Advice about mortgage needed

twinsen

Hi

Looking for some advice in regards to the morgage. Myself and wife were looking to get an mortgage 3 months ago , but unfortunately I was made redundant. At the moment I am looking for a job and, got a few offers, and not sure what would be better.
One of the offers is permanent contract but this would only pay 24k . The other one is 2 years contract, but would pay 30k. Which one would be better to take from the mortgage point of view?

My wife is on 21k ,and together we have 35k saved, looking to buy apartment for around 160k.

Any help would be appreciated.

D3PO

you wont get a mortgage on a contract. Nor would it be responsible to consider getting one on a contract, who says it would be renewed ?

So if you want a mortgage based on your two salaries then you need to take the permanent position, for which you will need to wait at least 6 months after commencing employment for them to consider this in your application.

Also its off topic but going to add my 2 cents worth. Are you sure you want to look at an apartment ?

They are harder to resell
Wont be ideal for you if you decide to have a family, no garden etc etc.

Unless your planning on living in this place for at least 10 years, then I think you need to rethink what and where your going to buy.

twinsen

D3PO wrote: »

you wont get a mortgage on a contract. Nor would it be responsible to consider getting one on a contract, who says it would be renewed ?

That's what hr told me. They offer only renewable contacts every 23 months.

twinsen

D3PO wrote: »

Also its off topic but going to add my 2 cents worth. Are you sure you want to look at an apartment ?

The reason we are looking for an apartment is that overall its cheaper to live in apartment. Also in the future, it might be easier to rent it or sell it. To buy a nice house for the money we could spend , we would need to buy in commuting towns around Dublin. And we would rather stay closer to the city.

3DataModem

twinsen wrote: »

Hi

Looking for some advice in regards to the morgage. Myself and wife were looking to get an mortgage 3 months ago , but unfortunately I was made redundant. At the moment I am looking for a job and, got a few offers, and not sure what would be better.
One of the offers is permanent contract but this would only pay 24k . The other one is 2 years contract, but would pay 30k. Which one would be better to take from the mortgage point of view?

My wife is on 21k ,and together we have 35k saved, looking to buy apartment for around 160k.

Any help would be appreciated.

So you are looking for a mortgage of 130k with salaries of 21k and 30k. That's unlikely, and probably unadvisable.

miezekatze

3DataModem wrote: »

So you are looking for a mortgage of 130k with salaries of 21k and 30k. That's unlikely, and probably unadvisable.

It's less than 3 times their annual household income, I've seen people getting approval for a lot more than that recently. I'd say it's worth a try. The OP would probably need to be in their job for at least 6 months though, so that might allow them to save up more money for a bigger deposit too.

ck83

3DataModem wrote: »

So you are looking for a mortgage of 130k with salaries of 21k and 30k. That's unlikely, and probably unadvisable.

I can't see why. Even if they only put it over 20 years, it would probably be cheaper to pay the mortgage than pay rent on a similar property in Dublin city. If they're both in secure jobs, then I wouldn't say it's unadvisable (apart from the apartment vs house issue, which they've obviously thought throught).
And I thought the rough guide was 5times your salary?

twinsen

3DataModem wrote: »

So you are looking for a mortgage of 130k with salaries of 21k and 30k. That's unlikely, and probably unadvisable.

Why unadvisable.
At the moment why have to pay 850e monthly for an apartment. If we would get mortgage for 130k for 30 years, we would be paying around the same for the mortgage. Also even though are wages are not much, we still managed to save 35k in last 5 yerars.

D3PO

twinsen wrote: »

Why unadvisable.
At the moment why have to pay 850e monthly for an apartment. If we would get mortgage for 130k for 30 years, we would be paying around the same for the mortgage. Also even though are wages are not much, we still managed to save 35k in last 5 yerars.

hmm with legal fees & stamp duty you wouldn't have an LTV of below 80% not on the figures you have posted.

Also your logic re buying an apartment is quite frankly flawed.

You seem to have no concept about the fact variable interest rates are likely to rise aswell, or considered the other associated costs of home ownership.

So what the if the mortgage and rent are about the same, you will have to have life assurance, you will have the management fees, the LPT and other maintenance costs that you do not have with renting.

Not having a go OP but you come across as very very naïve on this subject.

D3PO

twinsen wrote: »

The reason we are looking for an apartment is that overall its cheaper to live in apartment.

Explain to me your rational that allow you come up with this statement ?

