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Joint Application on Single Income

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  • 25-08-2020 6:37pm
    #1
    Tabby1234
    Registered Users Posts: 4 ✭


    Hi there,

    I'm looking for a bit of advice. Myself and my partner are looking at buying a house from her family. The family need to sell the house within the next six months for financial reasons. We have agreed on a price and it's a chance to get on the ladder in Dublin, have our own place and pay half the going rent.

    The only problem is that I have just started a new role which is only contracted for 6 months. Luckily, we can afford the house using only my partner's income (eg. 55k x 3.5) and a deposit.

    Talking to a mortgage broker, they said that I wouldn't be considered for a mortgage. It would, apparently, be easiest to do it completely through my partner's name as a single application rather than joint as they wouldn't consider me and they can't just take into account my partner's income and still have my name on the mortgage as this would reduce the amount we (she) could borrow.

    The broker suggested that we just draw up a legal agreement between ourselves and have the house fully in my partner's name. This is not ideal for us as we would obviously prefer to have both of our names on the house so that if one of us fecks off, the other isn't left high and dry!

    If anyone has any experience in a situation like this, I would appreciate any advice.

    Thanks!


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    #2
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    Yep, I can see the point.

    I'm guessing that you are not married, so a joint mortgage is little more difficult.

    As a couple, the bank may see you as a possibility of getting married, kids, and extra expense.

    Single person and single name on the mortgage is far more attractive.

    So, yes, separate legal agreement and then maybe in the future you can get added if you wish.


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    #3
    recyclebin
    Registered Users Posts: 3,502 ✭✭✭recyclebin


    We are in a similar position but were advised differently by our AIB mortgage adviser. We are looking to buy and my partner is on the wage subsidy scheme so they said they wouldn't take into account any of her income. I asked would it be better if I just applied in my own name and they said it would be better to do a joint application now as if we wanted to add my partner to mortgage and deeds at a later date it would be way more complicated.

    We are currently not married but engaged.


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    #4
    Tabby1234
    Registered Users Posts: 4 ✭Tabby1234


    Recyclebin,

    Yes we were told that to get my name on the mortgage in the future, we would have to reapply for a whole new mortgage.

    As you're applying for a joint application, did this reduce the amount you could borrow? I.e. less than 3.5x your income?

    Thanks again!


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    #5
    GalwayyGirl
    Registered Users Posts: 12 ✭GalwayyGirl


    recyclebin wrote: »
    We are in a similar position but were advised differently by our AIB mortgage adviser. We are looking to buy and my partner is on the wage subsidy scheme so they said they wouldn't take into account any of her income. I asked would it be better if I just applied in my own name and they said it would be better to do a joint application now as if we wanted to add my partner to mortgage and deeds at a later date it would be way more complicated.

    We are currently not married but engaged.

    This is happening to us at the moment. We were advised to do a joint application as although they cant take my income into account due to the subsidy for borrowing purposes, it can help to have both incomes on the application for proving repayment capacity.


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    #6
    8-10
    Registered Users Posts: 13,329 ✭✭✭✭8-10


    We were advised to do a joint application despite only one income. No issues at all and amount to borrow wouldn't have changed either way


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    #7
    wench
    Registered Users Posts: 1,630 ✭✭✭wench


    Getting a new mortgage in both names would be reasonably straightforward.
    However getting on to the deeds would not be.

    Revenue would see it as either you're being gifted half the value of the house and want CAT to be paid,
    or you are buying half the house, and that would trigger CGT for your partner, stamp duty for you, etc.

    There is also the problem of inheritance if your partner were to die before this was changed.

    Also, who is putting up the deposit?
    If you contributed to it, you would have to sign off on it being a gift with no expectation of repayment.
    And again, depending on the amount (over 3K) there would be gift tax owing again.

    So in short, don't take advice on this topic from a mortgage broker whose only interest is in getting this transaction done!


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    #8
    Tabby1234
    Registered Users Posts: 4 ✭Tabby1234


    8-10 wrote: »
    We were advised to do a joint application despite only one income. No issues at all and amount to borrow wouldn't have changed either way

    This is exactly what I would have expected. Why wouldn't we be able to borrow based just on my partner's income and still have both our names on the mortgage without the amount we can borrow decreasing?

    Surely if we're just borrowing the max based on my partner's income, which they could pay back alone, but have both our names and actually have two incomes coming into the household, why this would mean that banks would decrease the amount we could borrow?

    Mad.


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    #9
    wench
    Registered Users Posts: 1,630 ✭✭✭wench


    It decreases because the bank look at how many people a wage is supporting.
    So a single individual would need about €1500 left after the mortgage payment.
    A couple would be about €2000, leaving less for mortgage payments


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    #10
    Atlantic Dawn
    Registered Users Posts: 81,385 ✭✭✭✭Atlantic Dawn
    M


    One other thing to consider is if you are getting the house below market rate there's a tax liability so if you agreed a low price just make sure this is taken in to account.

    https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx


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    #11
    Tabby1234
    Registered Users Posts: 4 ✭Tabby1234


    wench wrote: »
    Getting a new mortgage in both names would be reasonably straightforward.
    ...

    So in short, don't take advice on this topic from a mortgage broker whose only interest is in getting this transaction done!

    If not a mortgage broker, who would you suggest to get advice from. I feel like we're stranded without any solid advice!

    wench wrote: »
    It decreases because the bank look at how many people a wage is supporting.
    So a single individual would need about €1500 left after the mortgage payment.
    A couple would be about €2000, leaving less for mortgage payments

    Is there actually any guidance for this kind of thing? I think we would still be in the clear for the case that my partner's income alone could support both of us and repay the mortgage.

    Thanks :)


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    #12
    wench
    Registered Users Posts: 1,630 ✭✭✭wench


    A tax consultant, normally a specialist Accountant.
    And then your solicitor.

    I think the amounts may vary a little from bank to bank, but those would be common enough.
    They usually reduce it further for each child too, so it only gets worse the more of you there are...


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    #13
    cannotlogin
    Closed Accounts Posts: 1,172 ✭✭✭cannotlogin


    It's legal advice you need not a broker who appears to be giving incorrect information.

    You can borrower in joint names, even if your income cannot be taken in to account.

    Any changes afterwards involves a new application, new legal fees.


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