Is it possible to get a third mortgage?

Stopitwillya

Hi just looking for some advice re getting a new mortgage?
At present I am 40 years old and earn 70k in a public sector job?
My wife is 33 and earns 35k in a private sector job?
I have a tracker mortgage with EBS on an apartment in my own name. Repayments are 550 per month and the apartment is rented out for 800 per month. Apartment has 125k left on the mortgage and would currently be valued at 120k. Don't want to sell it as in an area which is going to see major development over the next 5 years which hopefully should add to its value.
Also own a house in which I live in at present. Mortgage from bank of Ireland (fixed rate at 3%) with my wife has 129k left on it. House valued at 260k. Mortgage is 600 per month. If renting the house would rent at 1200 per month.
What I would like to do is get another mortgage to purchase a house that we would move into. Rent out the house we are currently live in. Looking to get mortgage with either Aib, kbc, ulster bank or one of the credit unions. Wouldn't be informing ebs or bank of Ireland about this as want to keep My present rates.

Is this possible or would the banks laugh at me?

listermint

Why would you want to do this ?

If something happens to either of your jobs your on the hook for three mortgages.

There is some correction due in the global economy and being left with undervalued houses is not ideal. You already own one in negative equity which you believe may get better. It most likely won't

lawred2

Stopitwillya wrote: »

Hi just looking for some advice re getting a new mortgage?
At present I am 40 years old and earn 70k in a public sector job?
My wife is 33 and earns 35k in a private sector job?
I have a tracker mortgage with EBS on an apartment in my own name. Repayments are 550 per month and the apartment is rented out for 800 per month. Apartment has 125k left on the mortgage and would currently be valued at 120k. Don't want to sell it as in an area which is going to see major development over the next 5 years which hopefully should add to its value.
Also own a house in which I live in at present. Mortgage from bank of Ireland (fixed rate at 3%) with my wife has 129k left on it. House valued at 260k. Mortgage is 600 per month. If renting the house would rent at 1200 per month.
What I would like to do is get another mortgage to purchase a house that we would move into. Rent out the house we are currently live in. Looking to get mortgage with either Aib, kbc, ulster bank or one of the credit unions. Wouldn't be informing ebs or bank of Ireland about this as want to keep My present rates.

Is this possible or would the banks laugh at me?

Do you have a buy to let deposit saved?

judeboy101

Stopitwillya wrote: »

Hi just looking for some advice re getting a new mortgage?
At present I am 40 years old and earn 70k in a public sector job?
My wife is 33 and earns 35k in a private sector job?
I have a tracker mortgage with EBS on an apartment in my own name. Repayments are 550 per month and the apartment is rented out for 800 per month. Apartment has 125k left on the mortgage and would currently be valued at 120k. Don't want to sell it as in an area which is going to see major development over the next 5 years which hopefully should add to its value.
Also own a house in which I live in at present. Mortgage from bank of Ireland (fixed rate at 3%) with my wife has 129k left on it. House valued at 260k. Mortgage is 600 per month. If renting the house would rent at 1200 per month.
What I would like to do is get another mortgage to purchase a house that we would move into. Rent out the house we are currently live in. Looking to get mortgage with either Aib, kbc, ulster bank or one of the credit unions. Wouldn't be informing ebs or bank of Ireland about this as want to keep My present rates.

Is this possible or would the banks laugh at me?

The lord mayor of Dublin had no problem getting 3 mortgages, why should you.

Stopitwillya

listermint wrote: »

Why would you want to do this ?

If something happens to either of your jobs your on the hook for three mortgages.

There is some correction due in the global economy and being left with undervalued houses is not ideal. You already own one in negative equity which you believe may get better. It most likely won't

I'm public sector and have a permanent position so can't lose my job. Although my wife is private sector her job would be pretty secure.

CPTM

Do you have savings OP? I would imagine your biggest problem would be the deposit they would be looking for. I wouldn't be surprised if they would need to see over 30% of a deposit before entertaining the idea. That's a lot of money these days. I think you probably won't be in negative equity by year end, and your job is secure, and if you can demonstrate 6 months to a year of being able to repay the 3rd mortgage (with a hypothetical interest rate increase of 2%), it could be doable. But the key decider will be your deposit amount in my opinion.

Edit: For example, surely there's folks these days with a primary home, an investment home and holiday home mortgages.

listermint

Stopitwillya wrote: »

I'm public sector and have a permanent position so can't lose my job. Although my wife is private sector her job would be pretty secure.

Why do you want more debt your already heavily in debt one of which doesn't have an asset that is worth the debt.

I literally don't understand this .


Sell the house and get another mortgage leave off this crazyness

CPTM

listermint wrote: »

Why do you want more debt your already heavily in debt one of which doesn't have an asset that is worth the debt.

I literally don't understand this .


Sell the house and get another mortgage leave off this crazyness

I think it's not that they want more debt, but that they want a different home. They're not in a position to sell the first one (negative equity), and the second sounds like it could be a nice earner in the future.

