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21-01-2020, 09:52   #16
Glenbhoy
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Originally Posted by positivenote View Post
Moving the mortgage to a new property will mean pushing the interest up an extra 1% to 2.5 whilst still being a tracker...

My salary is benchmarked and I am 5 years off the top of my scale which is approx 85k ... this added to the 25k my partner is on will bring the total earned to 110k per annum in 5 years time.

Does any of this count for anything?
It will help your chances of getting an exemption, which I think you should qualify for.
How realistic is your 310k valuation?
How old are ye, boi give mortgages up to 70, some others 68, it's likely longer helps your chances. To maximise exception potential it helps to take as long a fixed rate as possible, but rates are more like 3.3 for 10 Yr fixed. That said, it's unlikely they'll offer you what's needed to fund the 490k purchase, they'll offer 4 times possibly, but anything above that may need higher salary levels etc.
As others have alluded to, you should look at the affordability of a prospective mortgage of 400k, it woukd be a pretty large step up on current savings levels and current mortgage repayments by the looks of it.
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21-01-2020, 09:52   #17
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They still need a ball of money though. The equity in the house can't or wont be factored in unless they liquidate the asset of the current property, get that money in the bank and then purchase the new home.
That's how it was for my purchase. We had equity in the house but still had to have the cash on hand
The equity will of course be factored in, if it wasn't then very few people would be in a position to trade up.
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21-01-2020, 09:57   #18
Woshy
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True. I moved recently. Sale and purchase solicitor fees, Stamp duty, land registry fees etc and other sundries were about €7500. €4600 on the EA. ~€500 to the management company for statement of accounts....
it all adds up.
Yep, it adds up fast. we just sold and the EA was around 4000 plus 2000 for the solicitor. We had to pay the LPT and claim it back and other assorted costs. Plus then if you're buying another property you need to do it again with solicitors and stamp duty.
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21-01-2020, 11:55   #19
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The equity will of course be factored in, if it wasn't then very few people would be in a position to trade up.
You still need cash on hand to write the cheques for any deposits. If you're trading up on the strength of the equity in your home you effectively need a bridging-loan from somewhere to do it. Thats how it was for us and we moved in November 2019.
The only exception I can think there would be if you were selling and then buying at some undefined point down the line.
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21-01-2020, 12:20   #20
 
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How has the savings being accumulated ie is it say €1000 a month for the last 7 months or €300 a month for 3 years?

It will come down to your capacity to make repayments. Things like childcare costs (if you have them) will be a factor.

We have just gotten approved for €550k. We have €55k savings, combined salaries of approx €160k. Approval is with PTSB, current mortgage is on a tracker with them, about €200k remaining and around €35k equity in existing property. Have been saving €2000 a month for last 5 months and existing mortgage is around €900 a month. Childcare we are paying €1600 a month which is the real killer. Its normally 6 months savings that's required but as we are existing customers with a clean repayment they accepted us.
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21-01-2020, 13:41   #21
positivenote
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thanks for all the advice guys.
Our savings are accumulated over the past year or two in the Credit Union. They may be low, but we have always been of the mindset that once we have all our bills covered and a month or two safety net in the joint account the mortgage comes out of then we can afford our holidays and weekends away with the kids etc..
I have an additional account with approx 10k in it. But as i say we never miss a bill or payment, we have no outstanding loans. The value of our home is approx 310 (we owe 220k on it) and the house that has taken our fancy is 490k.
We could start to save for another year - year and a half before making a move, but what would be better: Saving more or chipping away at the mortgage by over paying a few hundred a month?

Thanks again for the advice
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21-01-2020, 15:15   #22
 
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Saving. Your house may be worth 310 now but it could be worth less in 18 months and you will still have everything you saved in hand.
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21-01-2020, 16:26   #23
nox001
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Saving. Your house may be worth 310 now but it could be worth less in 18 months and you will still have everything you saved in hand.
If his house is worth less and the new house is worth less it doesn't really change things. Ok he may have more savings but on the other hand getting a mortgage may be much more difficult if things take a turn for the worst. The op is public sector so doesn't need to worry about job loss etc in the case of the economy taking a dip.

So there are advantages and disadvantages to both ways. Lots of people who were being savvy not buying in the boom are now stuck paying monster rent where as even if they had overpaid at the time they may be in a better position now owning their home. The opposite is true also of course for many.
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21-01-2020, 16:56   #24
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Originally Posted by Jurgen The German View Post
Saving. Your house may be worth 310 now but it could be worth less in 18 months and you will still have everything you saved in hand.
The value of house doesn't make a difference to where to put savings from a total equity point of view.
Currently house is 310k with mortgage of 220k so there is 90k equity.
Lets say in year they will have paid 10k of mortgage, and another 10k either into savings or off mortgage.

