mortgages for lower incomes

EstaX10

Hi, hoping someone can help me with this. Myself and my husband have been looking into applying for a mortgage but due to our combined income of only 40,000 bank of Ireland basically told us our income was too low to apply for any amount, that we would need at least 45000 per year. Looking around other banks online I have found that both kbc and permanent tsb are offering mortgages for combined income of 40,000. Just wondering if anyone has heard of this or maybe has been approved a mortgage with a lower income. Thanks

phormium

It's not so much to do with the income as the amount left over after all loan repayments including mortgage have been met every month. Most banks have a minimum amount they specify must be left over every month for a single person/couple/each child so while one person on a particular income might be able to borrow very little due to existing loan repayments and partner/dependent children, another person might qualify for far more if they did not have those extra costs.

EstaX10

Thanks Phormium. Yes thats exactly what we thought but with bank of ireland they had said that we would need at least 45000 gross income to be considered for a mortgage at all. If it is based more on ability to repay then we have a much better chance due to no loans and few expenses per month.

Trish56

In accordance with Central Bank Regulations you can borrow up to 3.5 times your income = 140k however this is subject also to lenders assessment which includes the following:

Affordability : If you were to borrow 90k over 35 years your stressed monthly repayments would be €517 per month - you need to provide evidence that you are either paying rent or saving or both this amount for past 6 months.

Net Disposable Income. After paying €517 per month a married couple must have €2050 net income left over and if you have dependents you must add €250 per child so 2 dependents you need to have €2550 per month. If you have short term loans or childcare costs these will also be added to the €517 so would hugely reduce the amount you can borrow.

Savings : You need to have 10% of the purchase price saved so if you were to purchase a property for 100k you need to have savings of 10k plus stamp duty of 1k plus 2k legal fees so in total 13k.

Good Credit rating : Lenders will apply for a Credit Bureau for you which will show all current and previous loans in your name.

Income : I presume your income of 40k is gross basic and does not include overtime, bonuses or commission as all of these would not be factored in.

If you have no dependents and no other short term loans you should qualify for circa 90k over 30 or 35 years so it's no harm shopping around.

Best of luck.