How much can I get a mortgage for? (living abroad, intend to return home in one year)

red_owl99

I have been living abroad for last 6 years. I want to buy a house either now or when I return to Ireland in one maybe two years time. Myself and my partner (who is not working, we are not yet married) are returning for family reasons.

I've seen a house for sale for €390k plus stamp duty that I would love to buy, but I don't think I could get a mortgage for it! We want to buy 3/4 bed in particular area near family. We are planning to buy once -not getting something smaller now and upgrading in a few years time. Not interested in buying an apartment as we want to start a family in a few years time.

I've saved a cash deposit of €170k. In order to buy the house I'd need to borrow c€220k.

I'm currently earning c€100k working abroad, but would expect to earn c€60k in the same profession at home as a finance professional.

I've read that I could apply for an investment loan/mortgage where the max
Ltv ratio is 50% of property purchased. This would mean I could not purchase my dream house for €390k.

Given that we want to live in the house when we return home, could I be eligible for normal residential mortgage now for full €220k that I need to borrow?

I would love to get an idea of the maximum mortgage I could borrow from the bank in present circumstances! Also, if I did move home, how long would I have to be in a stable job before I could be eligible for mortgage?

thanks everyone for their help!

(pls don't respond why would we want to return home in present climate-we have been away for long enough, it's because of family!)

the groutch

it might be difficult getting any mortgage when you return, unless your job back here is with the same company that you worked for abroad.
otherwise you'll be seen as only being in your job for a few weeks/months, and they'll be reluctant to lend to someone without a length of continuous service that implies job security.

from the numbers point of view, I don't see a major issue, as there's little risk of you ever being in negative equity, and 220k mortgage over 25 years would be about €1,100 pm which would be affordable on your salary (assuming no other loans/debts).

red_owl99

Thats a bit of a worry - means I would be home for 12 months before I could apply for a mortgage... I might try contacting AIB and BOI to see if they can give me any guidance - judging by the comments on this site its not going to be easy!

DublinDilbert

If you purchase your "dream house" now, will you be renting it out for a few years till you get back? Have you any experience of being a land-lord and any idea how much this cost in terms of time/money/stress? Also your "dream-house" might not be much of a dream house when you come back to live in it in 3+ years time.

I would continue saving, you are in a great position, you'll easily have €200K+ saved by the time you return and be in a very strong position. There is no sign that credit will be more easily available in 3+ years time. Also nothing is moving in the 400K end of the market.

Also if your already emotionally attached and thinking about it as a "dream house" you'll be an estate agents "dream buyer". An estate agent will spot this a mile off, they do this for a living and know how to exploit it to the last.

red_owl99

DublinDilbert - understand I'm being called naive here... I don't believe that being a landlord is as stressful/or as bad as you make out!

My main issue is that 200k is not enough for a House in an Area I want to Live In. I'm trying to determine what the best way to get a mortgage is and how much I can get a mortgage for. Should I apply now while I'm earning good money abroad (and buy in the next year) or wait until I go home and have to build up 'job security' for 12 months before banks will lend to me?

red_owl99

Also, thanks for both your responses! I'm coming around to the idea that I may be best to hold off for now until I get home... Just worried about how long I'll have to be home before the banks will lend to me...

DublinDilbert

red_owl99 wrote: »

DublinDilbert - understand I'm being called naive here... I don't believe that being a landlord is as stressful/or as bad as you make out!

I think you have to be a landlord for a period of time before you realise the responsibilities involved and there are lots. You sound like a decent enough person and would want to do everything you can for your tenants, but its not easy and much harder when your out of the country. For example the heating system stopped working the day before Christmas eve last year in a house I look after, you've tenants ringing/texting every hour complaining they are cold, couldn't get a plumber for love nor money, so I had to drive for 2 hours to get there and spend 5 hours fixing it myself.

Also rented houses typically get little or no maintenance, which is fine for a year or so, but stuff very quickly degrades and little problems become major ones over very short periods of time.

No one said you could get your "dream house" in exactly the area you would like for 200K, but your in a seriously strong position, that in 3 years time you could get a mortgage for say 100K, with your savings and buy somewhere really nice.

Seamu$

red_owl99 wrote: »

I've seen a house for sale for €390k [/I]

Is €390k the asking price? I would suggest you try and negotiate this down significantly also, should be possible and would help lessen the mortgage burden.

Regarding approval, as others have suggested I would definately discuss your situation with the banks now rather than making the move and then finding out they won't lend to you. You are in a very strong position financially so it should be possible to arrange something with them.

killers1

red_owl99 wrote: »

Also, thanks for both your responses! I'm coming around to the idea that I may be best to hold off for now until I get home... Just worried about how long I'll have to be home before the banks will lend to me...

