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Mortgage affordability

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  • 18-10-2019 11:01am
    #1
    Danniilong
    Registered Users Posts: 51 ✭✭


    Looking to try work out if we will meet the banks criteria for mortgage affordability. When they talk about nett disposable income, what do they include in the calculation? I'm looking at EBS website and it says that for a couple with 2 children you need to have €2550 in your bank at the end of each month after the stress tested mortgage amount (@6%) is taken away. I know that they also include existing loans and car finance in this but my question is, do they take all household bills out of this amount also? E.g. once you have paid mortgage, loans, car finance, electricity, shopping, internet phones etc do you need €2550 remaining?


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    #2
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    No they don't take out household bills as that is what the €2550 net disposable income is for however they do take out childcare which sometimes can be higher than a mortgage. So you need to put in gross basic incomes into the calculator - they won't take 100% of other payments such as overtime, bonus, commission etc. You then input monthly car loan repayments, childcare, maintenance, personal loans and the calculator should then show you your net disposable income (NDI) The other important criteria is Repayment Capacity which needs to be equal or more than the stressed monthly repayment and can include rent and savings and both must be reflected in your bank statements. It can also include a loan that is due to finish or recently finished.

    Hope this helps and best of luck.


    Danniilong wrote: »
    Looking to try work out if we will meet the banks criteria for mortgage affordability. When they talk about nett disposable income, what do they include in the calculation? I'm looking at EBS website and it says that for a couple with 2 children you need to have €2550 in your bank at the end of each month after the stress tested mortgage amount (@6%) is taken away. I know that they also include existing loans and car finance in this but my question is, do they take all household bills out of this amount also? E.g. once you have paid mortgage, loans, car finance, electricity, shopping, internet phones etc do you need €2550 remaining?


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    #3
    poker--addict
    Registered Users Posts: 1,716 ✭✭✭poker--addict


    Trish56 wrote: »
    No they don't take out household bills as that is what the €2550 net disposable income is for however they do take out childcare which sometimes can be higher than a mortgage. So you need to put in gross basic incomes into the calculator - they won't take 100% of other payments such as overtime, bonus, commission etc. You then input monthly car loan repayments, childcare, maintenance, personal loans and the calculator should then show you your net disposable income (NDI) The other important criteria is Repayment Capacity which needs to be equal or more than the stressed monthly repayment and can include rent and savings and both must be reflected in your bank statements. It can also include a loan that is due to finish or recently finished.

    Hope this helps and best of luck.

    Your reply makes sense, but EBS website does say

    "These examples will show the minimum amount of disposable income EBS require the applicant to have left over after the stress test is conducted.

    We have slightly different rules depending on your situation and lifestyle – however, the same test and rules apply to all mortgage amounts – big, small and in-between!

    1. A couple with kids

    A couple with one child must have €2,300 left in their bank account after all other expenses (like childcare, food, bills, etc.) have been deducted, and after their future mortgage repayments have been factored in.

    Couples with more than one child will need an extra €250 for each thereafter."

    My emphasis. slightly old thread sorry, but relevant today more than ever probably.

    I cant imagine many with 2300 after mortgage and bills, so this must be an error?

    😎



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