Mortgage qualification advice

Hi All,


Just need some advise so I know what to tell my wife.



My annual salary is €50,000 with 5% bonus, I also get 24 hour support on call payments.
I am married with one child. My wife is a homemaker currently but will be re-joining the work force in about a year.
I currently pay €1100 rent.
I have two personal loans, AIB I pay off €300 p/m & Credit Union I pay off €311 p/m

There is a new development called Belmont where there are nice 4 beds going for €380,000. With what looks like another property bubble in specific areas of Dublin on its way we are worried that if we don’t get in now we will be left behind. There is a serious lack of housing in the areas we would like to buy and with so many families like us looking there is a lot of competition.

Using an online calculator I can see that a mortgage of €349600 would cost in the range of €1600 per month. To me this is affordable even without my wife going back to work, she will be though.
I just need someone to tell me, “not a chance you’ll get what you’re looking for”, or “with a bit of re-working they can make it work”?
I’m sure my personal loans will go against me and the fact my wife isn’t back working yet but can you please advise me on where I stand and what I would need to do to get to a point where I would be able to draw down the money I need.

Sleepy

You'd need to have over 40k as a deposit and tbh, with the personal loans, they might require higher as otherwise your deposit will have been "financed by debt".

Even at that, a 350k mortgage on a 50k basic salary is 7 times earnings so I think you'd be hard pushed tbh.

In terms of affordability, you need to stress test the monthly repayments for the inevitable rising interest rates too. Could you still afford it at 1800 a month? 2k? What if ye have another kid etc...

Yea I hear ya.
The wife needs to be back working and I need to have the loans paid off.

Ill just have to be patient and wait a few years and continue to rent. I hope prices don't continue to rise like they are at the moment.

joe316

Maddux Miniature Guano wrote: »

Hi All,


Just need some advise so I know what to tell my wife.



My annual salary is €50,000 with 5% bonus, I also get 24 hour support on call payments.
I am married with one child. My wife is a homemaker currently but will be re-joining the work force in about a year.
I currently pay €1100 rent.
I have two personal loans, AIB I pay off €300 p/m & Credit Union I pay off €311 p/m

There is a new development called Belmont where there are nice 4 beds going for €380,000. With what looks like another property bubble in specific areas of Dublin on its way we are worried that if we don’t get in now we will be left behind. There is a serious lack of housing in the areas we would like to buy and with so many families like us looking there is a lot of competition.

Using an online calculator I can see that a mortgage of €349600 would cost in the range of €1600 per month. To me this is affordable even without my wife going back to work, she will be though.
I just need someone to tell me, “not a chance you’ll get what you’re looking for”, or “with a bit of re-working they can make it work”?
I’m sure my personal loans will go against me and the fact my wife isn’t back working yet but can you please advise me on where I stand and what I would need to do to get to a point where I would be able to draw down the money I need.

Hey,

Best of luck with house hunting process (we are currently towards the end of the first stage of it)

Unfortunately I have bad news, there really isnt a chance of you getting that amount of money.

Just to run through your figures.

Salary - 50k (banks do not take bonus or overtime unless it fully guaranteed by your employer, can you get this?)
Monthly take home - would I be right in saying about 3k?

The banks are going to take 2050 for you and your wife to live on each month and another 250 for your child (doesnt matter if you actually live on less). So that leaves about 700 for your mortgage, this doesnt even include your loans at the moment which would be a further reduction, clear these asap!

Working that out for mortgage amounts (if you clear your loans now) and using AIB's interest rates (they are the best at the moment - fixed for 1st year then variable)

4.09% (stress tested to 6.09%) is 115/116k that you would get approved for.

Sorry about the bad news, I know how cr4p it is in certain parts of the country and the moment but when your wife goes back to work look at it again.

Do a couple of things before then.

- Clear the loans now
- Use the money that was going on the loans for additional savings (you never mentioned deposit)

For those houses in Belmont if they never went up anymore and with a deposit of 40k a stress tested mortgage would be just over 2k a month, you need to be saving/paying rent for this amount for at least 6 months before application.

Best of luck

Thanks Joe,
That's a great response and good advise, I'm going to print this off and show it to my wife.
So ill get the loans paid off, the wife back to work and by that time I'm sure my career will have moved on a bit. We do have the money for a deposit, maybe I should use this to just pay off the loans early on a mortgage of the price I was talking about.

So I'm now resigned to the fact that it will be a few years before we can buy in an area like Belmont, fingers crossed prices don't go crazy and the builders get out and start building again.

Sleepy

If you have the money for the deposit, pay off the loans and look into a regular savers account for the amount you're currently paying into those loans. Would make a big difference to an application if you could show you're paying 1100 in rent and 700 or so a month into a savings account (and should obviously save you money on interest payments).

D3PO

OP you have no chance of getting a 350k mortgage based on what you have said.

Your bonus and on call wont be considered, your loans are a major stumbling block too. Right now you would probably be lucky to be approved for any mortgage at all.

Joes mail hits the nail on the head. Very good mail.

lima

Sleepy wrote: »

If you have the money for the deposit, pay off the loans and look into a regular savers account for the amount you're currently paying into those loans. Would make a big difference to an application if you could show you're paying 1100 in rent and 700 or so a month into a savings account (and should obviously save you money on interest payments).

