Chances of Second Mortgage

lbyrne121

I was wondering if anyone could give any advice.. I was wondering what are my chances of getting a second mortgage ? I have an apartment and it is too small (2 beds) and to buy somewhere bigger. The mortgage is currently 195K (tracker mortgage) and property is approx 90-95K in negative equity, I don’t want to sell the property;

Income: 40K and partner 40K
Savings: 100K
Savings per month; 2,700
No loans, credit card debt etc..


My question is with the above details what is the chance of getting a second mortgage, the house costs approx 240K?

Any advice is greatly appreciated.

gaius c

As mentioned, your problem is basically that you only have 10k (possibly only 5k) equity to your name.

Apartment is worth 100k. House is worth 240k.
Total is 340k. Max 80% borrowings so €272k is the most you can borrow but you already have €195k borrowed so only €77k new borrowings allowed.

240k - 77k = €163k
That's what you need in cash to keep total borrowings below 80% LTV

You already have 100k so 63k more needed. Saving at 2.7k a month (which is pretty decent on those salaries btw) so it'll take you 23 months to save that.

Or you could try to do a deal with the bank on selling the apartment because they'd probably like to get you off the tracker if possible.

Damiencm

What could you expect to rent your apartment out for and to what level would this income cover the repayments?

Your healthy joint level of income and savings base could stand to you but it would really depend on what level of new mortgage you are looking for. Since your upsizing Im guessing it will be substantial

Best advice would be to make an appointment with your existing bank and then with another mortgage provider. Just be upfront with everything and see what happens

Edit: just noticed that you did mention the cost of the new house

lbyrne121

Damiencm wrote: »

What could you expect to rent your apartment out for and to what level would this income cover the repayments?

Your healthy joint level of income and savings base could stand to you but it would really depend on what level of new mortgage you are looking for. Since your upsizing Im guessing it will be substantial

Best advice would be to make an appointment with your existing bank and then with another mortgage provider. Just be upfront with everything and see what happens

The house im looking for is in the ranges between 225-240K.... if we have 100K in savings the mortgage i would be looking for would be approximately 130K...
The mortgage is currently 660 per month and I receive 750 per month in rent..
I understand from above post by galuc the LTV we would need an extra 64K but we are at a stage were we need to move as i am currently living at home with my parents hence the ability to save massively..

Uriel.

lbyrne121 wrote: »

The house im looking for is in the ranges between 225-240K.... if we have 100K in savings the mortgage i would be looking for would be approximately 130K...
The mortgage is currently 660 per month and I receive 750 per month in rent..
I understand from above post by galuc the LTV we would need an extra 64K but we are at a stage were we need to move as i am currently living at home with my parents hence the ability to save massively..

I am in a very similar position to you and recently got approved for a higher mortgage (albeit with a slightly higher joint income).

My advice would be to go to a broker and discuss with them. We went through a broker and he did an excellent job for us.

Damiencm

lbyrne121 wrote:

The house im looking for is in the ranges between 225-240K.... if we have 100K in savings the mortgage i would be looking for would be approximately 130K... The mortgage is currently 660 per month and I receive 750 per month in rent.. I understand from above post by galuc the LTV we would need an extra 64K but we are at a stage were we need to move as i am currently living at home with my parents hence the ability to save massively..

Well I definitly think it would be a bad idea to consume all your savings. Hold at least €15k to €20k back for a rainy day.

The LTV would be more of a concern for your current bank than for another provider.

Uriel. wrote:

My advice would be to go to a broker and discuss with them. We went through a broker and he did an excellent job for us.

If contacting a broker make sure you get plenty of references from others Remember, brokers get different levels of commission from different banks... Also remember that you will need to gather together the exact same level of information regardless of whether you go with a broker or not.

gaius c

gaius c wrote: »

....................

Apartment is worth 100k. House is worth 240k.
Total is 340k. Max 80% borrowings so €272k is the most you can borrow but you already have €195k borrowed so only €77k new borrowings allowed...............

In my experience that's not how the mortgage rules were applied.

The 80% figure was applied to the 2nd property, I needed 20% deposit. I had to have a demonstrated ability (monthly savings) to pay both mortgages.

The 1st mortgage was essentially classed as a personal loan payment.

lbyrne121 wrote: »

....
The mortgage is currently 660 per month ......

Both on €40k so probably €5k/month coming in after tax, 30% of that is €1500/month, can't see you being turned down for a €150k mortgage by all institutions. Some no doubt will, the bank your first mortgage is with for example.

briman1983

Is you partner on your mortgage at present. Can she not can she not just go to the bank as a first time buyer with savings and apply for a mortgage the normal way.

She should be entitles to 3.5 times her income which would equate to 140k + 100k in saving equating to a total of 240k so ye would have enough to purchase the house. She may need to tell a few white lies on the application!!

You would need to gift the savings to your partner in order for her to do this. I'm in the process of doing something like this at the moment with smaller figures but the same concept.