Management fees & storage heaters need I say anymore..

Also in the future, it might be easier to rent it or sell it.

Honestly if you think it will be easier to rent or sell an apartment in the future over a house your seriously mistaken.

To buy a nice house for the money we could spend , we would need to buy in commuting towns around Dublin. And we would rather stay closer to the city.

Firstly that's nonsense you can buy houses in the Dublin area for 160k, secondly is that your only thought on the matter ?

,

3DataModem

twinsen wrote: »

Why unadvisable.
At the moment why have to pay 850e monthly for an apartment. If we would get mortgage for 130k for 30 years, we would be paying around the same for the mortgage.

Two reasons;
1. Interest rates are at an unbelievable low at the moment.
2. Will you have two disposable incomes forever?

twinsen

D3PO wrote: »

hmm with legal fees & stamp duty you wouldn't have an LTV of below 80% not on the figures you have posted.

Also your logic re buying an apartment is quite frankly flawed.

You seem to have no concept about the fact variable interest rates are likely to rise aswell, or considered the other associated costs of home ownership.

So what the if the mortgage and rent are about the same, you will have to have life assurance, you will have the management fees, the LPT and other maintenance costs that you do not have with renting.

Not having a go OP but you come across as very very naïve on this subject.

For all legal fees and stamp duty I have extra 5k.
In regards to interest rate, i do understand that they may rise, that's why banks do stress test of every mortgage.
And based on the quote above , if the apr would go up to 7%, the monthly rate would go up to around 1100e. Still manageable.

In regards to whether buying a house or apartment. I never lived in the house, and I don't really need/want to.

twinsen

3DataModem wrote: »

Two reasons;
1. Interest rates are at an unbelievable low at the moment.
2. Will you have two disposable incomes forever?

1. They are low. Are you 100% sure they will go up ?
2.I don't see why not.

D3PO

twinsen wrote: »

1. They are low. Are you 100% sure they will go up ?
2.I don't see why not.

everybody is 100% sure they will go up. Rates are at historic lows.

Re point 2. This is a pretty irresponsible mindset to have especially when you consider you have already been made redundant in this recession.

Your free to do whatever you want and if the banks lend you the money fair enough.

My personal view based on your comments in this thread is that you don't have enough understanding about the housing market, the banking situation or the impact on your financial means home ownership will have on you for you to be contemplating buying a property.

I think you need to get more clued up on this before you go making the biggest financial decision of your life.

twinsen

Everyone was sure in 2008 that the prices will only go up. We all know how this ended up.

I can agree apr will go up, but there is no reason why it wouldn't go down at some point too.

So basically, your advise for me is to pay 10k a year to my landlord for the next 40 years?

desertcircus

OP: you're talking about taking a salary hit of about eight thousand euro over the next two years in order to spend all your savings and borrow an eighth of a million euro to buy something that's still going down in price, while refusing to contemplate the possibility (in reality, near certainty) that rates will rise or the idea that you might not always have two incomes. I understand the desire to stop paying rent and start owning, but it doesn't make sense given the circumstances.

I'm in a similar situation to you, but my partner and I have no intention of going near a bank for a mortgage in the next two years at least. Prices are still falling in almost every property class (if indeed any class really is rising), and with interest rates as low as they are, looking at estimated repayments as being accurate for any more than a year or two is dangerously shortsighted. Keep saving and renting.

desertcircus

twinsen wrote: »

Everyone was sure in 2008 that the prices will only go up. We all know how this ended up.

I can agree apr will go up, but there is no reason why it wouldn't go down at some point too.

So basically, your advise for me is to pay 10k a year to my landlord for the next 40 years?

If you want to ignore everyone and mischaracterise serious advice as strawman arguments, go ahead. You asked for advice and you got it.

And you donn't have to keep renting forever. People are advising you to keep renting now because buying would leave you dangerously overexposed on an apartment that's falling in value and near-impossible to sell on.

D3PO

twinsen wrote: »

Everyone was sure in 2008 that the prices will only go up. We all know how this ended up.

:eek::eek: Is this a wind up ? Nobody NOBODY thought in 2008 prices would go up.

I can agree apr will go up, but there is no reason why it wouldn't go down at some point too.

Yes there is a reason a VERY BIG reason. Rates are HISTORICALLY LOW.

So basically, your advise for me is to pay 10k a year to my landlord for the next 40 years?

My advise for you is to actually understand what's going on in the economy and its impact on housing, political decisions regarding housing, its impact on banking and banking rates and THEN make an informed decision.

