Help needed: Non-FTB

altoids

hi folks

I'm looking for some info on what banks need for non-FTB. Our situation is very good (i think!)
* permanent job for over a yr and half (and there was no break in employment)
* I'm am very lucky to be on a great salary
* good saving history
* current acct in order
We currently have a mortgage on an apartment that is rented out which covers the cost. We plan to rent our current home and the rent would also cover the cost. I've worked it out and if i had to take a large pay-cut we could still cover the cost.

So i think in theory we should be fine but i'm not even sure what you call this type off mortgage (pardon my ignorance) and are banks lending for this type of mortgage? Any advice would be appreciated as we've found a house we love ( i know, i know, i shouldn't fall in love with a house!!!) and that we'd plan to stay in so this would be our last move.

variety

What you're looking for is called a trade-up mortgage. Banks do offer them. In fact, there're more restrictions on re-mortgages than there are for a trade-ups.

Most banks will lend 90% of the purchase price (AIB might give you 92% if you're really strong candidates), but most of the mortgage funding they advertise as "available" is reserved for FTBs, so they might restrict the maximum LTV they will offer you.
Some Lenders also have different max LTV based on 'city' or 'county' (eg 90% in city, 80% in country, etc..)


The most important things to focus on are:
1. Your rental property finances: what are the monthly repayments compared to the rental income?
Banks want to see a bare minimum of 120% of the repayments in rental income (so, if the repayments are €1,000 p/m, rental income needs to be at least €1,200 p/m).
Lenders will also stress the repayments at 2% above what you are currently paying before doing the 120% calculation, so you need to have a huge difference in the repayments and the income.

The above applies to EACH of your properties (both the apartment and your current family home).

If your rental (known as RIP- residential investment property) income doesn’t conform to or exceed the above, you have to add the outstanding figure to your leftover monthly income (see point 3, below).


2. Savings history
You need to have a minimum of 12 months of accumulated savings which covers the balance of
the purchase price (+20%), stamp duty, solicitor fees.

So, say you’re buying for €100,000 with a 90% LTV mortgage, you will need to have €15,000 savings built up over a minimum of 12 months, broken down as follows:
-€10,000 + €2,000 (which is the 20%) balance of funds
-€1,000 stamp duty
-€2,000 solicitor fees (they won’t be anywhere near this amount, but it’s generally considered an absolute maximum figure for sol’s fees)

All lump sum deposits will have to be accounted for.


3. Leftover monthly income
You talk about “we” and “our” but you don’t mention your OH’s income. I assume you have children and your OH takes care of them?

A Lender requires that, after all your fixed outgoings are accounted for, that an individual has €1,500 leftover income, that a couple has €2,000 leftover monthly income, and that each child has €500 leftover income.

So, if you’re a couple with 2 children, after all your monthly repayments, and any additional loan repayments are accounted for, you need to have €3,000 leftover to pay for your other necessities (such as food, clothing, education, health, etc...)
If you can prove to a Lender that you currently live for less than that (you will have to show extensive examples of your monthly budget, proving income and outgoings), you might be lucky.

altoids wrote: »

* current acct in order

I assume this means no overdraft and no referral fees?


Best of luck...

altoids

wow - thank you so much! its exactly the type of help i was looking for!

Sorry i'm new to the boards so i should have been clearer on some of the details:
My OH's income is a take home of around €1,200 per month.
He was self employed and has been PAYE for about 5 months
Rental income from both properties only covers the cost - its not at 120%
Current acct in order - meaning i make sure it doesn't run negative etc
No kids
We're really relying on my salary: gross annual €120K
Property is currently on the market for €299K
Saving for the last year

The reason for my caution is that i don't want to waste people's time as the whole process can be exhausting! For example i got bad advise from a broker last year who said because i was on a good salary that i should just go for it and there wouldn't be a problem, however, at that point i was only 6months employed with little savings.

I guess what i really want to know is am I mad to try again or do i need to wait for OH's employment history?

Again, Variety, thank you so much for such a detailed response.

variety

altoids wrote: »

wow - thank you so much! its exactly the type of help i was looking for!

