Saving/Applying for a mortgage 2015/16/17/18/19

fg1406

TT rainbows wrote: »

Congrats ! never say never...could be plain sailing next time..well done on you for sticking with it and all those hurdles. Hope the stress levels drops down now and happiness endorphins start to arrive

Thank you! I can’t wait to feel the weight off my shoulders once we have the keys in our hands.

conti

Hello, long-time lurker, first time poster to property forum.

Apologies if this is the wrong place to post. I'm just wondering how difficult it is to qualify for the 4.5x salary exemption from the bank.

Some background on my current situation:
Myself and my girlfriend have been saving for a year now.We collectively earn just over 60k between us, by the time we’re going for the mortgage in summer 2019, assuming our salary bumps are consistent, we should be between 70–72k, with a deposit saving of 38–40k. This is from consistent monthly savings of our own – we’re both from relatively poor families and therefore have zero inheritance or any form of financial help.

In the meantime we’re paying rent in Drumcondra, and I have taken out and paid off a car loan of 4.5k without any delayed repayments. I have a clean ICB record, I was a couple of years late in paying off a student loan years ago but I did eventually clear it to the penny, which for some reason there is no record of in my report.

We don’t do expensive holidays and do have any lavish expenses, neither of use are big drinkers, the mortgage is really all we’re working towards. The only financial 'difficulty' we had was when herself changed job during xmas, even then we were fine, I dipped into my own personal rainy-day savings account to get through the holiday but we're well back on track now.

I’m in a secure I.T. job with great benefits. e.g. I’m covered on full salary for up to 1 year in case anything drastic happens to me health-wise.

The 3.5x our salary just won’t cut it to get a house in greater Dublin area, we were hoping for somewhere commutable like Kildare. Would the above get me anywhere near qualifying me for the 4.5x exemption?

GingerLily

conti wrote: »

The 3.5x our salary just won’t cut it to get a house in greater Dublin area, we were hoping for somewhere commutable like Kildare. Would the above get me anywhere near qualifying me for the 4.5x exemption?

You need to figure out what you can afford to pay per month.
What % of your net income less other outgoings will the stressed mortgage payment be?
Can you prove you can pay that (consistent rent plus savings)?

There's an excel formula to calculate monthly repayments (PMT) which might help you get started, remember to increase the interest rate by 2% on top of the variable amount to stress it.

MissElle

conti wrote: »

The 3.5x our salary just won’t cut it to get a house in greater Dublin area, we were hoping for somewhere commutable like Kildare. Would the above get me anywhere near qualifying me for the 4.5x exemption?

EBS were the bank that eventually gave us an exemption of 3.6 times our combined income. We were told that to get any excemption the underwriters would look at us more favourably if we had 20% deposit and combined income of >75k. We had to save for another few months to get the extra deposit. Best bet is to try a couple of different banks, we were told no by two others before we went to EBS.

cruizer101

conti wrote: »

Apologies if this is the wrong place to post. I'm just wondering how difficult it is to qualify for the 4.5x salary exemption from the bank.

You need to go talk to some banks and see what they say, so far here is what we were told.
KBC: Need to have a specific property in mind for them to consider, beyond that they didn't give details
AIB: for 3.5 they 2% stress test and require 2050 remaining in net after mortgage and other liabilities (this would be other loans, maybe childcare, etc and figure is probably different if have kids), I'm pretty sure most banks apply this although had heard 2100
For 4.5 again 2% stress test and require ~2700 remaining (I think that was the figure), they will also consider other stuff but I think if you don't fit that they won't consider.

Not sure about other banks, and take the above with pinch of salt, its what we were told but I'm sure there is more to it also.

Edit: I checked the pic we took of the sheet he did his calculations and the figure for 4.5 for 2850 actually

purpleisafruit

cruizer101 wrote: »

You need to go talk to some banks and see what they say, so far here is what we were told.
KBC: Need to have a specific property in mind for them to consider, beyond that they didn't give details
AIB: for 3.5 they 2% stress test and require 2050 remaining in net after mortgage and other liabilities (this would be other loans, maybe childcare, etc and figure is probably different if have kids), I'm pretty sure most banks apply this although had heard 2100
For 4.5 again 2% stress test and require ~2700 remaining (I think that was the figure), they will also consider other stuff but I think if you don't fit that they won't consider.

Not sure about other banks, and take the above with pinch of salt, its what we were told but I'm sure there is more to it also.

AIB count 250 extra per child on top of the 2050 for a couple. The figure for an income limit exemption is 2700. You also need to pass the stress test on the mortgage at 2% on top of normal rates.

Barlett

Hi folks, I co-own an apartment with my brother that we inherited. It has been rented out for over three years and has no mortgage - is it possible to use the rental income from it as income when applying for a mortgage?

conti

Thanks for the advice all.

I'll start putting together a spreadsheet and adjusting budget as needed.

So correct me if I'm wrong, we need to have >= 2700 left over after deducting
* monthly mortgage repayment (original interest inclusive?)
* + 2% interest stress test
* + monthly outgoings e.g. car, bills
all from our collective net monthly salary?

JDD

It's be tight. 4.5 x €72k is €324k mortgage. Say you get a 3% fixed rate, which stress tested to 5% is a repayment of €1,555 per month.

Banks want to see that you have €2,100 left over from your net take home pay as a couple with no kids after the €1,555 is taken off. Add €250 per child if you've got some. And that doesn't include any fixed outgoings, which means personal loans, car loans, credit cards or childcare fees so you wouldn't want to have any of those. That means you need a take home pay of €3,655 which might be a bit off what the take home pay is at earning €72k?

