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Mortgage 3.5 times salary

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  • 05-02-2018 8:15pm
    #1
    dar100
    Registered Users Posts: 1,735 ✭✭✭


    Question

    What way does the 3.5 salary work for couples, I assume there's a difference considering the difference in net income

    For example, single person on 100,000 can get 350,000

    Where couple on combined income of 100,000 can also get 350,000 but with higher net income?

    Am I missing something here ?


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


    dar100 wrote: »
    Question

    What way does the 3.5 salary work for couples, I assume there's a difference considering the difference in net income

    For example, single person on 100,000 can get 350,000

    Where couple on combined income of 100,000 can also get 350,000 but with higher net income?

    Am I missing something here ?

    Nope that's how it works


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    #3
    TheIronyMaiden
    Registered Users Posts: 188 ✭✭TheIronyMaiden


    No, as far as I know it's 3.5 times the salary of the application itself, regardless if it's a joint or single application. So your example above is correct, both types of applications come out with a mortgage of 350k


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    #4
    wersal gummage
    Registered Users Posts: 1,648 ✭✭✭wersal gummage


    I really should not be posting here because I don't know the answer..... However...

    I understand that the 3.5x is a sort of "headline" figure but is then subject to various testing by the bank, and that testing is based on net. Eg a single person on 100k with no kids might actually get 3.5x, whereas a married couple with kids /crèche /car loans etc might not not get the 3.5x. So in certain circumstances perhaps a higher net may be useful, but only to get you up to the max of 3.5??

    Don't the banks have a standard sort of cost of living formula? I've been told that it's 2500 for 2 adults for example (give or take). So presumably it is lower for a single person? So in fact a single person may have a higher disposable net income, all other things being equal?


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    #5
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    There are several criteria a bank will assess you on when giving you a mortgage, the first two, LTV and LTI are set by the central bank and the banks can only breach these limits for certain % of new loans.

    The LTI limit is 3.5 times your GROSS income, either as a sole applicant or the the sum of the incomes for two applicants. Net pay doesn't come into it. Creche fees etc. don't come into this.

    Another assessment is repayment capacity, and that looks how affordable the loan is based on a stressed mortgage repayment and allowing for current debt, creche fees etc.

    I recently got a mortgage, I have no debts or dependents so and had a good repayment capacity and a good history of saving so I was given an LTI exception, i.e. I borrowed (slightly) above the 3.5 times my gross income.


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