At the very least you will need to be 6 months in a permanent role with probation completed before any Irish Banks will consider an application. Do you bank here at the moment? I'd certainly recommend opening an Irish bank a/c here and transferring a fixed amount of savings over each month. At the proposed loan to value and your equity input into the deal you'll have little difficulty securing approval once you have a permanent job here for at least 6 mths.

BailMeOut

red_owl99 - we moved back to Ireland two years ago and we approached some banks about a mortgage and got nowhere even with 50% deposits!

I would however highly recommend that you forget about buying and just rent for at least the first year in the area you would most like to live in. In that first year (which will go by very quickly) you will really get a much better feel for the market and all sort of options and opportunities keep popping up. Since we moved back nicer, cheaper and in better areas homes keep popping up. I guarantee you will see things a lot differently when you get back and are living here.

...and congratulations on the move. We have not regretted it one bit. It takes living abroad for a while to really appreciate what a great place Ireland is to live.

red_owl99

BailMeOut - great to hear from someone so positive about the move home! Agree new things are happening all the time - Allsop auctions, Nama schemes, and receiver sales.

If I can grow my desposit, prices are expected to drop in the next 12-24 months, I should be in a better position. Still, I would like to be in a position where I could bid for houses now if I had mortgage approval. It would make the move back so much easier if I had my own place to live!

I could not have afforded a 2 bed apartment anywhere close to town when I left. Never thought I would be in this position re. buying a house! Certainly dodged a bullet!

nacimroc

We bought a house 3 months ago. Speaking as someone who actually went through the process and got a mortgage, I would gaurantee 90% of the rumours you hear are just that.

We were hounded by the banks willing to give us a mortgage. 3 banks called us at least weekly asking for our business after we enquired. (we were first time buyer with only 8% deposit)

If you want to know the only thing banks were overly concerned about, it seemed to be 2 incomes! They will stress test your income to a 5+% interest rate, but they want 2 incomes. It doesn't matter how much money you have, current income, outgoings etc., it always harped back to 2 incomes being a must with all 4 major lenders.

As regards the asking price of the house you are looking at....well...you really need to step back and have a look at what is selling and at what price. We bought our house for 35% of the asking price, so completely rip up and ignore ALL asking prices. I watched every local sale for the past 2 years and know asking prices don't apply anymore as any auctioneer will tell you. I would nearly say you would need half what you think you will be applying for assuming its a pricey dublin area.

This is just my 2 cents but please trust me on the asking prices.

This site is a must read for anyone buying. It may show the desperate people and the normal prices.

http://www.daftdrop.com
(Click on price drops)

killers1

nacimroc wrote: »

We bought a house 3 months ago. Speaking as someone who actually went through the process and got a mortgage, I would gaurantee 90% of the rumours you hear are just that.

We were hounded by the banks willing to give us a mortgage. 3 banks called us at least weekly asking for our business after we enquired. (we were first time buyer with only 8% deposit)

If you want to know the only thing banks were overly concerned about, it seemed to be 2 incomes! They will stress test your income to a 5+% interest rate, but they want 2 incomes. It doesn't matter how much money you have, current income, outgoings etc., it always harped back to 2 incomes being a must with all 4 major lenders.

As regards the asking price of the house you are looking at....well...you really need to step back and have a look at what is selling and at what price. We bought our house for 35% of the asking price, so completely rip up and ignore ALL asking prices. I watched every local sale for the past 2 years and know asking prices don't apply anymore as any auctioneer will tell you. I would nearly say you would need half what you think you will be applying for assuming its a pricey dublin area.

This is just my 2 cents but please trust me on the asking prices.

This site is a must read for anyone buying. It may show the desperate people and the normal prices.

http://www.daftdrop.com
(Click on price drops)

I think the first couple of sentences of your post sum up the rest of it...

OP do not fall into the trap of comparing mortgage applications. Even 2 separate applications where the people are on the same income income, looking for the same amount of money can end up poles apart in terms of the amounts a bank would lend to each. The idea that you 'need' 2 incomes to qualify for a mortgage is simply not true. You need an income level (be it from 1 or 2 applicants) sufficient to repay the stressed mortgage repayment, have a net disposable income left over each month that meets the banks guidelines and a proven repayment capacity for the stressed repayments on the amount required.

In relation to asking prices, you'll find there has been a closer alignment between asking prices and sale prices in the Dublin area recently with the majority of sellers realising we no longer live in 2007.

Tea drinker

Save as much as you can before returning, and watch expenses like a hawk when you return, we burned thousands when we came back, apart from rent and deposits.
60k is not a lot in Expensive ireland, especially keeping a car on the road.

red_owl99

We only have one income!! Hope that doesn't become an issue! We are not married yet...

I'll hope to start work immediately when I return - most of the cash I have will be piled into a deposit...

