Borrowing more than 3.5 gross income?

pabloazazel

Hi, single first time buyer here with one question.

Can I borrow more than 3.5 gross income for a mortgage?

Example:
Value of the House: 210.000€
Gross income: 37.000€
3.5 x 37.000 = 129.500€

Savings: 50.000
Difference 80.500

Permanent stable job. No credits, no debts, no children

How far do you guys think the bank can go?

listermint

Your math is wrong.


See 'difference' ...


Savings....

spaceHopper

The difference is 30500
Borrowing 160
If its a 1 bed I'd say no but a two bed where you can rent a room good chance if you talk to them work out the repayments are 2% higher or fix for 10 years so long as you can break it if needed. Basically show them you can afford it

pabloazazel wrote: »

Hi, single first time buyer here with one question.

Can I borrow more than 3.5 gross income for a mortgage?

Example:
Value of the House: 210.000€
Gross income: 37.000€
3.5 x 37.000 = 129.500€

Savings: 50.000
Difference 80.500

Permanent stable job. No credits, no debts, no children

How far do you guys think the bank can go?

DaveyDave

Speak to a mortgage advisor. It depends on the bank.

Our salary is €70,300. We're eligible for €245,000 mortgage, we'd like €270,000.

Our mortgage payments would be around €1,100. To get more, Bank of Ireland said to put €1,500 into savings (we're putting in €2,200). Permanent TSB want €70,000 salary and 170% of the mortgage payment left over. So if your mortgage was €1,000 they'd want you to have €1,700 left over.

GingerLily

LTI exceptions can go up to 4.5 your income, but these exceptions are hard to get and your income looks on the low side to qualify for the amount you are looking to borrow.

Do you know what the stressed payments will be on the mortgage you're looking for? What percentage of your net pay would that be?

Kenno90

spaceHopper wrote: »

The difference is 30500
Borrowing 160
If its a 1 bed I'd say no but a two bed where you can rent a room good chance if you talk to them work out the repayments are 2% higher or fix for 10 years so long as you can break it if needed. Basically show them you can afford it

Jesus Christ, Celtic Tiger back in full swing again? This was very common back then. and very risky for the banks to rely on (you could be lying)

The banks do offer exceptions to the 3.5x rule but you need to prove that you have 2k disposable income a month (this was the case for me, i think)

The problem with exceptions is the bank is only allowed to do a fixed number of them a year. When they have been allocated out you'll need to wait next year.

I got mortgage approval in January and was told thats your best chance in getting it

L1011

Banks cannot take rent a room income in to account. Exceptions are not made on that basis. Thankfully.

goldenhoarde

https://m.drcalculator.com/mortgage/


Use the above to work out the figures and stress test for a 1,2,3,4 % increase in rates. Also see what is the longest term you can get as that could help

And use this to work out wages

https://www.virtualaccountant.ie/Tools/tax2018.jsp


Look for a wage increase (so ask at work as a modest increase to 40,000 would help plug the gap/ any bonus OT potential, for the company it would help tie you into them for longer) plus as mentioned rent a room (tax free up to 12,000 or 14,000)

A mortgage advisor might be able to help present your data in a better way that the banks like.

Evenstevens

Look into the Rebuilding Ireland Scheme from your local county council.

pabloazazel

Evenstevens wrote: »

Look into the Rebuilding Ireland Scheme from your local county council.

Quite interesting, I did not know about this.

By the way, the interest rates are also very good, better than any bank.

2% fixed for up to 25 years (APR 2.02%)*
2.25% fixed for up to 30 years (APR 2.27%)*

Seeing the rates I would be happy if I can not find sufficient offers of finance from two banks which is one of the criteria for eligibility.

Dolbhad

pabloazazel wrote: »

Quite interesting, I did not know about this.

By the way, the interest rates are also very good, better than any bank.

2% fixed for up to 25 years (APR 2.02%)*
2.25% fixed for up to 30 years (APR 2.27%)*

Seeing the rates I would be happy if I can not find sufficient offers of finance from two banks which is one of the criteria for eligibility.

