.
A lot of professions, esp those based in Dublin would regard 80 k as a sort of "minimum wage"

OK, i don't think anyone was saying you were lying - just the people have largely different perceptions of what constitutes an ordinary job. As it happens, based on my own life, i'd tend to agree with you.

Myself and my OH have about the same combined income and I wouldnt consider us massively opulent or overly well paid relative to those around us. Its just more normal to earn that kind of money in Dublin, and as a result houses also cost more.

0gac3yjefb5sv7

I have to disagree here. 80k is definitely not a common salary - maybe when you are in your 40s/50s but the majority I guess would earn between 20-40k. I don't know many jobs that you can earn 80k without 10/20 year's experience.

deisedays

apologies
Wrong end of the stick by me!
I suppose what's happening is when few properties are for sale folks with this earning capacity will have first pick on property.
By the way I think that there is something radically wrong if Mr John and Joan Soap on average wages can't afford to buy a house but must rent.
Surely we know enough of our history to recognise the damage caused by landlordism in this country. Do we want to repeat the mistakes of the past and have the majority of peasants rack rented by the gentry for life?

SarahMollie

Pheonix10 wrote: »

I have to disagree here. 80k is definitely not a common salary - maybe when you are in your 40s/50s but the majority I guess would earn between 20-40k. I don't know many jobs that you can earn 80k without 10/20 year's experience.

I think its all a matter of your own experience. It wouldn't be unusual in my social circle. Including bonus, I earn more than that, and I'm still a little shy of my 30th birthday.

I'd go so far as to say that anything less than €40k would be considered very low. I'd estimate salaries in my group of friends range from €50/90k, so some couples can definitely get approved for big mortgages.

SarahMollie

I know its difficult for Irish people to adjust to the idea of long term renting, but maybe thats the way forward for a lot of people. Its ingrained into the Irish mindset that buying a home is a rite of passage, but why? If you look to France/Germany, people rent their whole lives and its normal.

I accept we'd need a radical overhaul of the rental market for this to happen, including sensible rent levels, professional landlords, security for tenants etc.

Despite how a lot of people feel, its not an automatic right to be able to buy a house.

**accepts hypocrisy of being both Irish and a home owner while writing the above**

Elessar

SarahMollie wrote: »

I think its all a matter of your own experience. It wouldn't be unusual in my social circle. Including bonus, I earn more than that, and I'm still a little shy of my 30th birthday.

I'd go so far as to say that anything less than €40k would be considered very low. I'd estimate salaries in my group of friends range from €50/90k, so some couples can definitely get approved for big mortgages.

Exactly. Depends on industry of course but someone with skills and experience can earn those figures quite easily. A friend of mine recently started a new job at 85k, he's 32 with 6 years experience in his field (also certified) - this is IT. Companies were almost throwing money at him to sign.

SarahMollie

Elessar wrote: »

Exactly. Depends on industry of course but someone with skills and experience can earn those figures quite easily. A friend of mine recently started a new job at 85k, he's 32 with 6 years experience in his field (also certified) - this is IT. Companies were almost throwing money at him to sign.

Yeah I work for an IT company (not technical, but I have a masters degree and am well qualified for what I do), my OH is an Engineer, educated to PhD level, and works in renewable energy.

I realize that doesn't make us John+Jane Bloggs, but we're hardly unicorns either.

SarahMollie

SarahMollie wrote: »

I think its all a matter of your own experience. It wouldn't be unusual in my social circle. Including bonus, I earn more than that, and I'm still a little shy of my 30th birthday. ........

No doubt, however one can surely recognise that only a minority of people in their late 20s earn salaries in excess of €80k/annum. I'm fully accepting it might well be the norm in your social circle.

Some stats grabbed from NERI on households.

33% of households have a gross income of less than €27,000
62% of households have a gross income of less than €50,000
The top 20% of households have a gross income of more than €80,000 per annum
12% of household have a gross income above €100,000 per annum

The above includes workers, pensioners, the unemployed etc. as far as I know.

