Buying a house 2013!

Balarrr Didiarr

Hi, looking for advice please. We hope to buy in the near future but will keep saving until good deposit amount built up. Just wondering what amount of mortgage we would be offered?

Our circumstances are as follows: 1st income is 60k gross, permanent full time. 2nd income is 34k gross, permanent full time. We have 1 child & pay €975 per month in childcare. We pay rent of €1050 per month and save €1400 per month. No loans. Age: 34 and 32.

We would hope to buy modestly in case something unforeseen was to happen, but curious as to where we would stand with mortgage approval amount.
Thanks.
BD

killers1

Balarrr Didiarr wrote: »

Hi, looking for advice please. We hope to buy in the near future but will keep saving until good deposit amount built up. Just wondering what amount of mortgage we would be offered?

Our circumstances are as follows: 1st income is 60k gross, permanent full time. 2nd income is 34k gross, permanent full time. We have 1 child & pay €975 per month in childcare. We pay rent of €1050 per month and save €1400 per month. No loans. Age: 34 and 32.

We would hope to buy modestly in case something unforeseen was to happen, but curious as to where we would stand with mortgage approval amount.
Thanks.
BD

You could expect approval up to €350k.

GetWithIt

killers1 wrote: »

You could expect approval up to €350k.

killers1, you're dealing with this on a day to day basis so it's somewhat nonsensical of me in trying to argue with your numbers, but 350 just looks a very big number.

I assume this couple would be given a max term of 31 years rather than 35. Maybe even only 30.

From my own minute sample set the numbers coming out of online mortgage calculators are not matching actual approval amounts since the start of this year.

I earn 10k more per annum this year than I did last - no other change - yet my mortgage approval has FALLEN by 10k. I assume the end of mortgage interest relief, higher taxes and higher mortgage interest rates have contributed to this. In fact my 3 monthly renewal was all of a sudden a lot more involved once this year started.

In your experience are you satisfied with the accuracy of these calculations versus actual approval levels?

quad_red

Went to see a house for a repeat viewing today.

Made a bid during the week. EA came back the following day saying there were three other bidders and we'd been outbid by 2k.

Looked at the house again today. I don't think the EA realized who we were. He said bidding was currently at the price we had bid previously. No mention of the supposed new price.

Now - there were too many people around to chase this down and he rushed off.

Is that a simple mistake on his part I wonder? Or are we competing with phantom bidders here. Or else the other bidder pulled out I suppose.

I wonder.

Went to see another house that is being sold for 45k more than it was sold for in mid 2011. House has had some work done on it alright. Would it count as an (attempted) flip?

killers1

GetWithIt wrote: »

killers1, you're dealing with this on a day to day basis so it's somewhat nonsensical of me in trying to argue with your numbers, but 350 just looks a very big number.

I assume this couple would be given a max term of 31 years rather than 35. Maybe even only 30.

From my own minute sample set the numbers coming out of online mortgage calculators are not matching actual approval amounts since the start of this year.

I earn 10k more per annum this year than I did last - no other change - yet my mortgage approval has FALLEN by 10k. I assume the end of mortgage interest relief, higher taxes and higher mortgage interest rates have contributed to this. In fact my 3 monthly renewal was all of a sudden a lot more involved once this year started.

In your experience are you satisfied with the accuracy of these calculations versus actual approval levels?

Hi getwithit,
I'd say the calculations are 99% accurate and match approval levels. Be careful with online calculators as they may not be up to date and may not take into account the end of TRS & budgetary changes. My figure of €350k for the OP was arrived at as follows;

Incomes of €60k & €34k over a 31 yr term indicate max loan amount of €422k. Net income will be circa €5,570pm. The stress testing then works out as follows;

Net Income €5,570
Less living exp €2,300 (couple with 1 dependent)
Less Creche €975
= €2,295 (available to put towards stressed mortgage repayment)

The stressed mortgage repayment on €350k over 31 yrs = €2,129 and because this figure is below amount available it is within policy. Applicants are currently showing a repayment capacity of €1050 (rent) + €1400 (savings PM) = €2,450. (creche fees cant be used to prove repayment capacity as they will be continuing after drawdown). Provided applicants have been paying rent & saving at this level in excess of the past 6 months they WILL be approved for €350k. They won't get approval for the €422k indicated by the Banks income calculator as they don't have sufficient available monthly income to meet the stressed repayment on €422k (€2,567 V €2,295 available). If they had new childcare arrangements with no childcare costs the would be approved for up to €422k.

