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02-12-2019, 20:41   #1
KateB1996
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Buying a second property but first time bank mortgage

Hi,
I purchased a home 3 years ago through a bank auction for 50k and got a loan of money from parents and in laws. We are paying them back €500pm, the deads of the house are in our name. We have around 30k left to pay and want to rent out this property now. How would we go about buying a second home ? Could the first property be used as collateral against the 2nd ?

Last edited by KateB1996; 02-12-2019 at 20:47.
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02-12-2019, 20:51   #2
Dolbhad
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Originally Posted by KateB1996 View Post
Hi,
I purchased a home 3 years ago through a bank auction for 50k and got a loan of money from parents and in laws. We are paying them back €500pm, the deads of the house are in our name. How would we go about buying a second home ? Could the first property be used as collateral against the 2nd ?
Generally not unless your selling that house and uses the equity for the deposit of the new house. Also maybe take proper legal and financial advice on this but I would think it’s best not to tie the two houses together. Say you buy a house now and market crashes and your in negative equity on second house but first house isn’t because of when you bought it - you don’t want them both tied in with bank.

I’d say start chatting with a bank/broker first to see the criteria. You may still be seen as FTB for the second house as you haven’t take out a mortgage before.
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02-12-2019, 20:52   #3
Salary Negotiator
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Will you be living in the second home?

How much is the first house worth? And what’s your combined annual income and debt?
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02-12-2019, 21:04   #4
KateB1996
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Will you be living in the second home?

How much is the first house worth? And what’s your combined annual income and debt?
Yes we would be living in the 2nd home, first home is worth 130k minimum. Annual income over 75k and I have a loan of 20k for a car/home improvement
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02-12-2019, 21:10   #5
DubCount
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Could the first property be used as collateral against the 2nd ?
I'm not sure this will work in that way.

It should be possible to get a mortgage on the first property, and use the proceeds to repay the family debt and act as a deposit on the second home. You can then get a mortgage on the second mortgage on the second house. Each mortgage is secured against a single property. In fact, the 2 mortgages don't even need to be with the same bank.

One issue is that whichever house you are renting out is going to be the subject of a Buy2Let mortgage. That means a higher interest rate and lower LTV, but you may also be able to get an interest-only period.

Another issue is the buy2let mortgage may impact on a banks perception of you as a risk, and that may impact on their willingness to extend a buy2own mortgage.

There is enough complexity here to suggest that a trip to a mortgage broker might be worth while.
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02-12-2019, 21:31   #6
Dolbhad
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And beware of possible GCT in the future when selling first home.
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Yesterday, 18:11   #7
Stopitwillya
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Investment wise probably better to rent out the new home as the interest repayments can be used to reduce your new landlord tax bill whereas you won't have this option if you rent out your present home.
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Today, 07:21   #8
April 73
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Why do you want to become a landlord? Have you done the sums & worked up a budget looking at total income & expenditure & included upkeep costs on both properties & new mortgage payments & tax bill? Have you considered selling, using the profit to buy a new house with a lower mortgage?
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