Thinking of buying an apartment

stiofan85

Hi guys,

Fiancée and I have decided we're better off buying rather than renting as our lease comes to an end this summer and we're a bit sick of renting and all that goes with it. We've decided to go for an apartment as it would suit our needs for the next few years and can very comfortably afford the mortgage payments.

We had been planning on buying after we get married in late 2017, so had only just started saving for a deposit specifically in December, putting a bit away with aim of having enough for deposit in Jan 2018, while also saving for the wedding. Otherwise savings have been a bit random - I was saving up for the engagement last year, and the year before that we went travelling for a bit so had saved up for a couple of years before that, spent most of it. Returned to work and back to some saving. Basically, the savings have been happening, but a bit inconsistent over the years.

The thing is, we actually have enough for a deposit for the apartment now and have seen one we like. We've no debt at all. Mortgage payments would be 0.7x our current monthly rent, and would be about 13% of our monthly take home. This is only a recent thing though, as I moved job 5 months ago to get a huge bump in pay to get us into this position. I'm worried the not-so-consistent savings, coupled with me being relatively new to the job would hinder us with our application. I'll be made permanent in 4 weeks' time, that's an absolute certainty. She's employed by the civil service in a very good position.

Reading that it can take months to draw down the mortgage, we don't want to wait until our lease is up to start the process. We should have money to cover fees and other costs in 2 months' time.

We've been paying the current rent by DD for 18 months, otherwise have rental history going back about 6 years. No kids.

So questions are: If we applied, how likely would we be to be to get full approval (not AIP)? If we applied and were rejected, would that hinder a future applications when things would be a lot more stable in terms of my job and savings?

Any advice would be appreciated.

Thanks.

NIMAN

You both sound like you are in a decent position to get approval, especially once you get your permanent status. Some lenders may want you to be in a permanent position for a certain length of time first though, bear that in mind.

One other thing that would spring to mind for me is kids. You say the apartment suits you needs, but always think of the future. Will it suit your needs in 5yrs time? 10yrs time?

I appreciate that you are probably thinking "we will sell and buy a house before kids come", but will the apartment be attractive to people, is it in a good area, what if there is another downturn and prices of apartments drop off? Try to think of every possible thing that might come about in future.

Good luck with whatever decision you make.

stiofan85

NIMAN wrote: »

You both sound like you are in a decent position to get approval, especially once you get your permanent status. Some lenders may want you to be in a permanent position for a certain length of time first though, bear that in mind.

One other thing that would spring to mind for me is kids. You say the apartment suits you needs, but always think of the future. Will it suit your needs in 5yrs time? 10yrs time?

I appreciate that you are probably thinking "we will sell and buy a house before kids come", but will the apartment be attractive to people, is it in a good area, what if there is another downturn and prices of apartments drop off? Try to think of every possible thing that might come about in future.

Good luck with whatever decision you make.

Hi Niman,

Thanks for your response. 100% agree regarding 5/10 years' time and kids. We're unsure where we'll be in 5-10 years' time, so we're very deliberately aiming for the low end of the market so we're not stuck in a complete mess if there was another downturn. We've capped the amount we want to spend to being only a small proportion of what we could actually borrow. The place is in a lovely, mature area and by all accounts is quite popular judging by the number of people viewing when we were there.

Taking the current 3.5x restriction on what we can borrow, and based on where our earnings should be in that time, the place we're looking at would be ~1.0 our combined annual earnings (currently would be ~1.6). Her earnings' trajectory is very defined, mine a little less so but I'm on a good path. So with that in mind, I believe we'd have enough bandwidth to buy a second place and hold onto the apartment.

Admittedly, there is some risk in the strategy, but we're comfortable with it and are not allowing our budget to creep up. We're trying to buy what we need and get away from renting. It's fair to say we're very lucky to both be in excellent jobs, but at the same time I don't feel the need to max ourselves out on a huge mortgage when something much smaller would suffice for quite a while.

Coming back to my original question: Should a bank refuse based on current circumstances, would that affect a future applications?

Thanks!

NIMAN

Hard to say, and something you might only find out by asking them.
Technically, you are not permanently employed yet, and even if you apply 6 months after you become permanent, they might see you as slightly risky if you have only been permanent for 6 months.

But as your borrowing level is so low, I think you both should be grand, especially as your OH has a public sector, well paid, steady job. Borrowing so well within your limits is a bonus, and clever thinking.

Sounds like a reasonable enough investment, how many bedrooms is it? Even if it was only a 1bed apartment, that would suffice for a family + 1 child up to maybe 18 months, when they might be moving to a room of their own.

stiofan85

NIMAN wrote: »

Hard to say, and something you might only find out by asking them.
Technically, you are not permanently employed yet, and even if you apply 6 months after you become permanent, they might see you as slightly risky if you have only been permanent for 6 months.

