Planning to buy within next 12 months

ADO · 14-10-2019 9:45am #1

Hey folks,

Hopefully someone can help shed some light on our situation, in a nutshell myself and my other half are saving 1k between us into a joint account, we have approx 10k saved already, now I'm working full time the last 2 years, and my other half has only started a new job and will be finished her probation period in January 2020 where she will be made permanent. I'm earning approx 38k (pay rise in March 2020 so could be 40k) and she is earning 38k basic with 4k bonus. Obviously we would need to get more then 3.5 times our combined salary, my question is how would we go about doing this? And how likely are we to get an exemption?

We have no out going really as we both live at home, I have 1 year left on car finance which I can pay off within the next 3 months also. We are looking for a new build preferably as we would like to live in Dublin 24 / newcastle area. But if we can't find a new build we will have to save longer and increase our deposit to buy a second hand.

Any advice at all would be great.

cruizer101 · 14-10-2019 9:51am

I don't want to come across as too harsh but saving 1k between you sounds very low.
On 38k you are taking home about 2500 a month each. You say you are both living at home so not outgoings. Where is the other 4k going? (not actually looking for answer but you need to answer this for yourselves).
Unless you are paying rent that you havn't mentioned you savings amount is quite low and I can't see a bank looking on you too favorably for an exemption.

ADO · 14-10-2019 10:04am

Not harsh at all and thank you for quick response, I have a certain percentage of my wages going into pension, AVC, €400 a month goes into credit union as savings and then I put approx another 200 into a savings account for a rainy day, this doesn't include the 300 per month I pay for car finance, which I could clear in 3 months with my savings so as that when I go for mortgage I will have that cleared

ldy4mxonucwsq6 · 14-10-2019 10:19am

ADO wrote: »

Hey folks,

Hopefully someone can help shed some light on our situation, in a nutshell myself and my other half are saving 1k between us into a joint account, we have approx 10k saved already, now I'm working full time the last 2 years, and my other half has only started a new job and will be finished her probation period in January 2020 where she will be made permanent. I'm earning approx 38k (pay rise in March 2020 so could be 40k) and she is earning 38k basic with 4k bonus. Obviously we would need to get more then 3.5 times our combined salary, my question is how would we go about doing this? And how likely are we to get an exemption?

We have no out going really as we both live at home, I have 1 year left on car finance which I can pay off within the next 3 months also. We are looking for a new build preferably as we would like to live in Dublin 24 / newcastle area. But if we can't find a new build we will have to save longer and increase our deposit to buy a second hand.

Any advice at all would be great.

You might need at least 30k deposit if looking in those areas. If you are both first time buyers and are buying a new build then you might be eligible for the help to buy scheme.

https://www.housing.gov.ie/housing/grantsfinancial-assistance/first-time-buyers-grant/first-time-buyers

Banks will have a limited amount of exemptions that they can offer for the year and its at their discretion.

The exemptions cover Loan to Value (LTV) limits
and Loan to Income (LTI) limits.

You probably need to look at your joint savings and realistically try to at least double that figure monthly, if you have no other outgoings then it shouldn't be difficult. Get the finance cleared as a priority.

If I were you I'd make an appointment to speak with a mortgage adviser with an aim of applying early next year once your other half is made permanent.

Creamy Goodness · 14-10-2019 10:23am

Just had a quick look on daft and looked at new builds in Newcastle/D24, 315k for a 3bed terrace (was the cheapest I found), looks like a nice house.

quick back of the envelope math:

315000 purchase price

31,500 deposit, 15750 if you're eligible for Help To Buy.
stamp duty 2700 (1% (house price - 13.5%VAT)).
Solicitor fees 1600 (roughly).
Land registry fees 700 (roughly)
search fees 150 (roughly)
bank valuation 150 (roughly)

So you're looking at roughly 36000 and that's before you will have to pay for white goods, floors, beds, etc. so add another 10k to that.

On the mortgage side you're looking at 266k so a purchase of 315k - 266k leaves you with 49k to make up, so you'll have to up your deposit to meet this shortfall or ask the banks for an exemption (you'll need to talk to them and go through the figures with them).

tomister · 14-10-2019 6:54pm

If you're paying rent this will be taken into account when the bank assesses your ability to repay along with your current savings. For an exemption the bank usually likes to see that you've been paying/saving the mortgage amount in order to qualify for an exemption along with a spotless savings history. Your finance on the car will impact this as that will come out of your ability to repay.
Since you're planning to buy in the next 12 months I'd suggest you meet with the bank for an initial conversation in order to ensure you're doing everything right between now and application to make everything plain sailing. They can advise on what you'll need to do in order to prove you can afford the exemption

Corruptedmorals · 14-10-2019 7:22pm

I recommend funneling your credit union savings into the deposit and reconsider suspending or halving the rainy day savings until you are in the house and settled with initial expenses etc. It will add up quickly. I live at home awaiting our house sale to complete and for my part I am saving the exact same as your combined savings and my income is lower.

