Tenant Buy-out - Mortgage Advice Please!

Pardmag

Hi,Help please!
We are renting a house over 5 years,1st time tenant and now seems like the opportunity to buy.
The price has dropped to an all time low and there is an opportunity to get a lower price for existing tenants.
The problem is investors are eyeing up buying all the remaining rental properties in the area, tenancies will remain in place we are informed.
We feel pressure to buy as we are happy here for the next 5+ years,and we don't want the house to be bought by an investor.
We have not prepared to be "mortgage ready" as people typically are as this opportunity has landed on our doorstep.
So here is my question,with a deposit of 20% gifted to us,the amount of mortgage would be around €50,000.
From different online mortgage calculators a 10year application would be a minimum of €100 LESS per month,than over perfect 5 years rental history which is paid by standing order.
We have no loans,credit card paid off and small savings going to be used to pay off small overdraft this week.
Can badly managed info on bank statements affect the application,since repayments are less than current rent??
Sorry and thanks!!

Kenno90

What do you mean by badly managed info on bank statements ??
....

That is a great opportunity, a 50K is actually very small considering the average ones that are taken out.

To be mortgage ready you need 6 moths bank statements, 3 months salary pay slips, P60s and any documents on savings/other accounts you may have.

As you are getting a gift of 20% you need to get the donators to sign a letter basically stating that they wont be looking for the money back and that it is truly a gift.

Pay off that Overdraft right away, its not a big deal as you have the funds, but you want as little as possible to get in your way.

Also an idea would be to take out the mortgage for 20 years but treat it like a 10 year by overpaying every month. (It'll need to be variable rate mortgage).

One thing banks look at is if you can pay off the repayments in a stress test, by seeing if you can make repayments with an interest rate of 6%. Right now its at 4.2/4.5%

I don't know your salaries (obviously) but the fact it'll be a small mortgage and that your rent is higher than what the repayments might be, you're in good shape. Your small saving is only bump i see

You'll also need to keep in mind, solicitors fees, life assurance, house insurance etc

Ray Palmer

Be very carful about your estimation on rent versus mortgage.

As already said you will have life insurance, house insurance, solicitor fees to pay along with possible interest rate rises. . You will also have to buy furniture and appliances. Pay for any repairs on the property.

Basically it isn't just mortgage vs rent

Pardmag

Hi Kenno90,
Thanks for the info. Re badly managed bank statements, is that we haven't prepared ourselves for 6 months in making sure they look fine. We may have missed a d/d on simple errors and we have had a lot of once off out of the ordinary payments that have left us with less than we normally have end of the month.
Will that look negatively on the application?

Pardmag

Hi Ray Palmer,
Thanks for the reply.
Yes we have considered that. The house will come fully furnished as it currently is, and €100 per month rent vs mortgage saving is the minimum we would be saving on the highest interest rate calculation only on a 10 yr term.

Kenno90

Pardmag wrote: »

Hi Kenno90,
Thanks for the info. Re badly managed bank statements, is that we haven't prepared ourselves for 6 months in making sure they look fine. We may have missed a d/d on simple errors and we have had a lot of once off out of the ordinary payments that have left us with less than we normally have end of the month.
Will that look negatively on the application?

I'm not going to lie, it could go against you. The banks are looking for any excuse not to lend, i heard about people being declined because of online gambling.

BUT its only a 50k mortgage. That's about 550ish a month in repayments. Small amounts of money considering. Maybe the'll let some things slide.

You wont know if you'll get mortgage approval unless you visit the banks.

If you are serious about this and are 100% positive you want to buy the house then the first step is to go to all the big banks (AIB,BOI,PTSB etc) and book an appointment for mortgage consultation.

Try to have all those documents i mentioned above. It'll speed the process along. If i was given that opportunity , i would jump at it.

MouseTail

Sounds like a no-brainer. Good luck with it.

yankinlk

Is the house the right size and in a location you want to commit to permanently? The beauty of renting is if it isnt, you can change it. Just cause its cheap and you can afford it, maybe even pay it off as quick as ten years - do you love this place?

When you go from being a tenant to a homeowner, will your view of your neighbors change? IE are you going to enjoy living next to a load of investment property owners, that wont treat that place like a home?

Have you considered looking elsewhere? Or is this deal so good you just cant pass it up?