But as your borrowing level is so low, I think you both should be grand, especially as your OH has a public sector, well paid, steady job. Borrowing so well within your limits is a bonus, and clever thinking.

Sounds like a reasonable enough investment, how many bedrooms is it? Even if it was only a 1bed apartment, that would suffice for a family + 1 child up to maybe 18 months, when they might be moving to a room of their own.

Yeah, I'm kinda hoping her job is our big selling point to the banks. I've sent them all phone-back requests today to have a chat with their advisors prior to any formal application, just to feel things out in case my situation is prohibitive.

Going for a 2 bed, completely renovated. If there's a kid on the horizon then we'd have enough space for a few years and then have to move on. Again, trying to future proof ourselves.

If she wants a second, I'm f*cked. :eek:

minikin

Have a tastefully small wedding in a registry office, put all that you save into the property.

stiofan85

minikin wrote: »

Have a tastefully small wedding in a registry office, put all that you save into the property.

I wish

We deliberately pushed the wedding date out to allow us to save for it without stretching ourselves. We're not doing anything fancy there either.

During the golden boom days it seemed everyone was getting loans to have stupid weddings and mortgaging themselves to the max, so it's fair to say we have a more conservative approach. Definitely don't want to end up drowning in debt for the sake of a party and a house we don't need!

NIMAN

2 bed a smarter option imho.
At least that way, you can even have 2 kids and still have space for everyone, at least until the kids got to maybe aorund 8 or 9 and want their own rooms!

Trish56

Hi Stiofan85,
Once you're permanent and in your job 6 months and finished probation there should be no problem with your employment. Lenders will look for proof of affordability over the last 6 months and this can be proven either by rent or rent and savings. For example if your monthly stressed repayments are €1200 then you need to be paying rent of €1200 for past 6 months or a combination of rent and savings. You will need to provide 6 months current account statements and credit card statements and you need to ensure that you do not regularly use your overdraft, have unpaid direct debits or referral fees and that you clear your credit card monthly.

The max you can borrow is 90% of the purchase price up to 220k and 80% on the balance over 220k subject to 3.5 times earnings.
Stamp duty will be 1% and legal fees will be approx. 2k depending on the Solicitor.
You should also be aware if you wish to trade up in the future you will need 20% deposit.
Hope the above helps.
Best of luck
Trish

stiofan85 wrote: »

Hi guys,

Fiancée and I have decided we're better off buying rather than renting as our lease comes to an end this summer and we're a bit sick of renting and all that goes with it. We've decided to go for an apartment as it would suit our needs for the next few years and can very comfortably afford the mortgage payments.

We had been planning on buying after we get married in late 2017, so had only just started saving for a deposit specifically in December, putting a bit away with aim of having enough for deposit in Jan 2018, while also saving for the wedding. Otherwise savings have been a bit random - I was saving up for the engagement last year, and the year before that we went travelling for a bit so had saved up for a couple of years before that, spent most of it. Returned to work and back to some saving. Basically, the savings have been happening, but a bit inconsistent over the years.

The thing is, we actually have enough for a deposit for the apartment now and have seen one we like. We've no debt at all. Mortgage payments would be 0.7x our current monthly rent, and would be about 13% of our monthly take home. This is only a recent thing though, as I moved job 5 months ago to get a huge bump in pay to get us into this position. I'm worried the not-so-consistent savings, coupled with me being relatively new to the job would hinder us with our application. I'll be made permanent in 4 weeks' time, that's an absolute certainty. She's employed by the civil service in a very good position.

Reading that it can take months to draw down the mortgage, we don't want to wait until our lease is up to start the process. We should have money to cover fees and other costs in 2 months' time.

We've been paying the current rent by DD for 18 months, otherwise have rental history going back about 6 years. No kids.

So questions are: If we applied, how likely would we be to be to get full approval (not AIP)? If we applied and were rejected, would that hinder a future applications when things would be a lot more stable in terms of my job and savings?

Any advice would be appreciated.

Thanks.

stiofan85

Thank you for the replies so far.

I've spoken to a couple of banks and the feedback has been strong so far.

Main question is over my permanency in the job, but since I've a strong record with big companies in Dublin combined with Masters qualification, I'm a strong bet.

My lesson here is to save regularly LONG in advance of trying to get a mortgage but until very recently, we expected to be looking for a place 2 years down the road.

If we miss the boat on the place we're looking at, at least we'll know what criteria we need further down the road. Either way, I don't believe applying now will affect future applications.

Thanks for the advice!