If I was to buy an apartment (mortgage <€100,000 for ~20yrs), how would that af

wherearewe45

I'm looking to get onto the property market in the next year or so once I'm confident of being accepted for a mortgage. I'll be living in that apt and renting out a room (I've been renting for 10yrs with 2 other people so I've no issue with sharing with one person) so based on rent prices and mortgage repayments, my repayments shouldn't be an issue*.

Few years down the line, say I get married, have a family and an apt is no longer enough. I'm still paying off a mortgage but need a new mortgage (~€200k) for a house. I understand that based on current laws, I'll need a 20% deposit as I'm now a second time buyer. How else will having a mortgage in a previous property affect my chances of getting a second mortgage.

Once again lets assume that I've never had issues with repayments on previous property. Selling the apartment could be an option in this scenario but let's say I want to keep it and rent out both rooms til the mortgage is paid off.

*this is everything going to plan obviously so please look at it in this way when answering.

4ensic15

Without a working crystal ball, it is hard to say. A lot depends on the general lending environment and how much equity there is in the apartment at the time of seeking a second loan.
On current rules, there would have to be equity of 40% in the apartment and 20% in the new property plus the ability to afford both loans without rental income.

The_Conductor

Any loan for a second mortgage would be reduced by the payments on mortgage no. 1- however, if you could show consistent income from Property no. 1- it would be taken into account towards your overall gross income for multiple purposes.

I.e. Keeping property no. 1 would reduce your borrowing capacity- as your repayment capacity would be assessed as a maximum percentage of your net income for all loans (similarly a car loan, credit card debt or any other loan- would reduce your borrowing capacity).

Honestly- the regulatory regime for landlords- is pretty horrendous- I would seriously advise if you cannot see yourself staying in the property pretty much indefinitely- not to buy.

I'd also suggest- whoever came up with the expression 'starter home' be tracked down, and beaten to a pulp. According to CSO figures- we have almost 420,000 people in Ireland (this includes children) living in accommodation that does not meet suitabilty rules imposed by local authorities- as they imagined their 'starter home' could be leveraged towards a 'forever home' down the line. Don't do it. The housing market is already at unsustainable income multiples- its not a matter of whether we're in bubble territory or not- we are- its more a question of when will the bubble burst again- we really appear to have learnt very little from our last experiences...........

I would be very reticent to go along with what you're suggesting- it really doesn't sound like a good idea to me.

ED E

wherearewe45 wrote: »

say I want to keep it and rent out both rooms til the mortgage is paid off.

You wont gain anything really.

Say you're renting the one room at ?8000 pa (?650/mo, top class appt), thats tax free. Then you move out and rent 2x, that nets you ?16,000 but you pay almost 50% of that in tax as the RAR scheme no longer applies. Plus the obligations of being a landlord could drastically increase your expenses.

Samuel T. Cogley

Not sure where you'd get an apartment for 100K that you couldn't get a small house for the same money. Even in Dublin the choice is generally live somewhere nice about 1KM away form somewhere not as nice where you could get a three bed house for the same money. Give or take a few hundred meters and a few grand. Small house all the way after getting stuck with an apartment.

However on the apartment front it's not terrible being stuck with one - generally even after tax it should wash it's face (break even) if you're not absolutely stuck and if it doesn't you can always sell it. Just be careful what you're buying; apartments have been the last thing to recover and will be the first thing to get hit - and hit hard - once supply starts to come on stream.