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Thinking aloud...

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    #32
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Outsidethebox wrote: »
    Hi folks,

    Wife and myself who are both in our 20's are ball hopping here.

    We bought a 2 bedroom house for 169K on which we owe 150K in 2007. We were offered upto 299K at the time - bananas!

    Our mortgage is a tracker on which we pay €517 a month with PTSB. We also have two loans on which together are about 6K. (Though if needed we could clear these quickly)

    Now, we're happy enough where we are and if we were told we're here forever we'd be fine with it. It's a lovely home. However, we have a young son and since last September my wife's mam is living with us as she is ill.

    "IF" we were to look into upgrading what we be our chances of getting some muladh? (Haven't bothered to ask our bank yet as we're not really sure whether we will bother doing anything or not)

    Our queries:

    1, Would we be better to sell ours for what we could get then take our negative equity with us? I estimate we'd sell ours for 60/70, meaning we'd have a negative equity debt of 80/90K.

    We'd be looking for about 90/100K to upgrade meaning we'd be owing around 180/190K.

    2, Highly unlikely but would it be possible a bank would leave us keep our place to rent and up our mortgage by 90K? The rent would more or less cover the existing mortgage and then in years to come when/if the market picks up a bit we could sell on.

    3, Could we approach a different bank for a 90K mortgage?

    Basically, we're wondering what, if any, are our options? What's peoples opinions? If a bank would go with option 2 I'd be inclined to go with it. The reasoning being that the tracker mortgage is very low and we'd rent it easily. Therby not taking the hit of 80/90K of a loss. Also, a second mortgage of 90K wouldn't be a huge bearing either.

    Now, I know a few of you are probably thinking jaysus look at these idiots trying to get a second mortgage. Did they not see what has happened the last few years and maybe you're right.

    As I said, we're happy out where we are as we have a lovely home with a low mortgage payment rate, but we are curious. We have the capabilities of paying a few hundred euro a month more on a mortgage and maybe this might interest the banks?

    Will probably add a bit to this over the next day or so but will leave it at this for now.

    Thanks to anyone who takes the time to read and answer this long winded effort.

    PS. As regards income, ones a public servant on just over 50K and the others on just under 40K.

    Go raibh maith agaibh,
    OTB.

    Hi OP,
    I not here to debate the merits of buying a second property, the property market, the pros/cons of being a landlord etc etc but simply to address the figures in your mortgage query & your chances of getting a second mortgage. I do find it a little surprising that other posters feel combined borrowings of €250k on a salary €90k is excessive? I wouldn't really consider borrowings of 2.7 times income as overly excessive even if you never earn a cent in rent.

    Negative equity is not a deal breaker for the banks. They will still lend to applicants who's existing property is in NE where they can show they have sufficient income, are not reliant on the proposed rental income and have a proven repayment capacity for the combined stressed repayments. Your combined incomes qualify for you have total borrowings in excess of €400k as per the banks calculators. You have a combined net monthly income in the region of €5,400. The stress tested mortgage repayment on your existing property treated as an Inv Prop for the purposes of calculations amounts to €1,055pm (€150k @ 6.95% over 25 yrs). No potential rental income will be factored into the calculations because the property is in NE and isn't currently let. The stress tested repayment on the new €100k mtg @ 6.24% over 35 yrs is €586. These combined amount to €1,671pm and when subtracted from your income leaves €3,759 for you to live off which is well within bank guidelines. If you can prove that you can afford €1,641pm you have a good chance of approval. If you add your existing mortgage repayment €517, personal loan repayments (?) and monthly savings contribution together and the figure exceeds €2k you've an excellent chance of approval. Seeing as you are in no rush to do this you have plenty of time to build up a repayment capacity evident for 6 months or more which will ensure approval when the time comes. There are other factors like savings, childcare costs etc etc but I am 100% confident that if you can show a proven repayment capacity as outlined the banks will have no issue with a couple in secure employment earning €90k having borrowings of 2.7 times that...


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    #33
    Outsidethebox
    Registered Users Posts: 139 ✭✭Outsidethebox


    Very grateful for that killers1, thank you!

    It's late, I'm tired and there's a few figures in there so I will have a closer look tomorrow.

    Just on one small point on "No potential rental income will be factored into the calculations because the property is in NE and isn't currently rented"

    Would it be an idea to sign it over to the council for the 20 years where we'd get 80% of market value? Would this benefit us looking for a second mortgage?

    Again, thanks a million.


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    #34
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Outsidethebox wrote: »
    Very grateful for that killers1, thank you!

    It's late, I'm tired and there's a few figures in there so I will have a closer look tomorrow.

    Just on one small point on "No potential rental income will be factored into the calculations because the property is in NE and isn't currently rented"

    Would it be an idea to sign it over to the council for the 20 years where we'd get 80% of market value? Would this benefit us looking for a second mortgage?

    Again, thanks a million.

    No problem. You might decide to hand it over to the council for 20 yrs to guarantee rent for the future but whether you do or not will have absolutely no bearing on the mortgage application because they won't factor any potential income into the calculations either way. It'll neither help or hinder your application. Your application stacks up on income, now it just needs to stack up on repayment capacity and you have plenty of time to get this right if you are not planning on buying for a while.


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    #35
    Outsidethebox
    Registered Users Posts: 139 ✭✭Outsidethebox


    Killers1.

    Am I right in saying you're a broker?

    How would a man go about arranging a meeting?

    Cheers,
    OTB


  • Options
    #36
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Outsidethebox wrote: »
    Killers1.

    Am I right in saying you're a broker?

    How would a man go about arranging a meeting?

    Cheers,
    OTB

    Hi OTB,

    I sure am. PM me your contact details and I'll give you a shout tomorrow.

    Cheers,
    Killian


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