I want to rent affordable apartment and buy a house

a.man

As the title suggests.. I have a mortgage on an affordable apartment and have just found out that the Council are allowing owners to rent the apartment as things have gotten so bad in the current climate. I have also just found out I'm pregnant so would like to buy a house some time next year. My partner is in a terrible situation with his mortgage/mortages at the moment (Long story!!!!) so it's not an option for us to buy together. I'm only on a salary of 28000 per annum so is there any chance I could get a decent mortgage on my own or is there any point in trying

D3PO

a.man wrote: »

As the title suggests.. I have a mortgage on an affordable apartment and have just found out that the Council are allowing owners to rent the apartment as things have gotten so bad in the current climate. I have also just found out I'm pregnant so would like to buy a house some time next year. My partner is in a terrible situation with his mortgage/mortages at the moment (Long story!!!!) so it's not an option for us to buy together. I'm only on a salary of 28000 per annum so is there any chance I could get a decent mortgage on my own or is there any point in trying

Is this a wind up ?

your earning very little have a significant new expense coming along (a child) already have an apartment thats probably heaviliy in negative equity, your partner is heavily endebted and you want to buy a new house on top of it.

Some people really need protecting from themselves.


Even in the boom times the banks would probably laugh at you and with every reason.

This is the most ludacris thing I have read here in a while.

jjspine

To answer you in a less negative way no the banks simply wont lend you a mortgage right now.

may i ask i didnt think you were allowed to rent out a dublin city council affordable home are you with fingal ?

a.man

jjspine.... Thanks for the reply I haven't a clue about the mortagage market I got this affordable apartment at the age of 20 after being made homeless when my mam died so it's all a bit of a blur tbh...I know someone who split from her ex rented the home they had together and got a mortgage on her own and now has a 3 bedroomed house in Newcastle.. So just wondered would it be possible for me to do the same thing but obviously not... The apartment is with SDCC btw

Ray Palmer

I'd be surprised that any council would relax the clause about rental and not have something in there about buying another property. Essentially I think they won't let you do that.

As for the concept it sounds like a really bad idea given what you said. The banks will probably not give you a mortgage.

sharper

a.man wrote: »

jjspine.... Thanks for the reply I haven't a clue about the mortagage market I got this affordable apartment at the age of 20

Prices from 10 years ago + 10 years of payments on the mortgage should allow you to sell up without taking a financial hit.

You don't need to buy a house, a rented one will do just fine. You can consider buying later when things settle down.

jjspine

Yes its a tough situation god knows i would have done things different had i known what was coming but fingers crossed one day it will come back up to normal levels !!!

theres a lot of ppl in your boat your not alone

a.man

Thanks Ray... the only info I knew was from that girl I used to work with, she done it only last year... Granted the house she had with her ex wasn't affordable though. I guess I'll have to stay put as the situation with partners mortgage won't change and no point in selling affordable apartment... Better get the Idea of having a garden for baby to play in the Summer out of head so...Damn this country!

bobbyg

Ray Palmer wrote: »

I'd be surprised that any council would relax the clause about rental and not have something in there about buying another property. Essentially I think they won't let you do that.

As for the concept it sounds like a really bad idea given what you said. The banks will probably not give you a mortgage.

I am at the latter stages of this process now, going to mortgage broker after Christmas to hopefully get approval a put an offer on a house. Have the affordable apartment rented the last 1 1/2 year with the councils permission.

I don't see how the council can stop me from getting a second mortgage to be honest. The biggest task so far was getting the deposit together.

D3PO

a.man wrote: »

F*uk you!!! I'm a 30 year old pregnant woman and don't need to be reading your ****!! Why go out of your f*cking way to give such a f*cking negative response you dick....GO **** YOUR OWN BALLS

You have clearly have no inclanation for the harsh reality of the world.

Your opening post is so insane that quite frankly a softly softly approach that doesnt cleary show how skewed your thought process would be pointless.

I could have just said no the bank wont lend you money but by association Im implying that its not that you considering this is crazy but because our banks arent lending.

That would be frankly an irresponsible impresion for me to give you because what you are suggesting is quite simply bonkers.



Nice retort though :rolleyes:

bobbyg

jjspine wrote: »

Yes its a tough situation god knows i would have done things different had i known what was coming but fingers crossed one day it will come back up to normal levels !!!

theres a lot of ppl in your boat your not alone

considering you bought in 2001 or so could you sell your apartment and clear your current mortgage?

If this can be done you will then need to save a deposit of a least 10% and then start thinking about getting a mortgage on your own.