In relation to your own figures, I'd love to run them for you to give you an idea of the rationale behind the loan amount you have been offered and subsequently lower amount approved. This will be in part due to the new calculator post TRS & budget, an increase in stress testing rates since your initial approval but may also be something to do with the repayment capacity you are able to show. By all means put your details up or send me a PM with them and I'll be happy to do the same exercise for you..

In a nutshell, the first part of the calculation is the income calc. This gives a max figure. There is no guarantee you will qualify to borrow this amount but you will never get approval for a higher amount. The second part is the stress testing on the amount you qualify for and whether you can prove it's affordable. For example, someones salary qualifies for €200k mtg but they can only prove they can afford the stressed repayments on €150k. They will only be approved for €150k. Alternatively if they have demonstrated a proven repayment capacity to take on a mtg of €250k they will only be approved for €200k (max income calc allows)

Balarrr Didiarr

Thanks so much Killers1 and GetWithIt, the detail and responses are really appreciated. Thanks again for taking the time to respond. I had no idea of the workings. Will be aiming for a much lower mortgage but let's us know we are in a good position. BD

killers1

Balarrr Didiarr wrote: »

Thanks so much Killers1 and GetWithIt, the detail and responses are really appreciated. Thanks again for taking the time to respond. I had no idea of the workings. Will be aiming for a much lower mortgage but let's us know we are in a good position. BD

I figured by your original post you'd be looking for a much lower amount, you'll have no difficulty whatsoever obtaining approval for the amount you need based on your details posted.

qwertypop

quad_red wrote: »

Went to see a house for a repeat viewing today.

Made a bid during the week. EA came back the following day saying there were three other bidders and we'd been outbid by 2k.

Looked at the house again today. I don't think the EA realized who we were. He said bidding was currently at the price we had bid previously. No mention of the supposed new price.

Now - there were too many people around to chase this down and he rushed off.

Is that a simple mistake on his part I wonder? Or are we competing with phantom bidders here. Or else the other bidder pulled out I suppose.

I wonder.

Went to see another house that is being sold for 45k more than it was sold for in mid 2011. House has had some work done on it alright. Would it count as an (attempted) flip?

Your dealing with phantom bidders I'm afraid. I think something really needs to be done about this as its really slowing down the market. I've had it done to me so many times. One occasion they told me someone viewed the house that morning and outbid me by 5k this was despite my mothers house being across the road and not one single person going into the house that morning. I called there bluff and all of a sudden that bidder pulled out.
On another occasion I kept ringing ea about a house and they kept sayin it was sale agreed but when I made contact wit seller direct we were able to come to a deal ourselves. Don't know what they were doing wit sayin sale agreed.

marketty

Hi all just sticking my head in here to say I will be hopefully buying this year, and I'm sure I'll be back looking for advice! Spoke to a BoI mortgage adviser a couple of months back and was told I could borrow 175k based on last years earnings of 37k. I know these things can change so might not get that amount later in the year, it is quite a bit more than I plan on borrowing anyway.

Just wondering if Killers1 or someone could clear something up for me. The mortgage adviser I spoke to went through some basic figures with me obviously to come to that amount. I asked her am I approved for that amount, as in can I go and view houses and make an offer without wasting anyone's time? She told me that they are approving on a case by case basis so I would need to apply with the details of the house I am considering. But surely that is for the actual loan application once sale is agreed? I just want to know can I go and view properties at around let's say 120k and be able to make an offer or do I need further approval from the bank 1st? Thanks

killers1

marketty wrote: »

Hi all just sticking my head in here to say I will be hopefully buying this year, and I'm sure I'll be back looking for advice! Spoke to a BoI mortgage adviser a couple of months back and was told I could borrow 175k based on last years earnings of 37k. I know these things can change so might not get that amount later in the year, it is quite a bit more than I plan on borrowing anyway.

