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Getting a second mortgage

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  • 20-03-2012 2:22pm
    #1
    AFJC
    Closed Accounts Posts: 6 ✭


    Hi there,

    Currently my boyfriend and I own separate houses. My boyfriend recently moved into my house and has rented his own, which currently covers the 100% of the mortgage.

    We are hoping that over the next 12-18months to start at looking at buying another house together however we are unsure of the impact on our application of us both owning houses . My house is in a relatively good location, and I think that I would have no problem renting it however the rent would only cover approximately 90% of the mortgage. Due to the current climate, we would obviously prefer not to sell either of our houses at present value.

    On this basis, Im sure that our new mortgage application would be stress tested to within an inch of its life - therefore I was wondering can anyone give me some pointers on how best to approach this?

    Any information would be greatly appreciated, including experience of the same situation.

    Many Thanks in advance.
    Tagged:


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    #2
    Poor Uncle Tom
    Registered Users Posts: 14,546 ✭✭✭✭Poor Uncle Tom


    Moved......Construction & Planning
    >Accommodation & Property.


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    #3
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    AFJC wrote: »
    Hi there,

    Currently my boyfriend and I own separate houses. My boyfriend recently moved into my house and has rented his own, which currently covers the 100% of the mortgage.

    We are hoping that over the next 12-18months to start at looking at buying another house together however we are unsure of the impact on our application of us both owning houses . My house is in a relatively good location, and I think that I would have no problem renting it however the rent would only cover approximately 90% of the mortgage. Due to the current climate, we would obviously prefer not to sell either of our houses at present value.

    On this basis, Im sure that our new mortgage application would be stress tested to within an inch of its life - therefore I was wondering can anyone give me some pointers on how best to approach this?

    Any information would be greatly appreciated, including experience of the same situation.

    Many Thanks in advance.

    Hi there, you are right in so far as the banks will stress test your current mortgages very stringently. Basically the banks will assess your income to see what you qualify to borrow based on their calculators at the time. They will stress the 2 current mortgages a 2% above their current investment property loan rates. They will factor in approx 70% of the rental income on your boyfriends property as he has a tenant in place. They will be reluctant to take into account potential rental income on your current property as it is not currently rented. They then look at the stressed repayment on the amount you are looking to borrow. You need to have evidenced a repayment capacity sufficient to repay the new loan's stressed repayment and whatever deficit arises when they do the stressed repayment calculations on the other 2 properties. The best way to prove affordability is to save, save & save some more between now and then and to prove that you have the capability to repay all 3 mortgage loans without being overdependent on the rental income. Your income will need to be at a sufficient level to meet the banks guidelines in relation to how much disposable income you need to have left over after the payments of all loans on a monthly basis.


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