Could you not just sell your current affordable home and rent a house with a garden?

a.man

Hmmm so your saying theres a chance... So I'm not some crazy ass witch as some previous poster suggested! At the end of the day I'm only enquiring. I'm actually really happy where I am but it's just not suitable for a child, no instant heating/water and no garden being 2 issues. So I just wanted to know what if any my options are

subway

a.man wrote: »

the Council are allowing owners to rent the apartment as things have gotten so bad in the current climate.

what does this mean? the council wont penalise you if you rent out the house to cover the mortgage?
is this correct or are there terms connected.

are you working? if so will they still allow you to rent it out
if not, how will you get a new mortgage.
can you afford 2 mortgages if you cant get a tenant
will the rent cover the mortgage after tax (rent is pretty much fully taxable so can expect to pay 20-41% or more depending on your earnings.

i dont think any of what you have described is workable. i would suggest that your partner focused on sorting his mortgages out and both of you be careful you dont get yourself in a deeper mess

D3PO

a.man wrote: »

Hmmm so your saying theres a chance... So I'm not some crazy ass witch as some previous poster suggested! At the end of the day I'm only enquiring. I'm actually really happy where I am but it's just not suitable for a child, no instant heating/water and no garden being 2 issues. So I just wanted to know what if any my options are

firstly nobody called you a crazy assed witch but if you want to put words in my mouth go ahead.


secondly you didnt ask what your options were you asked is there any chance of you getting a mortgage based on , your wage, being pregnant and already owning an apartment.

if you wanted to know what your options were then you should have asked that question.

bobbyg

a.man wrote: »

Hmmm so your saying theres a chance... So I'm not some crazy ass witch as some previous poster suggested! At the end of the day I'm only enquiring. I'm actually really happy where I am but it's just not suitable for a child, no instant heating/water and no garden being 2 issues. So I just wanted to know what if any my options are

Well I am not a mortgage broker, there is certainly no chance of you getting a 2nd mortgage and rightly so. But you haven't given all the fact with your current mortgage.

Are you in negative equity or could you sell and clear your current mortgage? Depending on your circumstance it might not be impossible but it might be a couple of years before you are in a position to buy as you would need to save a deposit.

a.man

Hmmm indeed D3PO... Like I said from my other posts I haven't a clue about the property/mortgage market except for the girl I knew that did something simular only last year.. Which is where the idea came from. Excuse me for being naive but I just thought if she can do it why can't I?

Oh and believe me I have quite the understanding of the harsh realitys of this world

a.man

bobbyg wrote: »

Well I am not a mortgage broker, there is certainly no chance of you getting a 2nd mortgage and rightly so. But you haven't given all the fact with your current mortgage.

Are you in negative equity or could you sell and clear your current mortgage? Depending on your circumstance it might not be impossible but it might be a couple of years before you are in a position to buy as you would need to save a deposit.

I really haven't looked into it that far tbh the idea only came into my head over the wkend after talking to my OH... All I was thinking was rent out this place 2 bedroomed 2 bathroomed apartment in prime location, cover the price of the mortage.... If I put my mind down to it yes I probably would have a deposit up in the next 2 years. All I know is...

Apartment was valued at 380,000 (ridiculous i know!)
Mortgage with council is 169,000 (Paying around €680 a month plus €2000 management fees on top of that!)
Apartment worth now...... probs €160,000 at the most!

Howjoe1

Quote:
Originally Posted by a.man
F*uk you!!! I'm a 30 year old pregnant woman and don't need to be reading your ****!! Why go out of your f*cking way to give such a f*cking negative response you dick....GO **** YOUR OWN BALLS


were you recently on a tube in London?:D:D:D

bobbyg

a.man wrote: »

I really haven't looked into it that far tbh the idea only came into my head over the wkend after talking to my OH... All I was thinking was rent out this place 2 bedroomed 2 bathroomed apartment in prime location, cover the price of the mortage.... If I put my mind down to it yes I probably would have a deposit up in the next 2 years. All I know is...

Apartment was valued at 380,000 (ridiculous i know!)
Mortgage with council is 169,000 (Paying around €680 a month plus €2000 management fees on top of that!)
Apartment worth now...... probs €160,000 at the most!

Well if you took out a mortgage of 169k about 10 years ago then you may have cleared down a good chunk of it and may be able to sell your current apartment.

You really have to have a proper think about it and renting out the apartment is not easy. You need to find suitable tenants, still pay the management fees and then you will have to pay tax on the rental income along with many other charges (PRTB, NPPR). My advice is if you can avoid becoming a landlord then avoid it!

The_Conductor

Lets chill guys.

a.man - I have edited your above post (from 16.05)- you really don't want to know how many people reported it, you've set a new record for this forum......

If you disagree with what someone else posts, either refute it factually, or if appropriate use the report post function to bring it to the forum's moderator's attention. If you are aggressive or abusive in your response- you invite similar in return from the other forum users, and before long its a free-for-all......