Just wondering if Killers1 or someone could clear something up for me. The mortgage adviser I spoke to went through some basic figures with me obviously to come to that amount. I asked her am I approved for that amount, as in can I go and view houses and make an offer without wasting anyone's time? She told me that they are approving on a case by case basis so I would need to apply with the details of the house I am considering. But surely that is for the actual loan application once sale is agreed? I just want to know can I go and view properties at around let's say 120k and be able to make an offer or do I need further approval from the bank 1st? Thanks

I hate BOI's system of mortgage approval. My biggest fear around discussing your application with the mortgage advisor is that they have just done the income calculation poart of the process. Your salary is fine to qualify for the amount you are now thinking of borrowing, even taking into account any increase in stress test rates since you had your last discussion with them. I'm presuming you're under the age of 40 and have no kids. If your rent + savings outweigh the stressed repayment on the amount you are planning on borrowing and has done for a consistent period of time you should be ok. If you want to get a more concrete approval from BOI and have an Underwriter actually assess your application give them a dummy property address of a house for sale at the level you want to buy which requires no works. Once your are approved subject to a satisfactory valuation report only, you'll know you have a concrete approval and can just tell them you decided to purchase a different property once you've had an offer accepted. If you read back a few posts on this thread you'll see the type of info I'd need to be able to give you an accurate assessment of your application i.e, age, income, rent, savings etc etc

tvc15

Since we are all talking approval amounts I'll share my story and maybe get some feedback on if I can actually buy or not!

combined income in my house is €75,000 in wages

Last year after tax there was an additional €8,000 after tax, on track for about €5,000 this year but neither guaranteed so I know not part of calculations

We also have about €40,000 in savings built up mostly between mid 2011 and mid 2012 while paying €1,100 per month in rent since around 2007

When we applied for mortgage last year we looked for €240,000 of a loan which was approved and it was mentioned that we easily could look for more if needed up to about €260,000. This was all with the understanding that we had a baby.

Now where it gets complicated, we started paying creche fees recently of around €800 per month, when we purchase a house my wife’s mother (Polish, retired and financially independent) will stay with us and we will no longer have creche fees to worry about.

After seeing the creche fees coming out of our account and a slower build up in our savings during 4 months of unpaid maternity leave for my wife, the bank have informed us that the new approved amount will be around €125,000 which does not exactly leave us in the market for a house anymore!

Maybe parents of a single child should only be approved for 1.6 times their income, maybe we have to wait 4 years until creche is done before we get a mortgage or maybe €75,000 of an income is not enough to get a decent mortgage, I'm not sure any more!! The warning remains however, if you are thinking of having a child and buying a house in the coming years, buy that house first or you might be sorely disappointed

killers1

tvc15 wrote: »

Since we are all talking approval amounts I'll share my story and maybe get some feedback on if I can actually buy or not!

combined income in my house is €75,000 in wages

Last year after tax there was an additional €8,000 after tax, on track for about €5,000 this year but neither guaranteed so I know not part of calculations

We also have about €40,000 in savings built up mostly between mid 2011 and mid 2012 while paying €1,100 per month in rent since around 2007

When we applied for mortgage last year we looked for €240,000 of a loan which was approved and it was mentioned that we easily could look for more if needed up to about €260,000. This was all with the understanding that we had a baby.

Now where it gets complicated, we started paying creche fees recently of around €800 per month, when we purchase a house my wife’s mother (Polish, retired and financially independent) will stay with us and we will no longer have creche fees to worry about.

After seeing the creche fees coming out of our account and a slower build up in our savings during 4 months of unpaid maternity leave for my wife, the bank have informed us that the new approved amount will be around €125,000 which does not exactly leave us in the market for a house anymore!

Maybe parents of a single child should only be approved for 1.6 times their income, maybe we have to wait 4 years until creche is done before we get a mortgage or maybe €75,000 of an income is not enough to get a decent mortgage, I'm not sure any more!! The warning remains however, if you are thinking of having a child and buying a house in the coming years, buy that house first or you might be sorely disappointed

What bank offered you €125k? What ages are you both & what is the breakdown of the €75k salary? Are you still paying €1100pm rent?

