Saving/Applying for a mortgage 2015/16/17/18/19

ELM327 · 09-04-2019 09:46AM

Bigmac1euro wrote: »

Ok, so i need quick help with this one.

Currently saving for a house, looking at buying a house in the 325k region.

Have been saving since July last year and have saved in total €11,800.

Currently saving €1200 per month and paying rent of €1200 per month. (would i have trouble getting more than 3.5 times if needed?)

Now, I could have a new job lined up and if I happened to get it we would be saving €1700 per month but this is not a definite. (No need for more than 3.5)

Solicitors fees and stamp duty would also need to be included.
We are both FTB's. So looking at 90% LTV.

We are hoping to buy next Summer, does this sound right ? Anything I'm forgetting ?
Exactly how much should I aim to have, I'm thinking 37k ??

If you want to buy at 325k you will need to have 32.5k for that, plus 1% stamp duty, plus solicitor fees estimated 2k so 37.5k is probably what you're aiming at

In order to get 325k your combined income will need to be ~93k.

averagejoe123 · 09-04-2019 10:10AM

ELM327 wrote: »

If you want to buy at 325k you will need to have 32.5k for that, plus 1% stamp duty, plus solicitor fees estimated 2k so 37.5k is probably what you're aiming at

In order to get 325k your combined income will need to be ~93k.

You will only need a combined salary of around €83k for a €325k house where you have a 10% deposit.

el Fenomeno · 09-04-2019 10:19AM

If you're buying a new build and Help-to-Buy is still available next year, the breakdown would be:

5% of 325k = €16,250 from you
5% of 325k = €16,250 from Help-To-Buy
1% Stamp Duty - 325k minus VAT = €286,343.6 * 1% = €2,863.43
Solicitors Prof Fees = Estimate €1500 - €2000 (best to estimate high)
Other Fees = approx. €1,500

So that'd be approx. €23,000 you'd need.

If Help to Buy is gone, or you're not buying a new build, then it would be:

10% of 325k = €32,500
1% Stamp Duty = €3,250
Solicitors Prof Fees = Estimate €1500 - €2000
Other Fees = Approx. €1,500

So that'd be close to €40k. I'm only familiar with the purchase process for new builds, so apologies if my estimates re: other fees is incorrect.

ELM23 wrote:

In order to get 325k your combined income will need to be ~93k.

They'd only need a mortgage on 90% of the 325k, which means they would need a combined salary of ~ €83.5k.

Exemptions can be given up to 4.5 times salary, so if you got the full exemption of 4.5, then a combined salary of €65k would do.

No idea what your repayment capacity is like - €1700 savings + €1200 rent would indicate a pretty good capacity, but no idea what other outgoings you have.

awec · 09-04-2019 10:21AM

Depending on what you get included with the house when you buy it, you'll probably need the guts of 20k to kit it out with floors, blinds, tiling etc.

voluntary · 09-04-2019 10:44AM

el Fenomeno wrote: »

No idea what your repayment capacity is like - €1700 savings + €1200 rent would indicate a pretty good capacity, but no idea what other outgoings you have.

Aa a rule of thumb when estimating the max monthly repayments, take the average montly savings PLUS montly rent currently paid MINUS ~4k/12=350 (for an average home expenses while owning vs renting) then reduce this amount by ~ 30% to give space for interest rates hikes, unexpected expenses, employment changes etc.

In the given examle 1200+1200=2400; 2400-350=2050; 2050*70%=1435 per month.
So, with 10% deposit and 325k house you're talking 25+ years mortgage.

Exceptions from the 3.5x rule are easier to get in the first 3 months of each year, so one may consider waiting until January to apply for one.

EDIT: 1700 vs 1200 would push the max monthly repayment to 1645, so he could reduce the mortgage term to 20+ years (from 25+)

voluntary · 09-04-2019 10:47AM

awec wrote: »

Depending on what you get included with the house when you buy it, you'll probably need the guts of 20k to kit it out with floors, blinds, tiling etc.

Ah... second hand homes would already have floors and kitchens. 100 euro mattress from Argos + some second hand furnitures from the 'FREE' section on adverts and you're good to go for a nice start

Bigmac1euro · 09-04-2019 11:30AM

Cheers for all the helpful replies. Following this thread for about a year.
More info on this than anywhere else tbh.
I won’t be going down the new build route I’m purchasing 2nd hand.
Answers all are very helpful think I was going the right direction anyway.

awec · 09-04-2019 11:34AM

voluntary wrote: »

Ah... second hand homes would already have floors and kitchens. 100 euro mattress from Argos + some second hand furnitures from the 'FREE' section on adverts and you're good to go for a nice start

If he buys second hand he'll need the extra 16k for his deposit then.

wally79 · 09-04-2019 11:37AM

FYI for all

AIB are cutting fixed rates for all new and existing customers

https://www.rte.ie/news/business/2019/0409/1041514-aib-mortgage-rates/

mur223 · 09-04-2019 11:43AM

Anyone who went with KBC: How long does the loan pack take to be sent out to your solicitor once the valuation is complete? Thanks!

big syke · 09-04-2019 11:45AM

mur223 wrote: »

Anyone who went with KBC: How long does the loan pack take to be sent out to your solicitor once the valuation is complete? Thanks!