Regards,

SMcCarrick

Ray Palmer

bobbyg wrote: »

I am at the latter stages of this process now, going to mortgage broker after Christmas to hopefully get approval a put an offer on a house. Have the affordable apartment rented the last 1 1/2 year with the councils permission.

I don't see how the council can stop me from getting a second mortgage to be honest. The biggest task so far was getting the deposit together.

That is not the latter stages of the process!
The council let you rent it out but I would read what the terms are. They don't have to stop you getting the second mortgage just simply make you pay the discount you got back with interest and also make sure you pay the proper stamp duty. The whole point was to give people a chance and specifically stopping people use it as a way to get a cheap investment property

bobbyg

Ray Palmer wrote: »

That is not the latter stages of the process!
The council let you rent it out but I would read what the terms are. They don't have to stop you getting the second mortgage just simply make you pay the discount you got back with interest and also make sure you pay the proper stamp duty. The whole point was to give people a chance and specifically stopping people use it as a way to get a cheap investment property

I would gladly pay the discount back now as it is zero, this is a clause in affordable housing once it goes into negative equity. The problem now is that councils are trying to get out of this. Years ago they would not allow people remortgage unless they paid the claw-back now they will just not allow people remortgage as the claw-back is nil for anyone in negative equity.

We have no stamp duty liability and there is no claw-back on this. (I have looked into it).

By latter stages I mean we have been saving €2k a month for the last year and a half and now have a sizable deposit. I take your point that this may not happen but I have been speaking to one bank and one decent mortgage broker and both have been positive. If it does go through I will report back as I know there are others in my situation.

I would gladly sell the apartment if it wasn't in negative equity.

D3PO

a.man wrote: »

Hmmm indeed D3PO... Like I said from my other posts I haven't a clue about the property/mortgage market except for the girl I knew that did something simular only last year.. Which is where the idea came from. Excuse me for being naive but I just thought if she can do it why can't I?

Oh and believe me I have quite the understanding of the harsh realitys of this world

ok well the fact is what your proposing isnt possible.

There are a few things not mentioned in this thead.

1. You mention you could rent the apartment to cover the mortgage. You need to realise you have to pay tax on this rent. People seem to think well Im not making a "profit" so why am I having to pay tax.

your paying tax on the income not on the profit. So "covering the mortgage" simply isnt enough

2. You dont seem to have thought about inoccupancy. what will you do when you have periods where nobody is renting ?

3. The most basic elephant in the room not even mentioned here. What if you lost your job ? I mean you could get by in the apartment with mortgage interest suppliment whilst you found a new job etc but theres no way you could handle it if you had two properties nor would you be entitled to MIS for a rental

4. You dont have any consideration for interest rate rises. Rates are at historically low levels and despite the fact we might see another three quarter point drop before the end of Q1 long term the wont be this low so your mortgages wont be as affordable

I could go on an on.

I know people are suggesting you sell the apartment but Id check the contract before listening to this. There may well be clawbacks on its sale although after ten years I suspect there arent

The_Conductor

The clawback on property purchased on the affordable housing scheme is calculated as-

If sold in the first 10 years- the entire discount that was originally granted, is due to the council from the gross sale price of the property.
If sold thereafter- the clawback is reduced by 10% for each year thereafter, reducing to 0 (aka no clawback) if sold after 20 years of ownership.

It was proposed to revise these rules- as obviously there was an assumption of an appreciation in property values assumed when this was drawn up, however nothing has been agreed thus far.

bobbyg

It's been discussed before on askaboutmoney and I am pretty sure someone had the link up before but I can't fint it now. The legislation states that the clawback is not payable where the property is sold for below what it was bought for, obviously if it's sold for below what you paid the council will do their own valuation.

RATM

OP sorry to say but the chances of a bank lending to you are 25 to 1 at the moment, compared to the peak of the boom. Lending has collapsed by 95% since the peak and only people in very secure and well paying jobs are getting mortgages at the moment.

Fingal County Council have been letting people with affordable mortgages rent out their apartments if they need to move somewhere else. But as DP30 said the income is taxable. You would also be legally required to register with the PRTB too, the fines for not doing so are hefty.

Even if you did rent out your apartment and rented a 2 bed house further from the city for the same price you would still have to make up the shortfall that the rental tax would take out of your pocket. If you could manage that then it is do-able, with the caveat that SDCC are permitting mortgage holders to rent their home.

noxqs

1. A child doesn't need a garden - and certainly wouldn't even be mentally aware of the difference between a garden and a stroll in the park in the next handful of years. Who ever put it in your head that a garden is required to grow up is wrong. I never had a garden to play in I my childhood was quite happy.

