College student-Mortgage

Reunoy

I am a student of Business and I am 20 years of age. I have savings of 20,000 and have an apartment in a student area of a city in my sights for 100,000 euro. The apartment is 3 bedroom and will rent for 350 per person per month. It is a well sought after apartment complex directly opposite an I.T. The rent would bring in around 11,000 euro per year which would pay off the mortgage. Would i be awarded a mortgage? Is it too risky for the bank? Would I need proof of income or something similar?

iainBB

You would get a better response from the property and accommodations section on here.

mortgage approval is 3.5 times your current full time wage with Permanent job ( lots of assumptions here first time mortgage, no kids etc)
You have 20,000 cash, apartment is 100,000, 80,000 mortgage needed.
80,000/3.5 = 23,000 wage

you would also need to pay house insurance on the property a year and let the bank know about it and life insurance add up to 600 plus a year.

Are you working and have an income over 23,000 a year?

Mortgage companies don't take into account rental income from it as a source of payment.
and ( i think) you can not rent out the property with a standard mortgage . check into this. you need to live in the property.. . .you can rent out one or two room as long as you live there.



Oh and Revenue would have a say on that 11,000 income you THINK you will receive that is taxable and they will want a share of your hard work.

so basically mortgage approval is based on wage 3.5 times current
It is not based on potential rental income from property
are you working full time with over 23K ?

topper_harley2

Unless you're working full time simultaneously then forget it.

Reunoy

Thanks for the reply. So basically the only way in which you can invest in property is if you buy in full or are earninv a full time wage in order to satisfy the mortgage criteria?

iainBB

Reunoy wrote: »

Thanks for the reply. So basically the only way in which you can invest in property is if you buy in full or are earninv a full time wage in order to satisfy the mortgage criteria?

There are buy to let mortgages you can get, but the they are even harder to qualify for and with high interest rate and high LTV loan to value ratio.

Wanderer78

Go traveling with the money op when college is done. More to life than getting into debt. Well done on saving. Best of luck with it

Francie Barrett

Reunoy wrote: »

Thanks for the reply. So basically the only way in which you can invest in property is if you buy in full or are earninv a full time wage in order to satisfy the mortgage criteria?

Would your parents be willing to help? Perhaps you could make a joint application with one of them, or maybe have them be a guarantor?

Reunoy

The idea of going traveling with your money is a nice one, people love that idea. I want to build a comfortable life for myself though and there is plenty of time to travel once I have a good foundation. Perhaps a relation would be willing to help. When you say help do you mean 1. Help to meet the full price so I wont need a mortgage. 2.Double the amount that I have which may give me higher chance of being awarded. Does number 2 work or does it still come back to having a full time job or paying in full.

Where does a guarantor fit into this?

Thanks

topper_harley2

You still haven't indicated if you're working! I have no idea why you'd want to get a mortgage if not. I personally wouldn't like approaching a relative for a loan in this scenario. Re: mortgage guarantor, just Google it, it's meaning is in line with the word "guarantee".

I think this is a hair-brained scheme to be honest! If a twenty year old college student with seemingly no full time job is on about investing in property then we are heading for another bubble and crash. NINJA loans anyone?!

Why don't you wait five years, save another 20 or 30 grand somehow and see how you're feeling then? Maybe you'll have moved to Canada or have met and married a girl from Donegal..... Do you really want to be stuck as a landlord then, tied to a property possibly far away from where you live? Too much responsibility, too young in my opinion. Well done on the saving though.

Reunoy

I know what a guarantor means. My question was if I had guarantor would I still need to raise more money. As for me no stating I'm I'm in full time work. I think the title of all this is a good give away. If I was 20 in 2007 and I had 20,000 I would want to do the same. What's a "NINJA loan". Your reply comes across as a moody old mans. I hope you are that and not below 30.

newacc2015

There is the mortgage rules. A bank cant lend more than 3.5 times your income. It appears you have no income, so I cant understand why a bank would attempt to lend to you. You dont have a steady stream of income. There is also the fact, if you default on the mortgage it will you will be difficult to repossess the house and get any outstanding payments from you ie you are not working

Your best hope IMO would be having a 60k deposit and hope to get a loan of €40k from your local CU.