Galego

tvc15 wrote: »

Now where it gets complicated, we started paying creche fees recently of around €800 per month, when we purchase a house my wife’s mother (Polish, retired and financially independent) will stay with us and we will no longer have creche fees to worry about.

After seeing the creche fees coming out of our account and a slower build up in our savings during 4 months of unpaid maternity leave for my wife, the bank have informed us that the new approved amount will be around €125,000 which does not exactly leave us in the market for a house anymore!

That is very odd. Which bank is this? I am in the same boat, same income by the way (what a coincidence!), and BOI has said nothing to me even though I mentioned this to them.

tvc15

Galego wrote: »

That is very odd. Which bank is this? I am in the same boat, same income by the way (what a coincidence!), and BOI has said nothing to me even though I mentioned this to them.

It's not BOI, they are getting back to me tomorrow with a more accurate number which should be higher but I doubt by much!

So the are 3 of you with roughly 800pm in creche? How much are they offering btw?

In answer to other questions, we are late 20s, no debts of any description currently paying 1100pm in rent and roughly 3:2 split on the income

Galego

tvc15 wrote: »

It's not BOI, they are getting back to me tomorrow with a more accurate number which should be higher but I doubt by much!

So the are 3 of you with roughly 800pm in creche? How much are they offering btw?

In answer to other questions, we are late 20s, no debts of any description currently paying 1100pm in rent and roughly 3:2 split on the income

Yes 800 in creche. I do not know what max which we could borrow is. We asked for 250k and were approved with no many questions.

killers1

tvc15 wrote: »

It's not BOI, they are getting back to me tomorrow with a more accurate number which should be higher but I doubt by much!

So the are 3 of you with roughly 800pm in creche? How much are they offering btw?

In answer to other questions, we are late 20s, no debts of any description currently paying 1100pm in rent and roughly 3:2 split on the income

If you are both in permanent employment, paying rent & creche fees via your bank a/c's at the level stated for at least the past 6 months, your application has been incorrectly presented to the Underwriters by your advisor. I am confident you should still be eligible for approval at the €240k+ level.

adam88

killers1 wrote: »

What bank offered you €125k? What ages are you both & what is the breakdown of the €75k salary? Are you still paying €1100pm rent?

I sense killers is on a rampage

killers1

adam88 wrote: »

I sense killers is on a rampage

Haha! Always on the rampage....

Balarrr Didiarr

Sorry to jump in, we are paying childminder by cash on a weekly basis. Is this problematic? Should I ask that we set up a dd as proof of payment? It's the only withdrawal that comes on our statement that we can't show evidence of where the funds are going. Thanks BD

killers1

Balarrr Didiarr wrote: »

Sorry to jump in, we are paying childminder by cash on a weekly basis. Is this problematic? Should I ask that we set up a dd as proof of payment? It's the only withdrawal that comes on our statement that we can't show evidence of where the funds are going. Thanks BD

No, keep that arrangement as is.

jagershots

Im buying in two years can see them being alot cheaper by then..

Have 48k deposit now

hope to have 65 when i do decide to buy

AlanG

Two years will be about right to wait. There is definitely a dead cat bounce in the Dublin market at the moment but remember we still have not had any real repossessions in the country yet so there are a lot of buy to let properties that will come on the market soon. In addition interest rates at the ECB are at an unsustainably low level so long term they are more likely to be 3-4% higher.
When prices hit around 180 - 200 times monthly rent for an area things will be closer to the international standard. ie. If the government stay out of the market a house that rents for 1000 per month should sell for between 180 and 220k.

jython98

AlanG wrote: »

Two years will be about right to wait. There is definitely a dead cat bounce in the Dublin market at the moment but remember we still have not had any real repossessions in the country yet so there are a lot of buy to let properties that will come on the market soon. In addition interest rates at the ECB are at an unsustainably low level so long term they are more likely to be 3-4% higher.
When prices hit around 180 - 200 times monthly rent for an area things will be closer to the international standard. ie. If the government stay out of the market a house that rents for 1000 per month should sell for between 180 and 220k.

well said, here is some figure from CSO http://www.independent.ie/business/personal-finance/property-mortgages/pace-of-property-price-falls-increased-in-february-cso-29155611.html

AlanG

Some more reports, you wouldn't believe it listening to estate agents and other vested interests.

