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How much can we borrow?

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  • 25-04-2004 12:22pm
    #1
    frantic_mel
    Closed Accounts Posts: 237 ✭✭


    Hey guys,

    I need a little help from you guys in regard to how much of a mortgage we would be allowed to borrow.

    Here is our finance situation

    Person 1 Full Time Employed
    17,500 per annum
    Person 2 Disability Allowance
    9,500 per annum

    Total Income 27,000

    Any help is appreciated.

    I think we also qualify for the Shared Ownership Scheme. If we went with this scheme how much would we be allowed to borrow also.

    Melissa


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    #2
    Civilian_Target
    Registered Users Posts: 5,618 ✭✭✭Civilian_Target


    Rule of thumb, 27,000 * 4 + 5% = €113,000

    Of course, if you've saved some money, you'll be able to borrow more because it shows your able to save.


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    #3
    frantic_mel
    Closed Accounts Posts: 237 ✭✭frantic_mel


    thanks civilian,

    what kind of savings would we need if we wanted a house that costs 200000 thousand, thats why the prices are down here in Limerick and basically anything under 130000 are located in not so nice areas.
    Any info on the shared ownership

    Melissa


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    #4
    Civilian_Target
    Registered Users Posts: 5,618 ✭✭✭Civilian_Target


    No idea about shared ownership, sorry. Basicly, if you provide any of your own savings, you can then borrow 2-5 times that from the bank, depending on your credit rating and your banks policy. But on such a low shared income I'd be surprised if the bank will lend you more than €150,000.

    That said, no harm in asking.

    Remember you have to repay the loan. €200,000 over 25 years (and thats a very long time) is going to work out at almost €11,000 a year by my reckoning, at current interest rates. And thats a lot of money if you only have €27,000 Remember it's in your interests not to borrow too much as well.


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    #5
    nlgbbbblth
    Closed Accounts Posts: 5,668 ✭✭✭nlgbbbblth


    income multiples (i.e. borrowing 2.5/3/4 times your salary) are not as relevant now-a-days because of the high house prices.

    Bank will generally lend if your monthly commitments (i.e. mortgage and other loans - and my advice is to have no other loans) do not exceed 40% of your total monthly net income.

    They will then "stress-test" you i.e. add a couple of % to the interest rate to see if you could hope with an increase in rates - if you're still coming in around 42%-45% you'll probably be ok


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    #6
    nlgbbbblth
    Closed Accounts Posts: 5,668 ✭✭✭nlgbbbblth


    also - Banks will not usually lend more than 92% of the purchase price

    so - you will need to have savings of 8% - or a gift - or from a non-borrowed source.

    However if say, parents gift you they will need to sign a Deed Of Waiver - basically states that they have no (financial) interest in the property.,

    also - a parental guarantee can help sway a borderline case.

    don't forget about stamp duty - if house is 2nd hand - you can blame Bertie Ahern for this heinous charge,

    I'm unsure to whether it was his doing or not but either way he should be blamed.

    Also - mortgage means "dead pledge" in Latin.


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