However getting the actual money from the council is a battle of its own looking the rebuilding Ireland thread. Seems a lot of councils are waiting on funds so can issue anything at moment

riclad

Keep on saving, you should be able to afford to buy a 1 bed apartment .
Look for one that has no lifts, no big underground car park, to
to keep the service charges low .
The market seems to have hit a peak regarding price rise,s .

Still waters

Look for something in your price range, not what you want but what you can afford, the restrictions are there for a reason

Irishcrx

Agree with the above advice , you need to look at the long term and what is realistically affordable - thing's can and will change job situation , salary for better or worst , interest rates...the stress testing isn't just for the banks approval it should be something everyone does themselves, yes you want a nice house to call your own but you also want flexibility to live your life over the next 3o years or so.

I was/am in a similar situation except I am looking to trade up to a bigger house as our current home has become too small for family life... I looked at it last year and couldn't get what we would be happy with on my salary + savings I didn't apply for an exception as when I stress tested it would leave us very tight if anything was to change and I didn't want to over reach for a house outside of Dublin that I thought would be first hit if the market came down (And I will)

So I went to my employer and explained I wanted a raise in exchange for my commitment to a long term contract and they agreed...I know everyone's situation/employer is different but if you don't ask...

riclad

The limits are there to keep bank lending under control at a realistic level.
The reason the banks had to be bailed out in 2008 was they were lending recklessly ,with no regard for the real value of a house, where it was located , and not really based on the lenders income.
And they were hardly being regulated at least in regard to mortage loans
for house buyers .
The limits are good for everyone ,for tax payers , buyers ,
investors and reduce the risk of a potential bank bailout in the future.
IF you cant afford a house near the city centre look further out
or look at buying a small apartment .
Theres no rule that says every single person should be able to buy a house near the city .

Saudades

Is the 3.5 loan to income rule a temporary measure, or is it permanent legislation?

DaveyDave

Saudades wrote: »

Is the 3.5 loan to income rule a temporary measure, or is it permanent legislation?

It's the limit set by the central bank, unless you meet the criteria for an exception to get up to 4.5 times your salary. Approx 20% of mortgages exceed the 3.5 rule.

aqn29swlgbmiu4

DaveyDave wrote: »

It's the limit set by the central bank, unless you meet the criteria for an exception to get up to 4.5 times your salary. Approx 20% of mortgages exceed the 3.5 rule.

What exactly are the criteria to get an exemption for a single person buying a place?
I can't nail them down anywhere!

GingerLily

Carlos Bitter Motorboat wrote: »

DaveyDave wrote: »

It's the limit set by the central bank, unless you meet the criteria for an exception to get up to 4.5 times your salary. Approx 20% of mortgages exceed the 3.5 rule.

What exactly are the criteria to get an exemption for a single person buying a place?
I can't nail them down anywhere!

Every bank has their own criteria, and they'll award them to the best applications!
In general, high earners with little to no expenses and good savings history will rank the best.

Shefwedfan

pabloazazel wrote: »

Hi, single first time buyer here with one question.

Can I borrow more than 3.5 gross income for a mortgage?

Example:
Value of the House: 210.000€
Gross income: 37.000€
3.5 x 37.000 = 129.500€

Savings: 50.000
Difference 80.500

Permanent stable job. No credits, no debts, no children

How far do you guys think the bank can go?

Bank will say no

The days of buying expensive house over your budget are gone. Bank are watched too tightly with regulator

Best process. Go to bank/mortgage advisor first and confirm what they will
Give you. Then look at what is in your price range.

Going out and picking and house and then trying to move it into your budget will not work and also end up making you feel deflated with the whole situation.

Apartments are really been pushed into market by county council and the mad rush to buy a house instead of an apartment will soon be forgotten.

Best thing as mentioned get your budget, also check with bank if they will allow a do-upper house. Some banks only want a house you are able to walk into, I say that because depending on area you might find a house cheap and just needs a bit of work. Will mean you get something cheap and you can add value if going to resell