For your own financial wellbeing I would strongly hope no bank would entertain your mortgage request right now. You are not a very strong candidate for a mortgage in my eyes.

djimi

It may be somewhat irrelevant as you wont be getting a mortgage in the next 6-12 months anyway given that you are just starting a new job, but the question that you have to ask yourself is whether you are certain that your new position is going to be secure enough to take on the financial responsibility of a mortgage, and if something were to happen could you sustain the mortgage payments on your partners salary alone?

Personally if I were in your position I would continue to rent for the next year at least, preferably two, and then re-evaluate your position. Youll have a better idea of where you stand with regards your job, and by then we should have a better idea of where the housing market stands. You will also be in a healthier position both with regards the bank and how they will see your job security, and also when you consider you will have a larger deposit if yo continue saving, meaning you either have the option of borrowing less, or buying a bigger property (possibly opening up the possibility of buying a house rather than an apartment).

twinsen

Alright.
I would like to thank everyone for their input and help on this.

StillWaters

PM Killers on here, he is a mortgage broker. I'd say dependent on sector you still might get a mortgage whilst on a contract.

Glenbhoy

D3PO wrote: »

you wont get a mortgage on a contract. Nor would it be responsible to consider getting one on a contract, who says it would be renewed ?

D3PO you're normally pretty knowledgeable and I agree with many of your opinions, but I've got to say that imho the highlighted portion is exactly the type of bollox I would expect to see from someone who doesn't have a clue.

A two year contract is a helluva lot more permanent than many of us out here in so called permanent jobs. Outside of certain sectors, namely public there is no such thing as a permanent job.
When would you suggest that the OP apply for a mortgage? Should he spend his life waiting for his job to be made permanent? Life has to be lived, let the bank underwriters make the decision as to whether the OP is being responsible or not (I know they haven't covered themselves in glory over the last decade, but they seem to be getting their acts together a little better now).

For what it's worth OP, take the higher paid job.

D3PO

Glenbhoy wrote: »

D3PO you're normally pretty knowledgeable and I agree with many of your opinions, but I've got to say that imho the highlighted portion is exactly the type of bollox I would expect to see from someone who doesn't have a clue.

For what it's worth OP, take the higher paid job.

To be honest that's my opinion on it, I think this thread goes more into the realm of opinion than requiring detailed factual commentary and as such that's what I've provided.

I think your taking that line out of context. Heres an OP that has been made redundant recently enough, whos just got a contract offer, this isn't somebody whos on a rolling 2 year contract that has been renewed once or twice or whatever.

Its a completely new contract during a recession, somebody in that position should be very wary of how precarious that position is. Even thinking of getting a mortgage on a contract that you have never started beggars belief.

I take your point, but sometimes I find the best way to get through to somebody is to be blunt, this OP needs to hear things bluntly because they seem to be in a bit of a bubble IMO.

Lets put it this way if I was an underwriter for the bank I wouldn't entertain the OP's application based on whats been outlines in this thread.

StillWaters

The OP and his wife have managed to save €35k whilst on lowish salaries and paying rent. They would appear to me to be sensible and prudent. OP has had several job offers, so is skilled in a growth sector. They are looking to borrow a sensible amount. I really think people are being a bit hysterical on here.

Lyn256

Out of curiosity OP-where are you looking to buy??

Just a couple of things, apartment prices won't be increasing anytime soon particularly 2 beds-there isn't the yield on them so you don't need to be in a rush to buy. (Even if you get the money you want over 30 years, you still will have to pay annual management fees, maintenance on your apartment, property tax etc and that will bring your outgoings up to very close to what you are currently paying in rent)

In your position, I'd be tempted to take the higher paying job, continue saving and in two years time, your contract will be renewed or you can look for another permanent job. The extra pay can be used to increase your savings (banks love that).

While you are taking both salaries into consideration, are you hoping/planning kids at any stage, because if you are, you wife's salary isn't high enough to merit her returning to work after having a child due to the cost of childcare and even if she does go back to work its highly likely that she will go back on reduced hours to spend more time with her child.

So when you are making your calculations, you need to consider if you will be able to pay your mortgage and support a future family on your salary alone.

As a family with one average income and 2 kids, I can tell you that it will be tough to do that on a salary of €30k.