You're lucky you caught me on a slow day, when I'm in a good humour, but it's my pleasure

altoids wrote: »

My OH's income is a take home of around €1,200 per month.
He was self employed and has been PAYE for about 5 months
Rental income from both properties only covers the cost - its not at 120%
Current acct in order - meaning i make sure it doesn't run negative etc
No kids
We're really relying on my salary: gross annual €120K
Property is currently on the market for €299K

If we assume your OH is on approx €20,000 p/a, your total gross annual income is €140,000.

The calculations you need to do are the following:
1: RIP 1 (your current rental property): (mortgage repayments + 20%) – rental income = W
2. RIP 2 (your current house that you intend to rent out): (mortgage repayments + 20%) – rental income = X
3. New home = Y
(assume you get €269,000 over 25 years which is a mortgage for 90% LTV, and pay the full asking price- this is a worst case scenario as noone in their right mind should be paying full asking nowadays): mortgage repayments (or, 'Y') = €1,350 per month
4. PAYE income: Nett monthly income, evidenced by payslips: Z
5. W + X + Y + Z = a
6. a = total remaining income.
If ‘a’ is less than €2,000 per month, you’re unlikely to qualify for a mortgage.

Having said all that, these figures are only what the Lender will take into consideration. What you need to do is figure out if you can actually afford another mortgage.

To do this, take ‘figure a’ and deduct all your monthly outgoings to give you a figure ‘b’. These should include health insurance & pensions (if not deducted before pay), medication, doctor’s fees, savings (very important!), entertainment, travel/holidays, food & drink, utilities (including new water rates), maintenance on the 2 rental properties, accountants fees (for the rental properties), life insurance, buildings insurance on 3 properties, car tax and car insurance (on maybe more than 1 car), petrol, refuse, pet outgoings if you have cats/dogs, etc...

And don’t forget the annual fees associated with the rental properties: PRTB registration, NPPR on 2 x properties.

And, of course, the new Household charge on 3 properties (annual), which could become extremely expensive.


I would suggest that if figure ‘b’ is less than €200 per month (with savings being not less than €500 per month), you probably cannot afford the extra mortgage.

But that’s just me, I’m ultra conservative with how much I like to keep in my current account (what I consider ‘short-term’ savings for unexpected things like blowing a tyre) and how much I like to move to my ‘long-term’ savings account.

altoids wrote: »

i got bad advise from a broker last year

Oh, and my BEST advice, get yourself a decent mortgage broker. No need to be paying a fee- the best ones work for free.

altoids wrote: »

I guess what i really want to know is am I mad to try again or do i need to wait for OH's employment history?

Try again, by all means - if the figures make sense to you.

killers1

altoids wrote: »

hi folks

I'm looking for some info on what banks need for non-FTB. Our situation is very good (i think!)
* permanent job for over a yr and half (and there was no break in employment)
* I'm am very lucky to be on a great salary
* good saving history
* current acct in order
We currently have a mortgage on an apartment that is rented out which covers the cost. We plan to rent our current home and the rent would also cover the cost. I've worked it out and if i had to take a large pay-cut we could still cover the cost.

So i think in theory we should be fine but i'm not even sure what you call this type off mortgage (pardon my ignorance) and are banks lending for this type of mortgage? Any advice would be appreciated as we've found a house we love ( i know, i know, i shouldn't fall in love with a house!!!) and that we'd plan to stay in so this would be our last move.

Hi Altoids,

This is how a lender will assess your application... Your OH will need to be in their job 6 months & be permanent with probation completed for them to factor his income into the equation.

They will look at your combined income to see what that allows you to borrow. They will then stress the loan o/s on the apartment & 2% above that banks investment mortgage rates & discount the rent by 20-30%. They'll also stress the repayments on your current house @ 2% above investment rates & will not take any rental income into account. They will then have an overall deficit on existing stressed mortgage repayments less the current rental income @70%. You will need to be able to afford this overall deficit on the investment properties & the proposed new mortgage repayment and prove that they are affordable. If you want to give me figures i.e. loan amounts o/s, term remaining, rental income, earnings etc I can give you an accurate assessment of whether you qualify or not.