You could always buy a 2br apt to live in for 2-3 years such that the increase you are expecting will be offset by the increase in your apartment price

(sounds like 2006-speak though!)

joe316

Maddux Miniature Guano wrote: »

Thanks Joe,
That's a great response and good advise, I'm going to print this off and show it to my wife.
So ill get the loans paid off, the wife back to work and by that time I'm sure my career will have moved on a bit. We do have the money for a deposit, maybe I should use this to just pay off the loans early on a mortgage of the price I was talking about.

So I'm now resigned to the fact that it will be a few years before we can buy in an area like Belmont, fingers crossed prices don't go crazy and the builders get out and start building again.

No problem at all, I know its a minefield out there its just knowing where you are and what you can apply for/afford makes a world of difference when dealing with the banks.

Yup, pay off the loans (make sure there are no penalties associated with doing this).

As the other posters say, keep paying your rent and use the newly cleared loan money towards savings (dont even spend it for one month, you've been used to it leaving your account each month, keep it up but make it work for you this time in savings, dont be tempted to start spending it).

I know this kind of a side note and very personal and each to their own (so please dont offence) but dont rush your wife back to work early if you dont have to. At the moment you aren't going to get the mortgage so if you are happy to keep the status quo with renting and making sure your accounts are perfect then happy days. My wife is staying at home with our little one and its great for him, I know that a lot of couples both have to work but unless she is going to go back to a 40/50k job then when you factor in childcare you wouldnt be coming out with a lot more and the 350k mortgage would still be a push. Please dont take offence by that comment, its just the little ones are only little for a few years and might as well enjoy it for as much as possible.

Give me a shout if you have any other questions!

Ok great, that's what Ill do, I just checked with the bank and there are no penlites for paying off early.

I don't take offense to your comment at all. I agree its better to have my wife at home rather than her going back to work. I think she is anxious to get back to work because she is cracking up at home and needs a change of scenery but I'm sure if it came to it she'd be upset to leave our daughter. I agree with you, she was only going to go back to work to help a possible mortgage application, now that we are going to wait there is no need.

This conversation has made me realise there is no need to rush into anything, we'll take our time. I think within the next two years more houses will have been built at that stage and the demand wont be so high and the prices will stablise again. I just got nervous when I saw prices rising and people offering above asking price.

Thanks again Joe.

Moonbeam

You do not have a chance but I would use the next year to pay of debts then when your wife gets a job apply again jointly and see what happens.
Good Luck

ShowMeTheCash

Hey OP I would not worry too much house prices getting too out of control... This type of fear is kind of why people got themselves into a mess....

Focus on what you can actually afford.... There would be a ton of people that would love to be in your shoes.... Assuming you do not currently have a mortgage and are not in negative equity....

My income is perhaps fractionally more however my circumstances very similar.
So we are not a million miles apart.

My budget is 120k in terms of max loan I would ever consider taking out.
Remember also when your wife gets back to work you may need to factor in child care costs.

If I am honest.... You should not even be considering a loan at 350k!

draiochtanois

This post has been deleted.

Villa05

You are earnig well above the average salary and above avg household income.this should tell you that prices are too high.

GavMan

joe316 wrote: »

The banks are going to take 2050 for you and your wife to live on each month

Wow, that much? Really? Seems excessive IMO

MurdyWurdy

GavMan wrote: »

Wow, that much? Really? Seems excessive IMO

It does seem a bit excessive to me and had me a bit worried.

My husband earns €50k and we have about €35k as a deposit. I'm at home with the baby and we'd like to keep it that way. We've no debts at all. I was hoping we could get a mortgage of €200k and was thinking that was reasonable. Now I 'm not so sure after reading this thread. We were going to apply in a few months.

How on earth are first time buyers supposed to buy these days?

ShowMeTheCash

Things to remember interest rates currently are low:

So 4% to 5%

50k gross or net?
Net on 50k is around 35k so call it 2900 pm

How long do you plan to take your montage over?
Let's say 20 years
20 years at 4% not taking any reductions into account 1226
5% 1337
6% 1453
7% 1573
8% 1697
9% 1825

Let's not forget before the crash in around 2007 I think interest rates for a lot of mortgages where in around 7.5%

I think realistically if your take home is 3000 and your repayment is greater than a third if that I.e. 1000 you are putting yourself at risk!

MurdyWurdy

Interesting, thanks. Net take home pay on a salary of €50000 where you are married and only one spouse is working is about €3250 (plus children's allowance if that helps?) I think, so it is doable I suppose if interest rates don't go mad. Are banks still offering 30/35 year mortgages or have they gone by the wayside?

20 would obviously be ideal long term but I'd imagine a lot harder on the pocket in the short term.

It does stress me out when I think too much about it!

ShowMeTheCash

I would not stress too much....
House prices will take years to recover!
The economy is not recovering just yet...

The bigger the deposit the easier the mortgage term is going to be.

I had a lot of friends tie themselves up in big mortgages!
Nice house, I had one friend that moved back in with his parents for the winter as he did not have enough cash to pay mortgage and pay for oil.... No fun at all!

MurdyWurdy

ShowMeTheCash wrote: »

I would not stress too much....
House prices will take years to recover!
The economy is not recovering just yet...

The bigger the deposit the easier the mortgage term is going to be.

I had a lot of friends tie themselves up in big mortgages!
Nice house, I had one friend that moved back in with his parents for the winter as he did not have enough cash to pay mortgage and pay for oil.... No fun at all!

Yeah, we're trying not to rush into anything but as the baby gets bigger I would like a bit of space and unfortunately smaller family homes in Dublin are in short supply.

I guess it's just up to us to decide whether me being at home is more important than moving sooner!