Stopitwillya

CPTM wrote: »

Do you have savings OP? I would imagine your biggest problem would be the deposit they would be looking for. I wouldn't be surprised if they would need to see over 30% of a deposit before entertaining the idea. That's a lot of money these days. I think you probably won't be in negative equity by year end, and your job is secure, and if you can demonstrate 6 months to a year of being able to repay the 3rd mortgage (with a hypothetical interest rate increase of 2%), it could be doable. But the key decider will be your deposit amount in my opinion.

Edit: For example, surely there's folks these days with a primary home, an investment home and holiday home mortgages.

Have deposit but not 30%.
Was hoping 10% deposit would do.

listermint

Stopitwillya wrote: »

Have deposit but not 30%.
Was hoping 10% deposit would do.

That is not going to cut it whatsoever. Sorry but no bank will talk to you with two mortgages and a 10% deposit

listermint

CPTM wrote: »

I think it's not that they want more debt, but that they want a different home. They're not in a position to sell the first one (negative equity), and the second sounds like it could be a nice earner in the future.

Earner... Individual properties are not earner they are a noose of expense.

Op I'd recommend selling the second house and put whatever money you wanted a third mortgage for into a pension plan.

Stopitwillya

CPTM wrote: »

listermint wrote: »

Why do you want more debt your already heavily in debt one of which doesn't have an asset that is worth the debt.

I literally don't understand this .


Sell the house and get another mortgage leave off this crazyness

I think it's not that they want more debt, but that they want a different home. They're not in a position to sell the first one (negative equity), and the second sounds like it could be a nice earner in the future.

Exactly.
And of course we are going to have more recessions but would be looking at this with a long term view.

HamSarris

Are you the guy that Padraig Flynn said to try running three houses?

appledrop

You may have a permanent job but what if one of you had a life changing illness? You proposal makes no sense whatsoever. You havent a hope with the banks. The next recession could come at any time. Sell the current house your in + get a new mortgage.

CPTM

Stopitwillya wrote: »

Have deposit but not 30%.
Was hoping 10% deposit would do.

Hmm I thought 25% was generally required to get a second mortgage in Ireland.. But this is your third and you don't seem to know that, so now I'm doubting myself.

ismat

Stopitwillya wrote: »

Have deposit but not 30%.
Was hoping 10% deposit would do.

I’d say that should be plenty. You should make sure to apply as early in the year as possible to make it easier to get an exception.

XsApollo

Guaranteed minimum 20% if you are moving out of the home you live in at present,
Also when they are calculating outgoings for the third mortgage they will calculate the mortgage payments on the house you are in on buy to let interest rates plus 2% so that will add a significant hike in payments on that house, which will reduce payment capacity.

But they will probably want more than 20%, that’s the minimum.
Unless you get an exemption of course as above

caviardreams

would you not consider selling the apartment, you might break even and clear the mortgage and it would be out of the way.

As it is you are having to supplement the rent to cover the mortgage repayments on it yourself. So this would free up cashflow as well as deleverage.

Stopitwillya

caviardreams wrote: »

would you not consider selling the apartment, you might break even and clear the mortgage and it would be out of the way.

As it is you are having to supplement the rent to cover the mortgage repayments on it yourself. So this would free up cashflow as well as deleverage.

Apartment is in an area with lots of development and new jobs starting this year so I want to hold onto it for another few years as I think it's value could rise significantly.

Stopitwillya

listermint wrote: »

CPTM wrote: »

I think it's not that they want more debt, but that they want a different home. They're not in a position to sell the first one (negative equity), and the second sounds like it could be a nice earner in the future.

Earner... Individual properties are not earner they are a noose of expense.

Op I'd recommend selling the second house and put whatever money you wanted a third mortgage for into a pension plan.

I already have an avc with cornmarket but stopped paying into it and started making lump sum payments off the mortgage on the house instead 2 years ago.
Will have 40k a year from my teachers pension when I retire too so if I put more money into a pension it could lead to paying 40% tax on the other side and I don't want that.

If I was to rent out the house I'm in now would easily get 1200 per month (houses not in great nick on my row are getting that presently). Mortgage is slightly less than 600 per month. A lot of that 600 is interest of which 100% can be wrote off against income tax on rental income.

Only concern would be bringing cgt onto me if I was to sell it down the line and the house has gone up 100k in value since I bought it.

pwurple

Ok, so in simple terms, the mortgage rules are 3.5 times salary... so that is 367k.
You can then subtract your other debts out of that... -250.. leaves you with possible additional borrowings of 117k. That would be you then maxed out. That’s assuming you are reasonably young etc.

Then they do any deductions for LTV or stress testing for net disposable income (net income per month less expenses of 1000 per adult and 500 per child). Rental income does not count towards income in these calcs. They assume you have an overholding tenant, because that actually happens all the time these days.

Is 117k plus your deposit enough to get you the other house?

Also, yes, you may lose your existing interest rates on the other loans.


That’s the reason people are suggesting ditching the apartment or the house. Fo the additional credit headroom.

Stopitwillya

pwurple wrote: »

Ok, so in simple terms, the mortgage rules are 3.5 times salary... so that is 367k.
You can then subtract your other debts out of that... -250.. leaves you with possible additional borrowings of 117k. That would be you then maxed out. That’s assuming you are reasonably young etc.

