Second Mortgage Advice Needed Please

lbyrne1221

Hi,

I was wondering if someone could give me some advice before I go to the mortgage broker to see what I should expect;

I am currently in negative equity (NE) of 100K, this is for a two bedroom apartment. Myself and my fiance want to buy a house as it is too small for future. My finance doesn’t pertain to this NE just myself. The apartment is currently rented and has been for the last 2 years with no issues of finding tenants. I am also on a tracker mortgage.

My current salary is 45K and my finance is 40K. We have 80K between us in savings and do not have any credit cards, over drafts or loans. What are the chances that we would qualify for a mortgage of 220K?
Would my finance be better applying for a mortgage on his own?

Any advice would be greatly appreciated.

unclebill98

The NE will play a massive part in any application. Expect it to be. Are you looking for 220k and use the 80k to buy a 300k house or 220k on its own?

lbyrne1221

unclebill98 wrote: »

The NE will play a massive part in any application. Expect it to be. Are you looking for 220k and use the 80k to buy a 300k house or 220k on its own?

I am just looking for 220k in total for a Mortgage.

PaulM1977

Hi lbyrne1221,

If you are looking to keep the apartment and keep it rented out while also buying your own place, then the rental income you receive will be used to offset part of the mortgage repayments that are to be paid on the property. The standard rule is 70% of any rental income received will be used to cover part of the mortgage, with the "remainder" being considered as a financial commitment to you, the new mortgage applicant, and will therefore be used to reduce how much you can borrow by this "remainder".

If you are only looking for a mortgage of €220k, based on your earnings and having no other financial commitments then you should be okay for the mortgage you need, the only thing that may be an issue is whether you meet the "affordability" criteria which all lenders look at when assessing a mortgage application. This is whether the applicants are putting enough money aside by way of savings or if a financial commitment that recently finished can be put towards their new mortgage, i.e. the monthly repayment and even if the rent you are paying at present can be used to cover the new mortgage repayments as you will no longer be renting if you have a new home.

What is the rent you are in receipt of and what are your monthly mortgage repayments?

PaulM

lbyrne1221

Hi Thank you for your response,

Currently I am renting out the property for 675 per calender month.. My mortgage repayments are 660 euro per month but my TRS is due to end in 2017.
We both put away a combined 2200 into savings per month, should I increase this?

PaulM1977

Hi lbyrne1221,

If your rental income is €675.00 then the mortgage lenders will take 70% of this (€472.50) to cover the mortgage repayments, with the remainder needing to be covered by you directly. This would be approximately €187.50, which should not make a huge difference to you when applying for a mortgage.

The savings that you are doing at present is more than needed so you should be fine in that regard also.

PaulM

phormium

Are you still getting TRS on the mortgage on the apartment that is rented out?