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2nd house own one mortgage on strength of first house

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  • 07-04-2016 8:08pm
    #1
    sadie1502
    Registered Users Posts: 666 ✭✭✭


    My friend owns a house. She wants to hold onto the house and she wants to remortgage or use it as collateral to buy another house. Is that possible?


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    #2
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,688 Mod ✭✭✭✭Stheno


    Does she currently have a mortgage on the house?


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    #3
    sadie1502
    Registered Users Posts: 666 ✭✭✭sadie1502


    No mortgage the house is paid off


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    #4
    thebeerbaron
    Registered Users Posts: 182 ✭✭thebeerbaron


    Well the rules say for mortgages its 10% up to €225000 and only 3.5 times your salary(if FTB). It will depend on these factors before any bank asks on equity. So your friend will probably have to have 20% of whatever house they want before the equity comes into it.


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    #5
    Michael D Not Higgins
    Registered Users Posts: 7,223 ✭✭✭Michael D Not Higgins


    Presumably the need to remortgage would be to free equity to use as the deposit/part of deposit for the new purchase? There's a few things to consider:
    • Is the property an investment property in order to rent it out? If so, they'll need at least 30% deposit. Otherwise a 20% deposit will be required (and possibly jumping through some hoops to show the bank it's not an investment property).
    • The repayments on the remortgaged PPR will be taken into account as lowering the repayment capacity on the new property's mortgage, and thus the affordability.
    • It's probably best to talk to the bank or a broker about options, affordability, and any other potential snags.


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    #6
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    The other thing for her to think seriously about is whether she wants to put her family home at risk for the sake of a leveraged investment.


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    #7
    Sun in Capri
    Registered Users Posts: 211 ✭✭Sun in Capri


    RainyDay wrote: »
    The other thing for her to think seriously about is whether she wants to put her family home at risk for the sake of a leveraged investment.

    Would it not be the case that if there was an issue with paying back a mortgage the bank would come after any assets you have anyway?


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    #8
    L1011
    Registered Users Posts: 68,904 ✭✭✭✭L1011


    Sun in Capri wrote: »
    Would it not be the case that if there was an issue with paying back a mortgage the bank would come after any assets you have anyway?

    Yes, but you're less likely to end up in that trouble on your own house than a leveraged arrangement involving a rental property and likely bog all equity left.


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