Boardies please correct me if I am wrong

Cathmandooo

Your biggest stumbling block will be the rent not covering the mortgage, assuming the €750 is before 40% income tax plus USC?

Your savings are great though and you're not looking for a big mortgage, definitely worth talking to a broker about. I can recommend by pm one that I just used if you like. He's based in Dublin but I believe he covers outside of Dublin too.

Cathmandooo

Cathmandooo wrote: »

Your biggest stumbling block will be the rent not covering the mortgage, assuming the €750 is before 40% income tax plus USC?..............

Not a factor from my experience, they look at capability to pay both mortgages. If they reckon you can't pay MortgageB with PropertyA empty than they won't be overly keen on lending from what I gathered.

gaius c

Augeo wrote: »

In my experience that's not how the mortgage rules were applied.

The 80% figure was applied to the 2nd property, I needed 20% deposit. I had to have a demonstrated ability (monthly savings) to pay both mortgages.

The 1st mortgage was essentially classed as a personal loan payment.



Both on €40k so probably €5k/month coming in after tax, 30% of that is €1500/month, can't see you being turned down for a €150k mortgage by all institutions. Some no doubt will, the bank your first mortgage is with for example.

Not going to happen. If the OP was to default on the apartment, what assets do they have to make up the shortfall upon repossession?
The house of course and that's already secured against other loans.

No bank would allow another bank have possible "call" on the asset their loan is secured against and no bank would hand out the 114% mortgage that you are basically proposing if he goes to the same lender as he used before.

Michael D Not Higgins

Augeo wrote: »

In my experience that's not how the mortgage rules were applied.

The 80% figure was applied to the 2nd property, I needed 20% deposit. I had to have a demonstrated ability (monthly savings) to pay both mortgages.

The 1st mortgage was essentially classed as a personal loan payment.



Both on €40k so probably €5k/month coming in after tax, 30% of that is €1500/month, can't see you being turned down for a €150k mortgage by all institutions. Some no doubt will, the bank your first mortgage is with for example.

Aside from affordability, are you saying the LTI and LTV limits are only applied on one mortgage at a time?

For example, in this case, the OP would have 80k income for a max LTI borrowing level of 280k, 195k of which is already tied up in the apartment allowing 75k in additional borrowing (without the use of an exemption which is highly unlikely with a large negative equity mortgage). Gaius has already done the LTV calculations.

You're saying the bank are only applying affordability levels to the repayments and not on the overall borrowing limits? It encourages people to take on more debt than comply with the rules in force.

gaius c

Damiencm wrote: »

Well I definitly think it would be a bad idea to consume all your savings. Hold at least €15k to €20k back for a rainy day.

The LTV would be more of a concern for your current bank than for another provider.



If contacting a broker make sure you get plenty of references from others Remember, brokers get different levels of commission from different banks... Also remember that you will need to gather together the exact same level of information regardless of whether you go with a broker or not.

I have just the broker for you and he would be well known to members of this forum. PM for details because I highly recommend him to others.

Augeo

Augeo wrote: »

In my experience that's not how the mortgage rules were applied.

The 80% figure was applied to the 2nd property, I needed 20% deposit. I had to have a demonstrated ability (monthly savings) to pay both mortgages.

The 1st mortgage was essentially classed as a personal loan payment.



Both on €40k so probably €5k/month coming in after tax, 30% of that is €1500/month, can't see you being turned down for a €150k mortgage by all institutions. Some no doubt will, the bank your first mortgage is with for example.

The piece in bold did happen, different bank.

gaius c wrote: »

Not going to happen. If the OP was to default on the apartment, what assets do they have to make up the shortfall upon repossession?
The house of course and that's already secured against other loans.

No bank would allow another bank have possible "call" on the asset their loan is secured against and no bank would hand out the 114% mortgage that you are basically proposing if he goes to the same lender as he used before.

gaius c

gaius c wrote: »

Not going to happen. ...............

Michael D Not Higgins wrote: »

Aside from affordability, are you saying the LTI and LTV limits are only applied on one mortgage at a time?...............

gaius & M D Not H', what ye think and what myself and Uriel have experienced differ. I simply described how I as viewed by a bank. I'm not proposing anything.

Uriel. wrote: »

I am in a very similar position to you and recently got approved for a higher mortgage (albeit with a slightly higher joint income)................

Augeo wrote: »

In my experience that's not how the mortgage rules were applied..............

Michael D Not Higgins

Augeo wrote: »

The piece in bold did happen, different bank.

What was your total LTV after the second mortgage?

gaius c

And did the second bank actually know about the first mortgage?

It really doesn't seem plausible that in a country with full recourse mortgages that a bank went "yeah no bother" to somebody borrowing over 100% of their total equity.

You fall behind on both mortgages and bank B will be in trouble despite positive equity on "their" property because your resources will be split between both mortgages and there will be a fight over the positive equity on property B.

OP
Just talk to a mortgage broker. I have an excellent one if you want the details.

Michael D Not Higgins

Michael D Not Higgins wrote: »

What was your total LTV after the second mortgage?

