Help with moving home

Irishcrx

Hi All ,

My other half and I have decided that we are going to need to move to a bigger house a little outside of Dublin in order to give ourselves and children some breathing space as we are outgrowing on current house.

Currently I own the house we live in and it's in my name on the mortgage, financial situation I've outlined a little below. I currently earn 60k a year and my partner doesn't work as she minds the children.

Current house value estimated 320 - 330k by the estate agent
We want to buy for 275 - 300k to get what we want
I currently owe 159k on my current mortgage

So I would be looking at getting a mortgage for max 210k which works as 3.5 times my salary and using the equity in my current house for the deposit. I also owe 27k in a home improvement/car loan that I will clear with the equity from the sale.

I'm not sure how the bank will view the application, will they count my current mortgage as an estimate on repayment capacity , if we got married it would improve finance as I would get additional tax benefits but would that then hinder the application as we would need to be joint applicants?

We don't have a great amount of savings currently as we would be looking to use equity in the house to fund the deposit rather than save it up.

I'm also looking to take the full 210k for the mortgage and retain any equity not being used for clearing loans or deposit as a nest egg for the future/ 'Thing's going wrong money'

I'm just concerned as I don't want to be in a position where we get API and sell only to be turned down on full draw down and be homeless and am looking for advice on what the best approach should be on this on.



Thanks!

catrionanic

First thing you need to do is work out what monthly repayments would be on a loan of 210k, then stress test them (add 2% to the interest rate). You can do this on mortgages.ie.

Then you need to be able to demonstrate to the bank, with at least six months of bank statements, that you are consistently able to repay this amount per month. This usually means demonstrating that your currently monthly mortgage repayments and monthly savings are in excess of this stress tested amount.

So say the stress tested payment for a new mortgage is €1000 per month. If you're currently only paying €800 a month on your own mortgage, you'll need to show six months of also saving the remaining €200 a month. This is to demonstrate that you could still pay your new mortgage if interest rates go up.

If you can't do this, you need to spend the next six months saving more money to demonstrate that you can.

Irishcrx

Great thanks we have already calculated that and are starting to do it.

My main concern is how getting the approval works when we already own a house and will be in the process of trying to sell , how does the lending structure work with the bank when your in a 'Chain' as I said I would be terrified of selling my house first with AIP and having the deposit for the bank to then reject me at draw down leaving myself and family homeless given the rental situation it's a real concern for me...could someone explain how this would work and if full approval is possible based on the house sale or how signing contracts would work in a 'Chain' to ensure this doesn't happen?

Thanks