Maybe consider a spreadsheet as well? You don't need to cut out all discretionary spending/fun but it may help you to identify areas where you can make substantial savings without making yourselves miserable.

Dolbhad · 14-10-2019 7:27pm

Meet with the bank first and have a chat. I did that about 12 months before we started looking for a house as I was due to qualify in my job in those 12 months and knew I would on a better income to get a mortgage then. It was handy to know the best way to save for the bank and what to avoid in my spending.

You will need to save a lot more. Your stressed tested on your mortgage payment to about 5% so you need to show can pay the mortgage, living expenses and also in worse case in increase of 2% interest. To get an exemption you need to show a capacity to save beyond that. Bank told us a min what we had to save and we saved above that for the year and got exemptions. Also we were on a lessor income then you are both currently on and had to save more than double what you currently are saving for an exemption so be aware of that. We also had a car loan and lived at home. Your current deposit needs to increased a lot more but you can save that in the 12 months. You also need to have the deposit, stamp duty and legal fees on top of the deposit.

SozBbz · 15-10-2019 9:58am

Yeah I can only echo what others have said - for two people living at home with that income, your savings are very low.

With no real outgoings other than your car (which yes, you should probably pay off) I don't see why you can't save €1k each per month.

Granted, this might mean no holiday this year, or cutting back on boozing, or whatever your vices are but its short term to achieve a very significant goal. Also, you need to ensure your accounts look clean, so if you like online gambling etc, time to knock that on the head.

Meeting with either a broker or just the banks themselves is a good idea. They'll be able to tell you exactly what you need to achieve, but IMO you're not currently behaving like serious buyers. Where is the rest of your money going?

Creamy Goodness · 15-10-2019 10:20am

Another thing to note, is to use one of the mortgage calculators online, to find out the rough repayments. You need to show to the bank that you can save this amount + 2% interest hike. Your regular savings need to be above this amount for at least 6 months without any dipping into it. Sometimes they take rent into the equation but since you're both living at home they can't.

elizunia87 · 15-10-2019 10:48am

Not sure if this will be helpful but I would definitely focus on increasing your savings.
My husband and I earn much less than both of you and we saved up 45 k in 2.5 years, put 20% for the House deposit ( it is a second hand house). But we are on low income salary compare to yours

Best of luck!

sheriff2 · 15-10-2019 10:51am

As mentioned you need to save more than 1k a month. Like Elizunia87, myself and wife earned less plus paid rent and we still managed to save twice your amount.

Idbatterim · 15-10-2019 10:51am

E300 a month on the car. Serious waste of money ! If you are trying to save , on lowish incomes, the money went up in smoke needs to be addressed!

There is a colossal amount of housing planned for city west. You won’t have problems finding new builds in the areas you are mentioning

ADO · 15-10-2019 3:18pm

Thank you to everyone for the replies! General feedback I'm getting is that we need to increase our savings amount, just a few points to address...

I finish my car finance on my car in July next year and then I own the car, I have the money there to pay off the car prior to applying for a mortgage so that's the first thing I'm gonna do.

Also forgot to mention we are expecting our first child in Feb 2020 so when I said "ah rainy day" it's more so a lump sum there for baby for the first year.

As regards outgoings, I don't do any gambling, I suppose my outgoing mostly consist of, car insurance, car tax, phone bill, diesel, dog food, dog insurance, gym membership, and to be honest we don't socialize that much, instead of a night out we are quite happy getting a tasty Chinese, lol

I will organize a meeting with bank in the coming weeks and see exactly where I am going wrong and where I need to improve. In the meantime we will increase our monthly savings. Thank you again to everyone who took the time out of there day to reply to me.

Creamy Goodness · 15-10-2019 3:23pm

The baby will complicate the maths, banks will subtract €250 per child per month from your discretionary income. It will potentially affect your affordability. It's a cold way of putting it but that's banks for you.

Nika Bolokov · 15-10-2019 10:22pm

Look at D22 too. You can buy near the red cow Luas stop for 260k , Newcastle has little to no transport.

Dolbhad · 17-10-2019 4:04am

Creamy Goodness wrote: »

The baby will complicate the maths, banks will subtract €250 per child per month from your discretionary income. It will potentially affect your affordability. It's a cold way of putting it but that's banks for you.

I was not sure how much they deduct but it is true. The bank will take a kid into account and affect your discretionary income which is what the mortgage and stress test is based on.

Re car loan, this depends on bank. We applied to most of main banks. For the exemption, some banks like AIB didn’t require car loan to be paid off and preferred the money to be in with deposit for exemption and some like Ulster Bank did give us more money if it’s paid off. See what banks say first.

Fia11 · 17-10-2019 11:10am

The broker we spoke with said the banks add on 250 euro a month per child. If your mortgage repayments would be €1250 and you have one child, they will calculate your affordability based on a repayment of €1500 per month.

Planning to buy within next 12 months

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