D3PO

StillWaters wrote: »

The OP and his wife have managed to save €35k whilst on lowish salaries and paying rent. They would appear to me to be sensible and prudent. OP has had several job offers, so is skilled in a growth sector. They are looking to borrow a sensible amount. I really think people are being a bit hysterical on here.

I don't disagree they have been clearly sensible and prudent thus far, but for whatever reason house purchases seem to send people dolally.

I said it earlier in the thread if a bank decides to loan them the money well that's up to them and the bank, I personally don't think given the OP's situation that its a good idea, but that's just my opinion.

Lyn256

In the olden days, banks would only lend 3 times the main salary or 2 1/2 times the main salary and the second salary.
These are far more sensible guidelines for a young couple.
In the OP's case, this would mean that depending on the job they should look to borrow
1 OP 24k wife 21k-3x24=72k
2 OP 24k wife 21k-2.5 x 24=60+21=81k
3 OP 30k wife 21k-3x30=90k
4 OP 30k wife 21k-2.5x30=75+21=96k

While these amounts won;t buy the OP what he wants, these are the borrowing rates that need to be considered to be able to manage a mortgage in the future

When I bought my first house in 1999, they were the criteria used and interest rates then were somewhere between 4-5%.

I bought on my own in 2002 and the most that the banks would give me then was 3 times my salary. At that time they wouldn't consider rent-a-room or bonuses or anything when considering what they would lend me and this was with a LTV below 75%.

These guidelines if re-introduced would bring house prices down further but would leave borrowers more breathing space when it comes to paying mortgages

twinsen

Lyn256 wrote: »

Out of curiosity OP-where are you looking to buy??

Just a couple of things, apartment prices won't be increasing anytime soon particularly 2 beds-there isn't the yield on them so you don't need to be in a rush to buy. (Even if you get the money you want over 30 years, you still will have to pay annual management fees, maintenance on your apartment, property tax etc and that will bring your outgoings up to very close to what you are currently paying in rent)

In your position, I'd be tempted to take the higher paying job, continue saving and in two years time, your contract will be renewed or you can look for another permanent job. The extra pay can be used to increase your savings (banks love that).

While you are taking both salaries into consideration, are you hoping/planning kids at any stage, because if you are, you wife's salary isn't high enough to merit her returning to work after having a child due to the cost of childcare and even if she does go back to work its highly likely that she will go back on reduced hours to spend more time with her child.

So when you are making your calculations, you need to consider if you will be able to pay your mortgage and support a future family on your salary alone.

As a family with one average income and 2 kids, I can tell you that it will be tough to do that on a salary of €30k.

We were looking to buy in Santry. Quite a few nice places even around 140k.
I know prices won’t suddenly go up, but due to the fact there is less and less new homes built, the quality overall will be going down. While now you can buy nice 2 bed in Santry, not sure if this will be case in 3 -4 years.
Kids are out of the picture, we can’t really have one.
While in earlier comment I was described as someone who lives in the bubble, that is very far away from the truth. I was just looking for advice here, rather than going first to the bank. I was just wondering which job is better. Please also note the fact that I am not trying to buy 4 bed house for 300k.
In regards to my job, I work in it industry, so pretty much there is some chance that people will not stop using computers in next 40 years.

Lyn256

Overall, I suggest you get in touch with Killian-aka Killers1. He is very helpful with advice and many people have used him as a mortgage broker (myself included) and found him to be excellent.

If you can wait 6 months (which you'll have to do anyway with starting a new job) there should be a lot of apartments coming on stream when the bank repossessions start and with more stock comes falling prices.

With your savings and at a €140k price point, you seem much closer to the traditional lending criteria.

So take the better paying job, save for another 6 months or so borrow 100k and your repayments will be between e450-e650 depending on length of term. This gives you lots of breathing space and options in the future

Get in touch with Killian-he's the best person to advise you

twinsen

Will do.Thank you.

beeno67

Lyn256 wrote: »

When I bought my first house in 1999, they were the criteria used and interest rates then were somewhere between 4-5%.

I bought on my own in 2002 and the most that the banks would give me then was 3 times my salary. At that time they wouldn't consider rent-a-room or bonuses or anything when considering what they would lend me and this was with a LTV below 75%.

These guidelines if re-introduced would bring house prices down further but would leave borrowers more breathing space when it comes to paying mortgages

When I bought first in 1995 we had no problem getting 3.5 times one income plus 1.5 times the second. 90% mortgages were the norm. That was pretty standard at the time and lending got easier after that. Your experience would not really be typical.