Your rent payment plus savings should at least be €1,555 per month for a year before you apply also.

Edit: Sorry I didn't know about the €2,700. That will make it a bit tighter I'd say?

tusk

JDD wrote: »

Edit: Sorry I didn't know about the €2,700. That will make it a bit tighter I'd say?

Literally went through this 2 weeks ago with aib, and their net disposable income minimum for exceptions for a couple is €2850.

purpleisafruit

tusk wrote: »

Literally went through this 2 weeks ago with aib, and their net disposable income minimum for exceptions for a couple is €2850.

Last Thursday, I was told 2700 by them. They don't seem to know themselves!

conti

purpleisafruit wrote: »

Last Thursday, I was told 2700 by them. They don't seem to know themselves!

Couple of years back I made a payment a across the phone to them for my student loan, at the end of the call the guy goes "You have one thousand and <something> left to pay off", I hung up the phone feeling something was off, then I remembered I had paid off a thousand a couple of months previously. I called back and asked them to double check, turned out they had made an error and then rectified it. Nearly swindled out of a grand due to an error on AIB's behalf, good thing I called back!

Mickiemcfist

tusk wrote: »

Literally went through this 2 weeks ago with aib, and their net disposable income minimum for exceptions for a couple is €2850.

Anybody know what the disposable income minimum for one person is?

cruizer101

cruizer101 wrote: »

AIB: for 3.5 they 2% stress test and require 2050 remaining in net after mortgage and other liabilities

So you need more than 2k a month left having paid an imaginarily high amount each month?

ELM327

Mickiemcfist wrote: »

Anybody know what the disposable income minimum for one person is?

1650 quoted as minimum for me from BOI.

ELM327

Deleted User wrote: »

So you need more than 2k a month left having paid an imaginarily high amount each month?

Yes.
It's not going to be imaginary, mortgage rates are going to go up.
A rise of 2 percentage points in 5 years is not out of the question.

2050 for a 2 parent family especially with kids isnt actually that much, as it doesnt include cost of living bills like food, school, clothes, tv, esb, etc

conti

JDD wrote: »

Your rent payment plus savings should at least be €1,555 per month for a year before you apply also.

It's been around 2500 since we started saving a year ago (we're very frugal and boring), should be able to keep that up until our application. But yeah, squeezing 2700 out the other end is the challenge, and getting deposit up to 20% instead of 10.

ELM327

ELM327 wrote: »

Yes.
It's not going to be imaginary, mortgage rates are going to go up.
A rise of 2 percentage points in 5 years is not out of the question.

2050 for a 2 parent family especially with kids isnt actually that much, as it doesnt include cost of living bills like food, school, clothes, tv, esb, etc

Well yes but I was thinking single person, is it the same?
Seems odd (e.g. for a 100k house) that one would have to have 10k deposit along with an income of almost 3k per month to pay back well under 500 per month.

JDD

I think it's €1,500 for a single person, though that will probably be higher if you are looking for an exception.

So if you have a salary of €50k, and want a mortgage of €175k, that's a stress tested repayment of €971 a month. That means your minimum take home needs to be €2,471 and if you have any loans it'll need to be higher.

bush

In Aib its 1400 per month for a single person

JDD

JDD wrote: »

I think it's €1,500 for a single person, though that will probably be higher if you are looking for an exception.

So if you have a salary of €50k, and want a mortgage of €175k, that's a stress tested repayment of €971 a month. That means your minimum take home needs to be €2,471 and if you have any loans it'll need to be higher.

It's at the lower end where it seems like it would have a huge impact.

ELM327

Deleted User wrote: »

Well yes but I was thinking single person, is it the same?
Seems odd (e.g. for a 100k house) that one would have to have 10k deposit along with an income of almost 3k per month to pay back well under 500 per month.

Proportionately the impact is a lot higher at the lower prices.
Those figures are not too far off. Im in the ballpark of those figures

autumnbelle

We are looking to build, currently saving deposit, have the site. Would need a mortgage of approx 160k. Realistically what do we need to be saving monthly and have left over to get mortgage approval. Is it income left over after you have paid the mortgage eg 2000 after potentially paying 700 a month?

LirW

As far as I know the banks assess your ability to repay as around 1250 per adult per month. If you're a couple it's 2500, everything beyond that is what you can afford to repay.
That and you'll be stress tested for higher interest rates, which you need to pass.

autumnbelle

LirW wrote: »

As far as I know the banks assess your ability to repay as around 1250 per adult per month. If you're a couple it's 2500, everything beyond that is what you can afford to repay.
That and you'll be stress tested for higher interest rates, which you need to pass.

Is this after the mortgage repayments? thanks

autumnbelle

Also does anyone know what they deduct is it loan repayments phone bills etc?

ELM327

LirW wrote: »

As far as I know the banks assess your ability to repay as around 1250 per adult per month

. Incorrect, its generally 1450-1650 for a single person

LirW wrote: »

If you're a couple it's 2500, everything beyond that is what you can afford to repay.

It's 2050 for a couple.

LirW wrote: »

That and you'll be stress tested for higher interest rates, which you need to pass.

True

autumnbelle

ELM327 wrote: »

. Incorrect, its generally 1450-1650 for a single person It's 2050 for a couple.

True

We are a couple with a child so I think we are 2000 plus extra then for having a child.

LirW

Pardon me, that was the figure when we checked out the banks which is now a bit down the line.

ELM327

autumnbelle wrote: »

We are a couple with a child so I think we are 2000 plus extra then for having a child.

2000/2050 is generally the banks figure for non-child couples.. each child (with AIB+BOI anyway) added 250.