I can totally understand your view on not wanting to travel now. I know so many twenty somethings who have blown their life savings on travelling and then wonder why they dont have a deposit for a house. I have several friends in their thirties who have houses and still go travelling for months on end.

CIARAN_BOYLE

Will banks take into account rental income on a BTL mortgage.

IE the OP says he will get €1,050 a month in rent or €12,600. Will the banks lend him 3.5 times this? €44,100 total?

ED E

CIARAN_BOYLE wrote: »

Will banks take into account rental income on a BTL mortgage.

IE the OP says he will get €1,050 a month in rent or €12,600. Will the banks lend him 3.5 times this? €44,100 total?

Thats crazy speculative.

Even being rented room by room vs wholly where evictions are easier you have a risk of licensee(students??) not paying for three months then disappearing, one serious party and wrecking the place. One bad licensee and you could write off €5000 of your years €11000 and fall way behind on repayments. A landlord that has other revenue streams can take this hit, a student can't.


OP assuming you started college right after the LC (2-3yrs into a bachelors?) then you won't even have any significant work experience.Try holding down a significant job for 2-3yrs before even dreaming of buying property.

topper_harley2

Reunoy wrote: »

I know what a guarantor means. My question was if I had guarantor would I still need to raise more money. As for me no stating I'm I'm in full time work. I think the title of all this is a good give away. If I was 20 in 2007 and I had 20,000 I would want to do the same. What's a "NINJA loan". Your reply comes across as a moody old mans. I hope you are that and not below 30.

Not sure how my age or moodiness is relevant, if you aren't prepared to take negative opinions on your questions then dont post on public forums.

But anyway....the thread title says squat, except that you are in college. You could easily be doing a night time business degree while holding down a 30K per annum full time job. This would change the answers given completely.

NINJA loan = No Income, No Job/Assest loans. These were given out during the property boom to anyone who asked for a mortgage without having to provide evidence of income. IMO this is what this sounds like. Basically you want to borrow 80K with zero demonstrable ability to currently pay it back, outside of the asset you are proposing to buy. My point is why would you put yourself under such strain right now, when in two or three years you'd snap up that place easily with another 20K savings and a full time job.

Francie Barrett

Reunoy wrote: »

Where does a guarantor fit into this?

Thanks

Your parents would be liable for your mortgage payments should you not be able to pay.

Reunoy

I worked for 2 years after my leaving certificate. I suppose it is risky as the its not set in stone what may happen regarding tents even though I have an idea in my head of what will happen. Sorry for bringing your age into this. I have just heard a lot of Celtic tiger cubs stuff from wise adults over the last while.

So the options are-

1. Wait till I am finished college, get a full time job for 3 years, pay for apartment.

2. Triple the money that I have by receiving a loan from a relative(s) and approach local CU.

3. Save my money for post college luxuries such as traveling.

4. Get 2 relatives to buy the apartment with me. I eventually get 100 ownership.

topper_harley2

No problem, apology accepted.

If you are intent on buying as investment then I would prefer option 1. This way you have couple of years to be sure this is what you definitely want, you'll have hopefully steady income and bank will look favourably on fact you have 20% deposit already.
Personally I hate taking on too much debt so that would rule option 2.
I also think buying property with relatives is a bad idea so that rules out 4.
Option 3 depends entirely on what you want. This is why I suggested option 1. Maybe after three years you will say "yes definitely I want to travel" and that will decide it. Personally, I went to Vegas for J1 visa after college and we still talk about that summer 15 years later, and it didn't cost 20k, so you could do both, option 3 followed by 1. Best of luck whatever you decide.

Reunoy

I am also an American citizen so that is a great asset. I might go there this Summer.