Does a guarantor help to secure mortgage approval these days

CJ1

Hubbie and I looking to borrow €150,000 to buy family home, we have €200,000 deposit. We owe €233,000 on a two bed apt which wont be fully paid up til 2035. We hope to rent this out and live in house. I have secure permanent employment about €55,000 p.a. Hubbie recently set up as self-employed so not much use for mortgage application purposes. Anyway the journey so far is proving difficult to say the least. I'm trying not to get down about it but when the bank say sell up the first property and then no problem getting mortgage, they may as well say Fe*k off!!

Anyway my parents (both mid 60s) own their own house and separately a small sheep farm and have a good amount of savings etc. They just said maybe they could go as guarantors or joint applicants for the mortgage. They both get department pensions (not sure if this is relevant).

I know we will have no problems with repayments so if i thought this would help our application id say go for it but perhaps it will not make any difference either way.
Any help appreciated greatly.

foxy06

Are your figures correct? 200k for deposit???

CJ1

Ya we have €200,000 available towards the house purchase. It is partly from selling a property in the good times and from saving like hell etc but what good is it when it is still so hard to get a top up mortgage to buy somewhere we want to live in

foxy06

Sorry I actually misread your op. I thought the property you were looking at was 150K not that you wanted to borrow 150k.

LightningBolt

You're pretty much looking to service a €383k mortgage (150 house + 233 apt) on €55k (is this net or gross?).

To be honest I would think it's unlikely that a bank will lend any additional money to you at this point in time though I'm not too sure if they'd accept a guarantor.

Have you factored in higher interest rates in the coming years should you be accepted for a mortgage? If you don't have children how will having them impact on your ability to pay? Can you cover a shortfall in the rent received versus the mortgage payments on the apartment? Quantify these and see what you can do.

It might benefit you to attempt to sell the apartment and make up the shortfall from your savings. It may or may not be a viable option for you depending on the likely sale price.

myflipflops

What is the realisitc value of the 2 bedroom apartment?

CJ1

Who knows how much it is worth, id hate to know, maybe €160,000. We paid €280,000. It is a nice small development and the apt is 900 square foot big, its really nice and we live in it and love it and have done for the last five and a half years and can do happily for another few but id still like to keep an eye out and hoped we would get a small mortgage but not so sure now.

I know the repayments would be hard if the apt did not rent and based on my earnings alone but in reality my hubbie earns every week and although we cant bank on exactly how much there has never been a week when he didnt and even if we had to cut the rent down surely we would still get some amount per month. But still Lightning Bolt I appreciate your input and maybe i do need a blt of reality before i bite into something that we might regret.

Maybe im clutching at straws. The bank are going to consider the guarantor factor now so fingers crossed.

daveyboy_1ie

Therin lies the problem with the state of our banks. No credit being given.

However the point made earlier is correct, you are essentially looking for €383K which is a large enough mortgage approval in this climate, and the fact that your husband is self emplyed means the 'what if' scenario still exists. If your circumstances change suddenly you as a family are in a very unstable financial situation relying on one income which is not gauranteed and still have a huge mortgage (relatively speaking on one income).

The only thing I can suggest is continue living in your apartment whilst increasing payments to try to decrease the negative equity levels (for a year or two) or sell the apartment and together with your €200K deposit take the hit and hopefully you come up with a healthy enough deposit left (anything over €130K is a bonus in terms of your apartment value). The problem with that is you will have nowhere to live in the meantime, thus more expenses and costs.

Its a tricky situation, although plenty are in a lot worse situation. You at least have the choices.

Think long and hard about bringing your parents into the fold, there are plenty of examples of people doing this and messing family finances up for years to come.

JoeyJJ

Good luck with it, one thing to note.

If you keep the apartment the bank will probably want to move the mortgage on it to an investment rate which will be higher than standard rates ifaik, you may be better off using your 200k to reduce the balance on that and maybe leave 50-60K for your new house, however if you have more equity in the house maybe they will offer slightly better rate. You'll need to balance this to make it work for you. Also if the Mortgage is small on the apartment you will be able to service it easier from rent however this will mean repayments on your own mortgage will be higher.

D3PO

some good inight in this thread provided to the OP.

Realistically OP I dont think the banks will look at this as a viable proposition.

Not sure if you have the possibility to sit on your hands OP, but if you were able to hold off for another year and keep saving the likelyhood of what your trying to achieve is much greater.

thats assuming we see the trend of house price drops continuing plus you contining to save. Assumng a fall of 10% in house prices combined with interest on your 200k plus savings you could realisticaly look at reducing the amount you want to borrow by 50 grand plus the capital repayments on your two bed will also reduce your total level of indebtedness.

Needless to say another year of accounts from your husbads business will help aswell.

I think your should hold off for 12 months and reassess. I think you would be a much more attractive proposition to banks then and realistically from your own perspectice it would be a much more prudent thing for you to do from your own financial perspective.

Treehouse72

Pensioner forced to leave home of 37 years

A PENSIONER is facing eviction from her home of 37 years following a High Court decision she has no arguable case to prevent repossession of the property due to mortgage arrears incurred by her daughter.

Ms Justice Mary Laffoy said it was "tragic" that irrespective of the outcome of the full legal proceedings brought by Eileen Tynan (74), she "will have to leave the home and neighbourhood in which she has lived for almost 40 years".

Even if Mrs Tynan established a right of residence in the property in full legal proceedings, all she would be entitled to was a sum of money representing the value of that right, the judge found. She would not be entitled to any order protecting her continued residence there.

...ctd...

http://www.independent.ie/national-news/courts/pensioner-forced-to-leave-home-of-37-years-2803414.html

kennyb3

The thing that strikes me here is that you have €200k partly from selling a house in the good times. This suggests you were one of the clever ones.

You then bought a 2 bed apt that you owe 233k on but is worth maybe 160k. This suggests something totally different.

Bit confused.

hmmm

Checks to make sure the date isn't 2006.

What's tricky about this situation? The OP wants to take on an unsustainable loan on a single salary and put their parent's house at risk. This is a no brainer - sell the apartment, clear the negative equity, take a mortgage for a sustainable amount and let your parents enjoy their retirement in peace.

the groutch

sounds like you'll have to bit the bullet and offset losses from this 2 bed apt against the profits from previous investments.
you'll still have a very big deposit, and be able to get a mortgage for the new amount required (230-240?) on the basis of your 55k salary