Drain on Income

somesoldiers

I am going through mortgage negotiations with a bank for a self build mortgage. I am a second time buyer. I am looking to borrow 250K and have the required deposit.
I am married with one child, my wife took redundancy from her job 2 years ago and had our baby soon after so I am applying on my sole income.


the bank have said they will lend me 250K with me on my current salary & only if my wife goes back to work and earns 10K, if she earns 20K they will lend us 300K. The reason for this being that when my wife starts earning she stops becoming a "drain on my income" as she is no longer a dependent and we are therefor better able to service the mortgage. I have explained that the reality of this would be quite different. even if she did get a job for 10K the resultant loss of tax credits & having to pay someone to mind our child would mean she would be going out to work for nothing practically other than to tick a box to bring us up to the level they want.


if I get a raise of 10K they will be prepared to lend us only 200K. I am due a promotion and raise shortly which will provide me with an extra 10K p.a. (8.4K of which is paid net of any deductions as it is a car allowance). So effectively my earning 10K is in real terms worth about 750 to us per month where her earning 10K would be worth practically nothing.


they keep saying they will only give us the 250K if the "drain on income" is removed.


I have invested a lot of time with this particular lender and for other reasons want to stick with them but I feel we are at an impasse. Am I missing something here or does their approach make any sense?


BTW my wife is actually pregnant again but I don't want to mention this to them as they would see this as a further drain on my income. I don't believe I am obliged to advise of a pending birth. this is why she wont be getting a 10K job any time soon. Also our planning and everything is based on the house design at 250K, I have said I can pull this back to 225K but certainly not to 200k which would require a complete rethink and resubmission of planning however they insist this is not going to happen with the drain as it stands.

usernamegoes

Get a her a job she can quit once the mortgage is drawn down.

somesoldiers

usernamegoes wrote: »

Get a her a job she can quit once the mortgage is drawn down.

They did say they would consider her income after 3 months "if she has an academic qualification that she uses in the job" or 6 months in a non probabtion role. Other than that she would have to be in the job a year. Being 7 months pregnant she'll not be getting a job anywhere soon unfortunately.
Anyone would think they were giving the money away for nothing & not charging double the rate of most other European countries

Trish56

Lenders assess mortgages based on affordability and net disposable income. After taking into consideration stressed mortgage repayments you need to have €2050 left over for a couple plus €250 per dependent so in your current case you need €2300 with one dependent and €2550 with two.

No need to inform of your wife's pregnancy.

All lenders differ re policy and criteria and of course their interest rates differ. If you want to post some details I can put into calculator for you .. will need your ages, your gross salary plus overtime etc., pension deductions, savings and how much you save monthly any other borrowings.

December2012

Could your wife do childminding?

Pete67

By the way, a car allowance is subject to all deductions, tax, PRSI and USC, it is treated as income for tax purposes.

somesoldiers

Pete67 wrote: »

By the way, a car allowance is subject to all deductions, tax, PRSI and USC, it is treated as income for tax purposes.

Allowance is paid "net of any deductions", that is the amount left over when these have been paid

Avatar MIA

somesoldiers wrote: »

Allowance is paid "net of any deductions", that is the amount left over when these have been paid

You'd need to be getting a car allowance of approx €17k per year to get €8.4 net - do the banks take car allowances into account when calculating income?

somesoldiers

Avatar MIA wrote: »

You'd need to be getting a car allowance of approx €17k per year to get €8.4 net - do the banks take car allowances into account when calculating income?

I don't see why they wouldn't, some will take bonuses into a/c even if not guaranteed.The car allowance would be guaranteed