2. Water not being warm instant isn't a problem for a child.

3. You have an existing mortgage in an apartment which was valued at 380,000 with a mortgage of 169K? Well sorry to say, apartments are unsellable at the moment and the prices are down 60+% officially and probably quite a bit further when you take in discounts on asking prices. You'd need to look at the market and figure out the price you may be able to sell for now and factor in any penalties with the council mortgage which may apply. I suggest you contact them in writing with itemized points for clarification?

4. 28K per year salary with a baby on the way is pretty low - and doesn't put you in the category of people who can likely get a mortgage now. Especially not with (3).

I would strongly suggest you forget the whole idea for now - It seems you have not fully researched this subject or your options. A house is not a human right for parent or child and sometimes its just not possible. You'd also need 15-20% deposit to get a new mortgage after clearing the first one.

Snakeblood

smccarrick wrote: »

The clawback on property purchased on the affordable housing scheme is calculated as-

If sold in the first 10 years- the entire discount that was originally granted, is due to the council from the gross sale price of the property.
If sold thereafter- the clawback is reduced by 10% for each year thereafter, reducing to 0 (aka no clawback) if sold after 20 years of ownership.

It was proposed to revise these rules- as obviously there was an assumption of an appreciation in property values assumed when this was drawn up, however nothing has been agreed thus far.

I got a release from my affordable house in South Dublin County Council. Basically:

I bought an apartment, valued at 245000.

Under terms of the affordable housing, I paid 145000.

My circumstances changed, and I tried to sell. I was told that I could sell, but I had to get council valuer to agree to sale price. Got offer of 125000, council valuer came, agreed to sale price, sold house. All the cash from the sale went to paying off my debt, the council took the hit for the theoretical '100,000' that they said their share was.

I think it goes on a council by council basis though.

The_Conductor

Snakeblood wrote: »

the council took the hit for the theoretical '100,000' that they said their share was.

I think it goes on a council by council basis though.

What you're describing has apparently happened for some people, and not for others. The argument is- why should the council's share be depleted before any negative equity becomes the remit of the borrower- DCC and others insist that the borrower 'share' the negative equity hit with the council, in proportion to the open market discount that they originally got on the property.

So- say the open market selling price on a property was 200k in 2006, however it was purchased via the affordable scheme for 160k, a 20% deduction on the omsp. If sold now- its valued at 100k. The 'negative equity' from the perspective of the borrower is say 40k (presuming they've paid off about 20k at this stage), of which 20% would be due to the council (aka 8k) leaving the borrower with 92k of the gross 100k selling price.

This is the formula that was discussed and most councils appear to be following (however some councils seem to be making up their own rules.......)

syklops

noxqs wrote: »

1. A child doesn't need a garden - and certainly wouldn't even be mentally aware of the difference between a garden and a stroll in the park in the next handful of years. Who ever put it in your head that a garden is required to grow up is wrong. I never had a garden to play in I my childhood was quite happy.

2. Water not being warm instant isn't a problem for a child.

3. You have an existing mortgage in an apartment which was valued at 380,000 with a mortgage of 169K? Well sorry to say, apartments are unsellable at the moment and the prices are down 60+% officially and probably quite a bit further when you take in discounts on asking prices. You'd need to look at the market and figure out the price you may be able to sell for now and factor in any penalties with the council mortgage which may apply. I suggest you contact them in writing with itemized points for clarification?

4. 28K per year salary with a baby on the way is pretty low - and doesn't put you in the category of people who can likely get a mortgage now. Especially not with (3).

I would strongly suggest you forget the whole idea for now - It seems you have not fully researched this subject or your options. A house is not a human right for parent or child and sometimes its just not possible. You'd also need 15-20% deposit to get a new mortgage after clearing the first one.

OP, you just found out your pregnant, so the child wont arrive for another 9 months, and wont be aware of much for about another year at least. Add another 3 years at least before it is spending any significant time in a garden what with irish weather. So you really needn't worry about it now. If I were you I would save some money and get your water sorted out so you can jump into a hot shower anytime you want. Will come in handy in the next few years, mark my words.

Snakeblood

smccarrick wrote: »

What you're describing has apparently happened for some people, and not for others. The argument is- why should the council's share be depleted before any negative equity becomes the remit of the borrower- DCC and others insist that the borrower 'share' the negative equity hit with the council, in proportion to the open market discount that they originally got on the property.

So- say the open market selling price on a property was 200k in 2006, however it was purchased via the affordable scheme for 160k, a 20% deduction on the omsp. If sold now- its valued at 100k. The 'negative equity' from the perspective of the borrower is say 40k (presuming they've paid off about 20k at this stage), of which 20% would be due to the council (aka 8k) leaving the borrower with 92k of the gross 100k selling price.

This is the formula that was discussed and most councils appear to be following (however some councils seem to be making up their own rules.......)

Well, I'm not denying that things are screwy/unfair/ridiculous, just saying that that's how it actually has definitely worked in some areas, and the OP is in SDCC like in my case.