Valuation competed on 28th and loan requested on 29th Mar, pack sent on 8th

ELM327 · 09-04-2019 11:46AM

averagejoe123 wrote: »

You will only need a combined salary of around €83k for a €325k house where you have a 10% deposit.

This was not how it worked when I got my mortgage in Q1 last year.
I needed 10% of the purchase price but my 3.5X was based on the purchase price total and not the mortgage amount. This was for KBC, AIB, BOI and one or two others.

Only brokers seemed to offer the method you described

09-04-2019 11:49AM

ELM327 wrote: »

This was not how it worked when I got my mortgage in Q1 last year.
I needed 10% of the purchase price but my 3.5X was based on the purchase price total and not the mortgage amount. This was for KBC, AIB, BOI and one or two others.

Only brokers seemed to offer the method you described

This is not the Central Bank guideline. You can borrow 3.5x your salary.

ELM327 · 09-04-2019 12:23PM

Ayan Prickly Road wrote: »

This is not the Central Bank guideline. You can borrow 3.5x your salary.

That was my initial understanding too however it did not seem to be that of the banks I applied to. (It didnt matter in the end of the day as I only borrowed 1.8X my salary in the end anyway, but I'm curious as we're looking to move into a bigger house now and the 3.5X becomes more important)

Bigmac1euro · 09-04-2019 01:09PM

Ayan Prickly Road wrote: »

This is not the Central Bank guideline. You can borrow 3.5x your salary.

Really hoping this is the case. Otherwise I’m pi55ing in the wind. I could clearly make the repayments showing my saving capability.

hanaimai · 09-04-2019 01:14PM

Bigmac1euro wrote: »

Really hoping this is the case. Otherwise I’m pi55ing in the wind. I could clearly make the repayments showing my saving capability.

It's absolutely 3.5 times your income (max unless you get an exemption) up to a maximum of 90% of the purchase price of the property (unless you get a deposit exemption). If a lender isn't giving you the full 3.5 times your salary it's because you don't meet the affordability requirements for whatever reason (e.g. dependents, not enough savings, other loans etc. etc.)

09-04-2019 01:16PM

Guidelines are here: https://www.centralbank.ie/consumer-hub/explainers/what-are-the-mortgage-measures

"So for example, a couple with a combined income of €100,000 you can borrow up to a maximum of €350,000"

Couldn't be clearer.

Bigmac1euro · 09-04-2019 01:25PM

hanaimai wrote: »

It's absolutely 3.5 times your income (max unless you get an exemption) up to a maximum of 90% of the purchase price of the property (unless you get a deposit exemption). If a lender isn't giving you the full 3.5 times your salary it's because you don't meet the affordability requirements for whatever reason (e.g. dependents, not enough savings, other loans etc. etc.)

Grand!
We’ve no dependants.
We’ve no outstanding loans.
No credit cards either.

awec · 09-04-2019 01:25PM

ELM327 wrote: »

This was not how it worked when I got my mortgage in Q1 last year.
I needed 10% of the purchase price but my 3.5X was based on the purchase price total and not the mortgage amount. This was for KBC, AIB, BOI and one or two others.

Only brokers seemed to offer the method you described

This makes no sense, and definitely isn't correct.

For a bank, if you borrow 350,000 the affordability calculations are exactly the same no matter if you buy a 400,000 house or a 1,000,000 house. Once you are paying at least 10% of the cost yourself, the bank does not care how much of your own money you put into the house purchase.

Likewise, if you were buying a 350,000 house and only applying for a mortgage of 100k, but your joint income was 50k then under your thinking the person would be refused.

The 3.5 max is related to the amount you borrow, since that's the bit you need to actually afford to pay back.

ELM327 · 09-04-2019 01:31PM

I hasten to add it was not my thinking, it was what I experienced in Q1 last year/Q4 2017.
My initial reading was exactly as you have all stated.

Hopefully this is correct as (moving to a second property) we will only need 80% LTV so that means our 3.5 multiplier will be based on the 80% and not property value.

awec · 09-04-2019 01:37PM

ELM327 wrote: »

I hasten to add it was not my thinking, it was what I experienced in Q1 last year/Q4 2017.
My initial reading was exactly as you have all stated.

Hopefully this is correct as (moving to a second property) we will only need 80% LTV so that means our 3.5 multiplier will be based on the 80% and not property value.