Every household isn't going to be able to afford to own the house they live in - renting, social & council housing etc. will all be required to house the nation.

SarahMollie

Augeo wrote: »

No doubt, however one can surely recognise that only a minority of people in their late 20s earn salaries in excess of €80k/annum. I'm fully accepting it might well be the norm in your social circle.

Yep, can absolutely accept I'm doing well, but I think some of the estimates given by previous posters on the lower end of the scale sound extremely low. Obviously people earn maybe €25/30k starting out, but once you've 5+ years experience, I would think you'd need to be seeing your income rise in that period.

SarahMollie

Deleted User wrote: »

Some stats grabbed from NERI on households.

33% of households have a gross income of less than €27,000
62% of households have a gross income of less than €50,000
The top 20% of households have a gross income of more than €80,000 per annum
12% of household have a gross income above €100,000 per annum

The above includes workers, pensioners, the unemployed etc. as far as I know.

Every household isn't going to be able to afford to own the house they live in - renting, social & council housing etc. will all be required to house the nation.

Wow, actually thats shocking. Yes I can definitely see how a lot of people will never afford to own if this is the case - you couldn't afford to save for the deposit by the looks of things.

I guess it goes to show the extent of the divide between Dublin and the rest of the country, because even €50k for a household in Dublin would be very low in my opinion, and you certainly wouldn't be buying property.

0gac3yjefb5sv7

25/30k is not extremely low. It's quite normal for many service level jobs, barmen, waiters, hairdressers, secretary's. Obviously you are in the minority. After 5 years experience in most jobs it might rise to 40-50k but definitely not up to 80k in most roles.

omb0wyn5ehpij9

SarahMollie wrote: »

Yep, can absolutely accept I'm doing well, but I think some of the estimates given by previous posters on the lower end of the scale sound extremely low. Obviously people earn maybe €25/30k starting out, but once you've 5+ years experience, I would think you'd need to be seeing your income rise in that period.

As far as I can remember, for 2014 the average salary was 35k and the median was 29k. Not sure of the 2015 figures, but compare that to the price of property and people will have no hope of ever buying

SarahMollie

SarahMollie wrote: »

Yep, can absolutely accept I'm doing well, but I think some of the estimates given by previous posters on the lower end of the scale sound extremely low. Obviously people earn maybe €25/30k starting out, but once you've 5+ years experience, I would think you'd need to be seeing your income rise in that period.

The estimates aren't necessarily low - everyone has a different experience and extrapolates from that.
Your post is based on assumptions.

SarahMollie

BDJW wrote: »

As far as I can remember, for 2014 the average salary was 35k and the median was 29k. Not sure of the 2015 figures, but compare that to the price of property and people will have no hope of ever buying

Yeah well depends on where you live I suppose. OP earns below this but his numbers add up from a cursory glance, but thats based on the cost of living in Sligo.

Definitely true to say you wouldn't be buying much in Dublin on those numbers.

SarahMollie

SarahMollie wrote: »

Yep, can absolutely accept I'm doing well, but I think some of the estimates given by previous posters on the lower end of the scale sound extremely low. Obviously people earn maybe €25/30k starting out, but once you've 5+ years experience, I would think you'd need to be seeing your income rise in that period.

Again that makes sense for those in careers who progress. There are loads and loads of people who go through their working life in roles where experience doesn't equate to their salary increasing beyond inflation.

Santy2015

My salary and my OH salary add up to 43k in north county cork. We are well within our means and save 1600 a month. We can afford to get a house but obviously if we were on that salary living in cork city you'd struggle to find anything at all and especially not Dublin or the commuter counties Kildare Wicklow Meath. We are lucky that house prices i. Our area are steady but would be screwed of we lived in a city. I work in retail and she works in childcare. Not the best paying jobs but I'm on some sort of salary scale but it'll never go above 40k of imagine

deisedays

Are peeps here talking about gross salaries (I.e. Before tax) or take home pay?