SBP: "Property prices fall by 2.6% in year to February"
http://www.businesspost.ie/#!story/Home/News/Property+prices+fall+by+2.6%25+in+year+to+February/id/19410615-5218-5151-80ad-beccb1989576


Irish Times: "House prices down 2.6% nationally"
http://www.irishtimes.com/business/economy/ireland/house-prices-down-2-6-nationally-1.1339173
Times claim Dub houses dropped 0.1% but they actually dropped 1.0%

AlanG

jython98 wrote: »

well said, here is some figure from CSO http://www.independent.ie/business/personal-finance/property-mortgages/pace-of-property-price-falls-increased-in-february-cso-29155611.html

Just to add to that a large number of owner occupier mortgages are with non-Irish banks so once legislation is passed to allow repossessions they will not care about our politicians begging them not to repossess. This legislation is due to be passed in the next month or so at the bequest of the IMF so will happen.
http://www.irishtimes.com/news/repossession-loophole-to-be-shut-1.754420

You will know that house prices are sustainable when foreign lenders re-enter the market and the Revenue don’t make current house tax valuations stick for 3 years. If the Government thought house prices were on the way up they would get you to revalue each year so the tax take would benefit.

jython98

AlanG wrote: »

Just to add to that a large number of owner occupier mortgages are with non-Irish banks so once legislation is passed to allow repossessions they will not care about our politicians begging them not to repossess. This legislation is due to be passed in the next month or so at the bequest of the IMF so will happen.
http://www.irishtimes.com/news/repossession-loophole-to-be-shut-1.754420

You will know that house prices are sustainable when foreign lenders re-enter the market and the Revenue don’t make current house tax valuations stick for 3 years. If the Government thought house prices were on the way up they would get you to revalue each year so the tax take would benefit.

Yep, without MIR, home repossession is on the way, and the help from PPR website(it seems being updates every Wed. or Thu.), there should be a better picture about the house market in 3 - 6 month time.

Shedite27

AlanG wrote: »

Two years will be about right to wait. There is definitely a dead cat bounce in the Dublin market at the moment but remember we still have not had any real repossessions in the country yet so there are a lot of buy to let properties that will come on the market soon. In addition interest rates at the ECB are at an unsustainably low level so long term they are more likely to be 3-4% higher.
When prices hit around 180 - 200 times monthly rent for an area things will be closer to the international standard. ie. If the government stay out of the market a house that rents for 1000 per month should sell for between 180 and 220k.

What effect will the ECB rates rising have on the market do you think? Do you expect that to increase the price of mortgages, and thus remove some buyers from the market?

Also, what level is that rent:cost ratio at currently in your opinion?

makeorbrake

Shedite27 wrote: »

What effect will the ECB rates rising have on the market do you think? Do you expect that to increase the price of mortgages, and thus remove some buyers from the market?

Mine is an unqualified opinion - but it stands to reason. If interest rates go up (and practically everyone agrees that they will - just uncertainty surrounding the 'when'), affordability goes down - so the banks will have to adjust what they are prepared to lend to a home buyer...in the same way as I think has been pointed out in this thread, they have accounted for the lack of MIR?

kennyb3

makeorbrake wrote: »

Mine is an unqualified opinion - but it stands to reason. If interest rates go up (and practically everyone agrees that they will - just uncertainty surrounding the 'when'), affordability goes down - so the banks will have to adjust what they are prepared to lend to a home buyer...in the same way as I think has been pointed out in this thread, they have accounted for the lack of MIR?

Depends - banks stress +2%, it's whether they'll keep adding this 2% as rates rise (or whether they'll reduce the stress level - they shouldn't but nothing would surprise me anymore)

doc_17

Saw a 4 bed house on website for €90,000. House beside it was bought by a friend of mine 6/7 years ago for €250,000.

Think it requires a bit internal redecoration but it wouldn't be excessive. I would have a good bit of that saved but just wondering what the people here think about that price?

There might be a bid of €70,000 in at the minute. Think it's owned by the bank now.