I've already stated what deposit I contributed for the 2nd property. I'm not going to state what my total LTV is as I have no real ambition for such detail to be public.

gaius c

gaius c wrote: »

And did the second bank actually know about the first mortgage?

............
Just talk to a mortgage broker. I have an excellent if you want the details.

Of course they knew about the first mortgage.

If you think this is all so unlikely why are advising the OP to talk to an excellent mortgage broker?

gaius c

Augeo wrote: »

I've already stated what deposit I contributed for the 2nd property. I'm not going to state what my total LTV is as I have no real ambition for such detail to be public.

Does it breach 90%? (That's rhetorical. You don't actually have to answer it)

If not, you're probably just an exemption to the new rules and they ran the figures in that way.

Michael D Not Higgins

Augeo wrote: »

I've already stated what deposit I contributed for the 2nd property. I'm not going to state what my total LTV is as I have no real ambition for such detail to be public.

I'm trying to establish if your situation is different from the OP's or not. If you had less than 100% LTV then there's less risk in the bank's eyes and wouldn't be considered comparable to their situation.

OP is suggesting a situation of >100% LTV over the two mortgages.

Michael D Not Higgins

Augeo wrote: »

Of course they knew about the first mortgage.

If you think this is all so unlikely why are advising the OP to talk to an excellent mortgage broker?

A mortgage broker can review their financial situation better than we can and will provide better professional advice than us clowns, it's only prudent.

OnDtown

lbyrne121 wrote: »

I was wondering if anyone could give any advice.. I was wondering what are my chances of getting a second mortgage ? I have an apartment and it is too small (2 beds) and to buy somewhere bigger. The mortgage is currently 195K (tracker mortgage) and property is approx 90-95K in negative equity, I don’t want to sell the property;

Income: 40K and partner 40K
Savings: 100K
Savings per month; 2,700
No loans, credit card debt etc..


My question is with the above details what is the chance of getting a second mortgage, the house costs approx 240K?

Any advice is greatly appreciated.

My partner & I were in a similar position to you, heres our figures...
Income: 55K and partner 45K
Savings: 120K
Savings per month; 2k
No loans, credit card debt etc..

We were at least 95k negative equity in the apartment we were living in and about 30k negative equity on my partners property.
We starting by trying all the big banks for 150k mortgage but got refused, reduced our request to 120k but still got refused but then walked into PTSB and got approved there & then.
The one thing they won't like is that your living with your parents and your current spending won't be reflective of your living costs when you get your new property and it's also givng a false impression of your savings.
They did take all potential rental incomes into account when applying also.

Cathmandooo

Augeo wrote: »

Not a factor from my experience, they look at capability to pay both mortgages. If they reckon you can't pay MortgageB with PropertyA empty than they won't be overly keen on lending from what I gathered.

It was a factor in my experience.

Michael D Not Higgins

OnDtown wrote: »

My partner & I were in a similar position to you, heres our figures...
Income: 55K and partner 45K
Savings: 120K
Savings per month; 2k
No loans, credit card debt etc..

We were at least 95k negative equity in the apartment we were living in and about 30k negative equity on my partners property.
We starting by trying all the big banks for 150k mortgage but got refused, reduced our request to 120k but still got refused but then walked into PTSB and got approved there & then.
The one thing they won't like is that your living with your parents and your current spending won't be reflective of your living costs when you get your new property and it's also givng a false impression of your savings.
They did take all potential rental incomes into account when applying also.

Did you sell any of the properties when going for the third, i.e. get a negative equity loan? Was your total LTV >100% when all was said and done?

Uriel.

gaius c wrote: »

And did the second bank actually know about the first mortgage?

It really doesn't seem plausible that in a country with full recourse mortgages that a bank went "yeah no bother" to somebody borrowing over 100% of their total equity.

You fall behind on both mortgages and bank B will be in trouble despite positive equity on "their" property because your resources will be split between both mortgages and there will be a fight over the positive equity on property B.

OP
Just talk to a mortgage broker. I have an excellent one if you want the details.

Mine knew about it, can't fathom a situation where they wouldn't know tbh. Mine knew about it and the estimated negative equity as well

Eugene Norman

lbyrne121 wrote: »

I was wondering if anyone could give any advice.. I was wondering what are my chances of getting a second mortgage ? I have an apartment and it is too small (2 beds) and to buy somewhere bigger. The mortgage is currently 195K (tracker mortgage) and property is approx 90-95K in negative equity, I don’t want to sell the property;

Income: 40K and partner 40K
Savings: 100K
Savings per month; 2,700
No loans, credit card debt etc..


My question is with the above details what is the chance of getting a second mortgage, the house costs approx 240K?

Any advice is greatly appreciated.

Is 195K what's left on the mortgage?

lbyrne121

Eugene Norman wrote: »

Is 195K what's left on the mortgage?

No 178K is left on the property... a mortgage of 216K was taken out.

athtrasna

OP as you also have duplicated this thread on the banking forum I'm going to close this one. Please do not start multiple threads for a single query.

Mod