Then they do any deductions for LTV or stress testing for net disposable income (net income per month less expenses of 1000 per adult and 500 per child). Rental income does not count towards income in these calcs. They assume you have an overholding tenant, because that actually happens all the time these days.

Is 117k plus your deposit enough to get you the other house?

Also, yes, you may lose your existing interest rates on the other loans.


That’s the reason people are suggesting ditching the apartment or the house. Fo the additional credit headroom.

Thank you
Thought some of the rental income would be counted towards mortgage application but obviously not.

jhenno78

You're making all of your assumptions based on best case scenario.
Things are going well at the moment and probably will for the next few years but they absolutely will not over the life-time of a mortgage.

This is exactly the kind of thinking that got so many people in trouble 10 years ago. Even if the banks were crazy enough to give you another mortgage, you owe it to yourself not to.

Your description is that you're doing ok. Just ok. You've got a bit too much debt for safety but you should just about manage if things go pear-shaped. Getting another mortgage would make you extremely vulnerable.

pwurple

Stopitwillya wrote: »

Thank you
Thought some of the rental income would be counted towards mortgage application but obviously not.

I should add a caveat there, that is based solely on my own experience in the last 4/5 years as a customer. That is not financial advice, just personal experience. I will say, If it was me, I would sell the house. You get your credit space back, and also a lump sum for your next home. No capital gains or anything there, i know you said you live there, assuming it is your PPR?

It was a different story 12 or more years ago, so if you bought back then, you may be remembering it how it used to be. Then, they would include rental income, and rent a room income, and add in the perceived equity in the house as real equity, and bump up that disposable income to allow people borrow very large amounts. Not so much these days.

Brego888

Have to say this would be absolute madness op. Everything turns out rosy and you should just about be OK. But 3 mortgages? I'm getting anxiety just thinking about it.
Unless you are a professional landlord 2 sets of tenants is just 2 sets of problems.

I'd definitely sell one of the properties. You think the apartment is going to significantly rise in value? It's not worth that much as it is how much profit are you realistically going to make on it? Gentrification happening in many areas doesn't always lead to all round increase in property prices. In fact if it leads to a lot of new build properties it can be hard to shift older stock.

I suppose at the end of the day what harm in going to speak to a bank or two and see what they say.
I'd seriously caution against this 3 mortgage plan though. Maybe bring this question to the accommodation and property forum

AndrewJRenko

Have you any plans to have kids? Have you factored in loss of income, childcare costs and other expenses into your calculations?

Stopitwillya

AndrewJRenko wrote: »

Have you any plans to have kids? Have you factored in loss of income, childcare costs and other expenses into your calculations?

Have them already

Stopitwillya

Thanks for all the replies. Lots more investigation and calculations to do.

daheff

OP

so long as you do your sums and have a contingency plan should something go wrong, the banks will give you the 3rd mortgage. They want to see ability to repay loans.


Forget all the posters who say you are crazy etc. If the sums add up, then their points are mainly irrelevant. There are a lot of naysayers who only remember the crash, and forget that houses prices, rent & economies go in cycles. For sure there will be bad times but also good. you need to work through both.

at the end of the mortgages you would have fully paid for investments worth more than you put into them + are generating a monthly return.

AnRothar

You are currently in full time employment and based on the is post you are earning somewhere around €80K.

Will have 40k a year from my teachers pension when I retire

I suspect you pay max rate tax and USC.
So all other "income" will also attract the higher rate of tax and USC.


Taking the first post.

I have a tracker mortgage with EBS on an apartment in my own name. Repayments are 550 per month and the apartment is rented out for 800 per month

Assuming its occupied with no break EVER in tenancy.
Then the "income from this apartment is €9600 or so.
Now obviously certain items are allowed against this.
Not knowing the exact details but using a rough calculation I would say you are barely covering the mortgage using the rent.

Also own a house in which I live in at present............. Mortgage is 600 per month

Using your current situation re the rental/mortgage you need to get professional advice tailored to your circumstances.

d.pop

Had a house in city and we were looking to move ‘home’ to countryside.
Had kept house in city all through recession making top up payments from abroad as had to emigrate and rent house out.
Around time we came home house came out of negative equity and we tried for a second mortgage in hometown.
Rent was finally covering mortgage and we thought at long last...
Had combined earnings of 80+, but bank would not touch us with a second mortgage.
They saw the loan on the city house as a negative and would only ‘credit’ us with 50% of the rent as an income.
They offered us €50k of a loan....I’d have got a bigger car loan.
Had to sell the city house, clear mortgage and start again with much tougher conditions, lost our tracker mortgage, higher interest, longer terms etc.
In hindsight I’m glad the house in city is gone as it’s one less worry but in last 12 months the value of it has gone through roof and I can’t help but think what if..
To summarize.. we thought we were a good safe bet for bank but they thought different.
I guess they had their reasons.
Not as easy as it used to be or as I believed it used to be, maybe that’s not a bad thing, if something happened myself or wife we’d have been in big trouble, now not so much trouble I guess.