Looking for a mortgage

Afehogan · 19-11-2011 9:05am #1

My partner and I are going to be looking for a mortgage in the next few months. Savings of about 16000 between us and 10000 from his parents. We have seen a house around the 300000 Mark that we are interested in. Both in permanent jobs. I have a loan of 12000 for a car. Neither of us have ever missed a loan payment. What are the chances of the mortgage?

NIMAN · 19-11-2011 9:10am

You don't mention your salaries, so hard to tell.

You will need at least a 10% deposit, maybe more.

Zadkiel · 19-11-2011 9:14am

Hi

Officially banks say 10% deposit is what they're looking for unofficially most aren't sanctioning anything below 20% deposit level.
Just a few questions that should help with an answer.
How long have you gotten the savings over? Are your bills by direct debit or paid with cash debited from your account? What term is left on your loan? Are you currently paying rent?

Bare in mind that houseprices are still on the way down so I'd suggest making an offer on the house well below asking.
Feel free to PM Me if you have any questions.

Z

beertons · 19-11-2011 9:24am

Get rid of the car loan asap. We just got approved for a mortgage of 220k with a deposit of 60k. Have no loans, she has a credit card, with a small excess. What salaries are you and himself on? Ulster bank have a huge kitty at the moment for mortgages, try there first.

Afehogan · 19-11-2011 9:27am

Car loan will be gone in 2 and a half years. Both on salaries of 34000ish both in jobs for past 5 years. If I clear the car loan te savings will be depleted!

westies4ever · 19-11-2011 9:39am

not a chance you'll get a mortgage for more than four times the combined salary - thats 272k - and that would be without any other debts. why would you want to buy at the top end of your repayment capacity? will leave you very stretched if your income is reduced in anyway? please do your research - sounds like madness to me.

Afehogan · 19-11-2011 9:43am

320000 is asking price. Would be hoping to get it for a lot lower than that obviously. Just checking to see what people would think really. House has been reduced from 400000 already. But on the Market for 2/3 years.

NIMAN · 19-11-2011 2:06pm

Do you need such an expensive house?

Have you kids? Could you buy something cheaper or is that the going rate in the area you want to live in?

The banks have very strict stress testing of applicants too (I got a mortgage approx 1yr ago). Doubt they will give you a mortgage thats right at the top of the scale of what you qualify for. They build in an interest rate thats a fair few % higher than it is now as well as some other variables, so you may find that the amount they will give you will work out at 3 or less x your combined salaries.

I was just reading that KBC Bank, one of those which is supposedly actually lending to 1st time buyers at present, has upp'd its deposit requirement from 10% to 20%. Thats a big chunk people have to have saved before they start looking at property.

beertons · 19-11-2011 4:18pm

We started bidding 260 on a house that was 325@ got it for 277. Go way under. Car loan will go against you. Even if it takes from the savings, you don't owe anything else. Clean slate and all that.

saa · 19-11-2011 4:31pm

I agree you would be in a better position if you bought a cheaper car without the need for a loan, but its done now so apply anyway if the car loan goes against you can sort that out then.

Right so you have 26 k (assuming you have to pay his parents back)
so you have 16 k realistically from savings what if you went for something around the 200-250 marks just in case one of you lost your job in the future.
just another option which might make it easier when going for a mortgage.

Gareth2011 · 19-11-2011 4:41pm

If I was you id stay renting. Whats the point in taking out a mortgage that in 3 or 4 years time the house wont be worth what you paid for it and your in negetive equity like the rest of us. Also if your renting anything goes wrong your landlord is rsponsible for it, owning the peoperty means you will constantly be paying for stuff. I got my "tracker mortgage"

in 2006. House was way overpriced looking at it now and now worth bout 70 or 80 k than what we paid for it. but still im glad we got tracker couldnt handle 4-6% variable.

Afehogan · 19-11-2011 5:50pm

Were fortunate that we won't have to pay back his parents. I suppose we just really fell for this house and the location is ideal. Silly really when we should have gone to te bank first to look for mortgage on principle! The car won't be sold as I commute to dublin each day and changed it last year for this reason because petrol was shocking! I suppose it's good that the banks are being stricter instead of giving huge mortgages to people who can't afford them! How times have changed! The very first week I started in my teaching post I had a phone call from te bank looking to offer me 100% mortgage! Thank god I said no!!!

username123 · 19-11-2011 6:03pm

My advice would be to keep saving, clear the car loan and go looking to buy a house when you have a much bigger pot of savings. By that time the prices will have dropped again saving you both more money. Dont forget that on top of mortgage repayments you'll want to be furnishing the place, you'll be insuring it, general maintenance and upkeep, plus you will have solicitors fees and stamp duty.

Sorry, but on savings of only 16k between you (forgetting about the 10k gift for a minute), and a 12k car loan - it would be totally silly for you to overextend yourselves for a mortgage as well - even if a bank would give it to you (unlikely given the car loan).

Also bear in mind that no ones job is safe, and even if the jobs are ok, the salaries will likely be hit with taxes and levies in the next budget etc... So you would want to be thinking about having as much money up front as possible, with repayments as low as you can get them so that if life takes a bad turn you can manage.

Afehogan · 19-11-2011 9:44pm

Thanks everyone, disappointed though! Really did find the dream house and was hoping for the best! May just keep saving the pennies!!

killers1 · 21-11-2011 4:08pm

You wouldn't be far off qualifying for circa €300k if the car loan was repaid and you're both aged 35 or younger...That's not to say you'd need that much if the property was on the market that length of time the vendor may be open to offers well below the marketed price...

stepbar · 23-11-2011 12:29am

Just out of interest - what area is the house in? Outside of Dublin, the LTV can be less, certainly for apartments which is no suprise!

Mind you, I would debate if there is ANY house worth €325k outside of Dublin (Am making the assumption that it's a standard build, 3/4 bed, in / close to a large town).

Dr. Dodger · 23-11-2011 1:55pm

I think a general rule of thumb for the banks used to be for every thousand owed, that was €10k less of a mortgage they'd offer. I think now it's pretty much, we won't take you on if you have a load of personal debt. It's not easy out there but you're still in a great position in that you've got the market open to you! Rent a bit longer if needs be, it'll be well worth it in the long run. You wouldn't have been looking at a house at all a few years ago.

dudara · 23-11-2011 5:11pm

The way I see it (which is very old-fashioned) is that you should look to borrow 2-2.5 times your combined salaries. In your case, assuming €34k each, that puts you at €136k - €170k.

This obviously would need to be adjusted depending on current outstanding borrowings etc.

Or alternatively, you borrow based on one salary only, with a minor dependance on the other. You could become a housewife, or one of you could lose a job. These have to be factored in when stress testing. Borrowing 5 times combined salary really strikes me as a bit daft (sorry).

Looking for a mortgage

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