Santy2015

Before tax, that's how they calculate how much you can borrow. 3.5 times gross salary

athtrasna

Mod note

Folks this is Accommodation and Property, not who gets paid how much and what average earnings are. There's a work and jobs forum if you want to discuss such things.

SarahMollie

S.M.H wrote: »

Hi all. I'm a 28 year old male in the North West of Ireland on an income of 27k per annum and the (idea of the) buying bug has hit me in. I hope to apply for a first mortgage in the next 6 months so this could be an interesting journey....

Financial Background:
I've spent about 6/8 months bumping up finances the CA and the past 10 weeks I've set up a DD of €200 per week to go from my CA to Savings. In those 10 weeks I've obviously saved €2,000 but my CA capital has also risen €1,000 in the same period - hopefully proving that my day to day CA shouldn't be affected if I continue to pump €200 per week into a mortgage (even if it's unlikely I'd commit to such high repayments)
I've no credit cards, never had an overdraft, never been in debt and no dependents.
Essentially I have followed advice directed toward FTBs thus far.

Bottom line, I have saved close to €10,000 (8k in CA / 2k in savings - regular payments)

What property I'm seeking?:
An apartment or house in or after the 60/100k mark. I'm also open minded to entering the rental property market while occupying the property. Most likely purchasing in Sligo.

Other factors:
I've a permanent position for over a year in an established company and expect my wage to increase. My debt free next of kin could be a guarantor on any mortgage I go for.
A mortgage of €80,000 over 25/30 years is fine by me

---

1- Based on the above how far away would I be from securing a mortgage for say €80,000.
2- Which lender is favorable for first time buyers?
3- Is the 10% deposit guidelines for FTBs something lenders will stand by/honour based on what you know?
4- What hidden aspects of mortgage application should I be looking out for from lenders?
5- Anything else?

Thanks in advance

OK so getting back on track.

As someone who's bought in the past 6 months, this is my take.

I don't see any issue with you getting the mortgage you're looking for. The only thing is that they might ask you to demonstrate savings for a little bit longer, but I don't think it would prevent a preapproval.

Obviously shop around (maybe use a broker?). Honestly word of mouth was huge for me in who I ultimately worked with.

I'd transfer most of the money into your savings account, and only keep a running balance in your current account. I think they look at this as more sensible (which it is, as you don't earn any interest on current account, and also the money is just safer in savings). You need to demonstrate that every month you are saving enough to cover repayments when stress tested (I'd say market rate +2%) so work out what this is and put this aside every month.

You will need to save a bit longer, because you don't only have to have your deposit in cash, but you also need to have legal fees, valuation costs, survey if required and stamp duty, and you need to show that after paying for all this, you can still afford to live. Another few months should be ok. You will definitely need the 10% deposit. I've heard of banks giving exceptions based on upping the 3.5 times income, but never accepting a lower deposit.


I didnt find many "hidden aspects" to my mortgage, there was nothing in there i didnt expect. You will obviously be expected to maintain mortgage protection insurance, but this can be quite low on a monthly basis, and for €80k, probably negligible.

After all is said and done, i did end up spending more than I'd anticipated, but it wasnt anything to do with my mortgage. You'd arguable be wise to have significant savings to cover moving in, as the list of things you'll need to have is extensive.

Do you have any of the following? Or would you need to buy everything new? Could you borrow/take second hand from friends/family?

Bed(s) and bedding
TV
Sofa
Dining Table
Kitchen ware and utensils
Pots and pans
Kettle/Toaster/Microwave
Hoover
Curtains (I still don't even have all my curtains!)

Buying all of the above can easily add up!

The way (I hope) it will work out for me is that I've now bought all of these things and taken the hit on the upfront costs, so that from now on my monthly outgoings will be less than when i was renting. But make no mistake, the last few months have been very expensive!