1. House same value money into savings
House value 310k, mortgage 210k, 10k savings -> Equity 110k

2. House same value money into mortgage
House value 310k, mortgage 200k -> Equity 110k

3. House lass value money into savings
House value 290k, mortgage 210k, 10k savings -> Equity 90k

4. House lass value money into mortgage
House value 290k, mortgage 200k -> Equity 90k
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21-01-2020, 19:53   #25
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Could I just ask. Seeing as interest rates on savings are so low and leaving money in a savings account long term just reduces the value of your money. Isn't it better to put the vast majority of what you would have put into savings towards clearing mortgage quicker. I'm wondering why everyone is so insistent that the savings are far too low. For example I've been paying off twice my mortgage repayments to clear mortgage much quicker rather than put that money in a savings account. It works out better overall. What's the point in saving these days when you have a debt. Shouldn't the debt be cleared first before leaving money sit in an account losing value? Genuine question.
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21-01-2020, 20:01   #26
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Could I just ask. Seeing as interest rates on savings are so low and leaving money in a savings account long term just reduces the value of your money. Isn't it better to put the vast majority of what you would have put into savings towards clearing mortgage quicker. I'm wondering why everyone is so insistent that the savings are far too low. For example I've been paying off twice my mortgage repayments to clear mortgage much quicker rather than put that money in a savings account. It works out better overall. What's the point in saving these days when you have a debt. Shouldn't the debt be cleared first before leaving money sit in an account losing value? Genuine question.
Technically yes. After establishing a short term emergency fund then people's money should either be invested to grow or else used to clear debt. But that's if all you want is to maximise return on your money, which seems the logical thing to do but in reality people like having the cash on hand. Financially unsound but not everyone behaves rationally with money
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21-01-2020, 21:23   #27
cruizer101
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Overpaying is better than putting into a savings account. Better than investing is more debatable and no right answer, you might get better return might not.

If you have been consistently overpaying the bank should view that as just as good as saving.

I would say people were mentioning saving more from a repayment capacity.
So the bank will look to see can you afford the repayment on bigger mortgage. One way to show that is to consistently pay your existing mortgage plus put extra into savings that you don't touch, that shows repayment ability.
But consistent overpaying shows the same, and I would be of the same opinion that it is better in long run.
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22-01-2020, 12:05   #28
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Originally Posted by positivenote View Post
thanks for all the advice guys.
Our savings are accumulated over the past year or two in the Credit Union. They may be low, but we have always been of the mindset that once we have all our bills covered and a month or two safety net in the joint account the mortgage comes out of then we can afford our holidays and weekends away with the kids etc..
Sure, thats all fine but not in the case where you want to ask a lending institution to give you lots of money.

As things stand, the buying and selling costs alone would easily eat up all of your savings. They probably wouldnt even be enough.

A bank will want to stress test any applicant. You've no further nest egg to act as an emergency fund.

I think you need to save more before buying again.

You could pay down your existing mortgage faster if you wanted but IMO if you're on a tracker and are lacking in the upfront funds area then strategically it might be better to save for now.

Generally, when you're not looking to move (ie not needing to present your finances in a certain way) the advise is to pay down debt ahead of saving at current rates, however for this scenario, I think you need more cash at hand.
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23-01-2020, 22:10   #29
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Originally Posted by deisedevil View Post
Could I just ask. Seeing as interest rates on savings are so low and leaving money in a savings account long term just reduces the value of your money. Isn't it better to put the vast majority of what you would have put into savings towards clearing mortgage quicker. I'm wondering why everyone is so insistent that the savings are far too low. For example I've been paying off twice my mortgage repayments to clear mortgage much quicker rather than put that money in a savings account. It works out better overall. What's the point in saving these days when you have a debt. Shouldn't the debt be cleared first before leaving money sit in an account losing value? Genuine question.
I think overpaying is a great idea if you can afford it, and once you have an emergency fund of 3-6 months expenses saved up.

OP do you know what your repayments would be if you got this mortgage? Some financial advisor advice I read was that your housing costs should be no more than 25% of your household net pay, in order to live a comfortable life. This 25% includes mortgage repayments, insurance, property tax, management company fees etc.
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24-01-2020, 07:22   #30
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Overpaying is better than saving in current climate. Paying down debt as fast as possible when savings and mortgage interest rates are so low is the most financially prudent thing to do. It’s all off the capital.
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