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Are banking giving commercial mortgages

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  • 20-01-2012 2:51pm
    #1
    rainbowdash
    Closed Accounts Posts: 878 ✭✭✭


    I am just looking into something at the moment.

    If a person had money in the bank, say €100K and they wanted to purchase a commercial premises on the market for €250K, has anybody gotten a commercial mortgage in recent months off the bank along these lines?

    The person would already have a viable self employment business earning say 80K+ before tax and no other debt except a modest home mortgage under 100K


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    #2
    maxer68
    Closed Accounts Posts: 1,076 ✭✭✭maxer68


    You're looking for about 60% ltv at / near bottom of the market. You ahve earnings that will easily allow you pay the mortgage, so I doubt if there would be any issue.

    KBC probably would be my first port of call or bank whom you have a working relationship with.

    Another option is to see if its a bank forced sale - if so, that bank may be willing to provide the finance as it would mean a non performing loan becomes a highly rated performing loan.


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    #3
    shangri la
    Registered Users Posts: 952 ✭✭✭shangri la


    The market is not near the bottom. Why people keep saying this for the last 2 years is mystifying.

    Why do you think its near the bottom?


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    #4
    maxer68
    Closed Accounts Posts: 1,076 ✭✭✭maxer68


    shangri la wrote: »
    The market is not near the bottom. Why people keep saying this for the last 2 years is mystifying.

    Why do you think its near the bottom?

    From an investment point of view, the returns on property rental are at 7%-10% of the purchase price, therefore it comes in way above deposit rates and substantially above the long term equity market rate.

    Basically I can buy a rental property today for €200,000 and if it still is worth €200,000 in 20 years time, I'd consider it a good investment as the rent would have covered the cost and left a positive balance.

    That's the only true indicator of value in a property market.

    Of course the market can go lower and ignore the value signs, the same way as it continued to go higher and ignore the over priced signs.


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    #5
    neris
    Registered Users Posts: 20,055 ✭✭✭✭neris


    maxer68 wrote: »
    Basically I can buy a rental property today for €200,000 and if it still is worth €200,000 in 20 years time, I'd consider it a good investment as the rent would have covered the cost and left a positive balance.

    And what about rates, repairs, insurance and maintainance work over that time? plus all the taxes and stamp duty. Thats a fairly **** investment if it hasnt appreciated over 20 years. Unless it appreciated over time and there was another crash bringing it back down.


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    #6
    rainbowdash
    Closed Accounts Posts: 878 ✭✭✭rainbowdash


    Thanks for the feedback, do banks give mortgage approval based on your financial numbers and then you can go looking around or is approval against a specific property?

    I am just looking at it at the moment so no need to get solicitors involved etc.!

    As regards calling the bottom of the market we are approaching that point, or at least getting towards the point that any further falls will be modest and likely to recover in a reasonable timeframe.

    But thats not the question I am asking here;)


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    #7
    neris
    Registered Users Posts: 20,055 ✭✭✭✭neris


    There was a brief mention on newstalk this morning saying that if you had minimum 50%LTV you were in a much better position to get a mortgage and better interest rates aswell. I think it may have been an article in one of the papers but cant remember which one. Banks will ledn if you are low risk but expect to wait to get a decision


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    #8
    maxer68
    Closed Accounts Posts: 1,076 ✭✭✭maxer68


    neris wrote: »
    And what about rates, repairs, insurance and maintainance work over that time? plus all the taxes and stamp duty. Thats a fairly **** investment if it hasnt appreciated over 20 years. Unless it appreciated over time and there was another crash bringing it back down.

    No rates payable on private residence
    Household charge is payable by the tenant
    Insurance & maintenance easily come out of rent
    Stamp duty is 2% these days on investment properties. (budget 2012)

    If I put for arguments sake, €40,000 deposit and 160k mortgage and the house was worth 200k after 20 year and mortgage would be paid off, it would be a good investment even without capital growth, and based on current rental values less 15% (assuming unoccupied for 15% of time over 30 years)


    The big problem we had previously was partly caused by everyone expecting appreciation - do the math assuming no appreciationa nd if the sums add up, its a good investment.

    And on plenty of properties as present, the sums do add up - hence from an investment point of view, there's value to be had. Only problem is there's no money:D


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