Thanks everyone for the responses... Great to hear your opinions - its been a great help!

shoegirl

red_owl99 wrote: »

I would love to get an idea of the maximum mortgage I could borrow from the bank in present circumstances! Also, if I did move home, how long would I have to be in a stable job before I could be eligible for mortgage?

The simple answer is zero until you've been in a permanent job for three years. If you do get what you speculate you'd earn, you'll qualify for about the amount you are looking for.

If you expect to contract or go self employed you could be waiting for several more years.

sam34

op, it really does vary depending on your circumstances.

the poster above me has said you'd need to be in a permanent job for three years- this is simply not true in all cases. I got my mortgage when I was only in the permanent job about 5 months and I still had probation to complete.

likewise re the two incomes- I bought on my own, one income only, and it wasn't an issue.

and I only had an eight percent deposit.

you really need to talk to the bank and see what they tell you

killers1

sam34 wrote: »

op, it really does vary depending on your circumstances.

the poster above me has said you'd need to be in a permanent job for three years- this is simply not true in all cases. I got my mortgage when I was only in the permanent job about 5 months and I still had probation to complete.

likewise re the two incomes- I bought on my own, one income only, and it wasn't an issue.

and I only had an eight percent deposit.

you really need to talk to the bank and see what they tell you

Sam34, How recently did you get your mortgage? Did you get approval in principle after 5 months in your job but loan offer/drawdown was subject to probationary period being successfully completed? Just curious... Nowadays you need to be in a permanent position 6 months with probation completed to meet AIB's criteria, 1 yr with current employer for the other banks and 2 yrs continuous employment for KBC.

Regarding the previous posters claim you need 3 yrs in a permanent role, this is simply not true in ANY case.

sam34

killers1 wrote: »

Sam34, How recently did you get your mortgage? Did you get approval in principle after 5 months in your job but loan offer/drawdown was subject to probationary period being successfully completed? Just curious... Nowadays you need to be in a permanent position 6 months with probation completed to meet AIB's criteria, 1 yr with current employer for the other banks and 2 yrs continuous employment for KBC.

Regarding the previous posters claim you need 3 yrs in a permanent role, this is simply not true in ANY case.

I only got it a few months ago. I got approval in principle at the 5 month mark and drew it down after another approx 8 weeks when everything else was ready. so I had yet to complete my probation. and that was with aib.

killers1

.[/QUOTE]
I only got it a few months ago. I got approval in principle at the 5 month mark and drew it down after another approx 8 weeks when everything else was ready. so I had yet to complete my probation. and that was with aib.[/Quote]

Tks, I figured they wouldn't have lent to you whilst on probation.

tora2012

killers1
you seem to know an awful lot about mortgages, can you tell me at what stage is a mortgage 'drawn down'?
Is it when my solicitor lodges mortgage check to her account or when she withdraws it from her account?

killers1

tora2012 wrote: »

killers1
you seem to know an awful lot about mortgages, can you tell me at what stage is a mortgage 'drawn down'?
Is it when my solicitor lodges mortgage check to her account or when she withdraws it from her account?

The mortgae is drawdown when the funds leave the bank. If it's a bank that still sends cheques to the solicitor interest starts accruing when the cheque is cashed I.e when the solicitor lodges the cheque to their client a/c. If it's a bank that send funds by EFT directly to the solicitors client a/c then interest starts accruing the day it's sent..

tora2012

Thank You

The_Conductor

OP- if you have been living abroad- I would seriously recommend renting before buying.

With respect of getting a mortgage- lenders focus on a couple of criteria-

1. How much of a deposit, as a percentage of the purchase price of the property, have you saved.

2. What portion of your net income will be necessary to service the proposed mortgage (typically its a max of 35-40%).

3. Security of tenure in your job (preference is given to public sector jobs, though even this is very much not what it used to be).

4. Where are you proposing to buy- rural areas may prove difficult to get mortgages for- irrespective of the fundamentals

5. Certain property types are for more likely to be of interest to a prospective lender than others- aka, a freehold property (typically a house) is infinitely more mortgageable than a leasehold property (such as an apartment)

At the end of the day- all applications are assessed on their individual merits. Nothing ventured, nothing gained. Ask the different lenders whether they are willing to do business, and on what terms.

Personally- I'd seriously recommend renting before buying- to get a better feel for what you are looking for- and to give you a breathing space to explore what your options are.

Best of good luck whatever you decide to do........

red_owl99

I am planning on buying a 3/4 bed house in Dublin southside. My main concern is getting a loan.

Judging by the responses, best advice is to go home, rent for a while, get a job and buy at a later stage. Solid advice - but it seems an awful long time away!

red_owl99

Just found this related post if anyone is in same situation:

http://www.boards.ie/vbulletin/showthread.php?p=74785374