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Mortgage advice

  • 10-07-2016 12:33pm
    #1
    speedstar500
    Users Awaiting Email Confirmation Posts: 4 ✭


    Hi,
    My situation.
    Just built and now living in new home - No mortgage - 2 X Short term loans totalling €34000 both over 8 per cent - would like to mortgage €45000, pay of loans and use balance on house, new stairs and finish upstairs flooring.
    I own a house in north Co.Dublin that's rented -10,000 income p/a, mortgage repayments 10,000 p/a - house value €170,000 - mortgage balance €156,000 tracker.
    Current salary €30,000.
    I have enquired with BOI about a mortgage and to my a suprise they rejected me, They said owe to much on rented house. The repayment on my personal loan with boi is more than a mortgage would be!!. My question is, Are all institutions going to tell me the same or is their any bank out there that may consider me application. ?


Comments

  • #2
    iainBB
    Registered Users Posts: 460 ✭✭iainBB


    That is not clear. your first sentence you say you have no mortgage then you do have on a buy to let with additional personal loans. With income of 30k .
    Your mortgage potential is 105k max . which you are already over. Even though you have equity in your buy to let mortgage.
    Your personal loans circumstances is way to high to be second mortgage candidate.


  • #3
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    OP you need to provide more information in order ascertain if you qualify for a mortgage on your PDH. Your Investment property would not be included in the 3.5 times your 30k salary so ignore that from previous poster.

    Are you married, have dependents, and your age would be required. I take it your short term loans of 34k was borrowed to build your private dwelling house.

    What is the tracker rate you are paying on Investment property. All lenders will stress test this rate to circa 5% so this will be a negative which is possibly the reason you were declined but without the aforementioned information it is not possible to advise you.


  • #4
    MrDerp
    Registered Users, Registered Users 2 Posts: 991 ✭✭✭MrDerp


    Trish56 wrote: »
    OP you need to provide more information in order ascertain if you qualify for a mortgage on your PDH. Your Investment property would not be included in the 3.5 times your 30k salary so ignore that from previous poster.

    Are you married, have dependents, and your age would be required. I take it your short term loans of 34k was borrowed to build your private dwelling house.

    What is the tracker rate you are paying on Investment property. All lenders will stress test this rate to circa 5% so this will be a negative which is possibly the reason you were declined but without the aforementioned information it is not possible to advise you.

    Source? I know several people who've been through the banks and they've looked at total Loans to income for mortgages, but with a percentage of the income on the investment property being allowable as income.

    Total property loans to total income. It would make zero sense for a bank to ignore the investment property which could tank a PPR mortgage easily if a tenant stopped paying rent and refused to move out.


  • #5
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Look up the Central Bank Regulations for Mortgages. It states that the Loan to Income of 3.5 times income is limited to new lending for Principal Private dwelling homes purposes. It does no apply to 'Buy to Let' mortgages.


    MrDerp wrote: »
    Source? I know several people who've been through the banks and they've looked at total Loans to income for mortgages, but with a percentage of the income on the investment property being allowable as income.

    Total property loans to total income. It would make zero sense for a bank to ignore the investment property which could tank a PPR mortgage easily if a tenant stopped paying rent and refused to move out.


  • #6
    PaddyWilliams
    Registered Users Posts: 1,121 ✭✭✭PaddyWilliams


    Trish56 wrote: »
    Look up the Central Bank Regulations for Mortgages. It states that the Loan to Income of 3.5 times income is limited to new lending for Principal Private dwelling homes purposes. It does no apply to 'Buy to Let' mortgages.

    Interesting. They may not include the Investment mortgage amounts (which is strange) but the €10,000 mortgage outgoings per year would factor in to their calculations surely?


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  • #7
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    All the lenders have a calculator where you input the details of the Investment property and yes the interest rate is stress tested and rental income reduced in the calculation. If the amount o/s on the mortgage is low and interest rate is a low tracker and rent is high it may not effect the amount you can borrow for a PDH.
    Under the Consumer Credit Act all lenders are supposed to give you a reason in writing why a mortgage is declined. When all the calculations are done the OP may not even have qualified for 3.5 times income so it's not correct to say the 3.5 times applies to total lending. As far as Lenders are concerned it is affordability and repayment capacity.

    PaddyWilliams wrote: »
    Interesting. They may not include the Investment mortgage amounts (which is strange) but the €10,000 mortgage outgoings per year would factor in to their calculations surely?


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