Rent double a mortgage payment

sadie1502

Hi all

My friend is renting the past 6 months paying 850 a month direct debit to a property management company. She is thinking of going for a mortgage small mortgage 85k there abouts. She has saves her deposit and solicitors fees etc. He mortgage payments would be 400 to 500 max. Even with stress test. As she is renting and paying 850 she isn't now saving. Will this go against her even though she is paying well above a mortgage payment ?

NIMAN

Her current situation will most likely be irrelevant to the lenders.

They have very strict criteria to pass before giving out mortgages, and she will either pass or fail these.

The fact that she has some savings sorted and the deposit there will look good anyway. Whether or not that will be enough for them she will only find out by talking to a lender.

Trish56

Her current situation would be most relevant to a lender and the fact that she is not currently saving will not go against her. Once she can show that she has her deposit saved plus legal fees and stamp duty and has proven affordability she should have no problem getting a mortgage subject to income and a good credit rating.
If her stressed monthly repayment is €500 and she can show through her bank statements that she is paying €850 per month in rent for the past 6 months then the lender will be happy that she can afford the mortgage.
Best of luck.
Trish

sadie1502 wrote: »

Hi all

My friend is renting the past 6 months paying 850 a month direct debit to a property management company. She is thinking of going for a mortgage small mortgage 85k there abouts. She has saves her deposit and solicitors fees etc. He mortgage payments would be 400 to 500 max. Even with stress test. As she is renting and paying 850 she isn't now saving. Will this go against her even though she is paying well above a mortgage payment ?

Toots

Moved from Banking & Insurance & Pensions, per OP request.

Posters, please note that the Accommodation & Property Charter now applies to this thread.

Michael D Not Higgins

Under the central bank lending rules, if your friend is a first time buyer, they need at least 10% of the purchase price as a deposit. The borrowed amount (85k) should be no more than 3.5x the gross salary. So your friend should have an income of at least 25k, and have savings of at least ~10-15k.

Affordability as determined by the bank will be determined by many factors, such as if your friend has children, outstanding loan repayments, etc. A rule of thumb is that each adult requires ~1300 per month. If your friend was a single person without children or any loans, a salary of 25k looking for a mortgage of 85k with 15k for deposit and fees, they'd be on the limit of affordability.

Mrs OBumble

Has she budgeted the cost of house insurance, management fees and maintenance (house and appliances)? I know the difference between the rent and mortgage seems large, but it's not. 400 less per month for 12 months is only 4800, and she could easily spend most of that on the things listed.

sadie1502

Thanks for the replies. Yes she has budgeted for these things. Has the deposit and fees boxed off. No loans no children. Doesn't owe a penny to anyone. Car paid for through savings. Credit card paid off.