You must have picked it up wrong, because there's no way that's what you were told by the banks.

Thargor · 09-04-2019 01:38PM

For a single guy with no dependents, no loans, no debt and a 40-50% deposit saved (not sure if that makes a difference), do you need to have a long term permanent job to get approval?

I'm asking because I've had this permanent pensionable job for 5 years but I see a lot of 12 month contracts out there for the same job but 25% higher salary. I'd like to go for them but if it costs me a chance at a house then I'm not interested...

ELM327 · 09-04-2019 01:41PM

awec wrote: »

You must have picked it up wrong, because there's no way that's what you were told by the banks.

Perhaps I took it up wrongly and didnt question as I wasn't needing 3.5 times anyway. This thread is positive for me so, gives more funds available for my next house as it's 3.5X+D = P now as opposed to 3.5X=P+D where X is mortgage amount, P is purchase price and D is deposit.

20PP in the difference!

Thargor wrote: »

For a single guy with no dependents, no loans, no debt and a 40-50% deposit saved (not sure if that makes a difference), do you need to have a long term permanent job to get approval?

I'm asking because I've had this permanent pensionable job for 5 years but I see a lot of 12 month contracts out there for the same job but 25% higher salary. I'd like to go for them but if it costs me a chance at a house then I'm not interested...

2 years permanency is the standard. You can use consecutive contracts as part of the permanency but banks will not allow you draw down unless you are permanent afair

givyjoe · 09-04-2019 01:46PM

el Fenomeno wrote: »

If you're buying a new build and Help-to-Buy is still available next year, the breakdown would be:

5% of 325k = €16,250 from you
5% of 325k = €16,250 from Help-To-Buy
1% Stamp Duty - 325k minus VAT = €286,343.6 * 1% = €2,863.43
Solicitors Prof Fees = Estimate €1500 - €2000 (best to estimate high)
Other Fees = approx. €1,500

So that'd be approx. €23,000 you'd need.

If Help to Buy is gone, or you're not buying a new build, then it would be:

10% of 325k = €32,500
1% Stamp Duty = €3,250
Solicitors Prof Fees = Estimate €1500 - €2000
Other Fees = Approx. €1,500

So that'd be close to €40k. I'm only familiar with the purchase process for new builds, so apologies if my estimates re: other fees is incorrect.

They'd only need a mortgage on 90% of the 325k, which means they would need a combined salary of ~ €83.5k.

Exemptions can be given up to 4.5 times salary, so if you got the full exemption of 4.5, then a combined salary of €65k would do.

No idea what your repayment capacity is like - €1700 savings + €1200 rent would indicate a pretty good capacity, but no idea what other outgoings you have.

On the subject of help to build, does anyone have any tips for easily finding them? I may be blind, but on daft (app) i cannot see any option to filter for new builds only, i.e. eligible for the help to buy scheme.

GingerLily · 09-04-2019 01:49PM

givyjoe wrote: »

On the subject of help to build, does anyone have any tips for easily finding them? I may be blind, but on daft (app) i cannot see any option to filter for new builds only, i.e. eligible for the help to buy scheme.

WWW.DAFT.IE/NEW-HOMES

Phileas Frog · 09-04-2019 02:17PM

ELM327 wrote: »

2 years permanency is the standard. You can use consecutive contracts as part of the permanency but banks will not allow you draw down unless you are permanent afair

2 years permanency is not the standard. Yes they will.

scarepanda · 09-04-2019 02:17PM

We've just been approved as FTB for 3.5x (salary+average regular bonuses) + deposit = purchase price.

We are looking for a 90% LTV mortgage. We didn't think we'd get the full amount based on salary as we are a single income family with one dependent, but neither seemed to make any difference in our case.

el Fenomeno · 09-04-2019 02:33PM

ELM327 wrote: »

2 years permanency is the standard.

I haven't seen this anywhere. Most banks will just go by whatever the Salary Cert says. I'm still on my probation, but my Salary Cert from my employer said I was full time. Had no issue getting approval, and that was with the banks being aware that I was only with the company only 5 months.

I'm sure if my Cert said that I was still on probation, I still would have gotten an offer but would have to prove permanency before drawing down.

CaptivePortal · 09-04-2019 03:43PM

hi all,

long time lurker finally in position to buy. just wondering about peoples experiences placing offers.

We placed on offer on a property yesterday to estate agent via email. We have not received any acknowledgement and when i rang their office today i was told the es was on another call and would call me back. this was 4 hours ago.

My question is: should we have received acknowledgment of the offer?

ELM327 · 09-04-2019 04:03PM

Phileas Frog wrote: »

2 years permanency is not the standard. Yes they will.

Banks will allow you draw down if you are not permanent? Really?
Show me that and I'll show you a bank that needs a new credit risk team.

Saving/Applying for a mortgage 2015/16/17/18/19

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