Have more deposit than first time buyer - can I somehow get bigger mortgage?

JonathanM93

Hi,

Long story short - I am 27, I recently got €60'000 and have no debts but also have no property, been renting all my life.

I am employed full time and my annual gross income is €47'000, I am single with no children.

I checked online and it seems I can only get up to €164'500 with minimum deposit being around €16'000 - €17'000.


Just wondering is there any type of mortgage which would allow me to get mortgage higher than ~€220'000 (if I understand it right: Mortgage + Deposit + anything else I have left from deposit).

Perhaps paying higher deposit? (Like 20% of lets say property for €300'000 = So €60'000 for deposit?)


If not - do I have any options? There seems to be barely anything out there for ~€220'000

cython

Central Bank rules do allow for loan-to-income exceptions in lending, but anecdotally with the onset of COVID-19 banks are unwilling to approve these for new applications.

Some people get 4.5x their income as part of such an exception which in your case would get to around 210k, some have gotten more, many have gotten less. Such an exception would allow you to borrow around 210k, with 60k deposit bringing to 270k. However if that were to empty your coffers and leave you short stamp duty, fees, etc. then your actual budget would have to come in lower.

Best bet would be to start the ball rolling with a bank or broker to see will they entertain your situation.

cruizer101

You are probably in a good position for an exemption with a large deposit but only the banks can tell you for sure.
I have heard anecdotally that they are less likely to give exemptions to single applicants but not sure how true it is.
Do you have any savings on top of the money received, bank would ideally like to see that you are putting money aside every month also, though that does depend somewhat on how much you are paying in rent.

JonathanM93

cruizer101 wrote: »

You are probably in a good position for an exemption with a large deposit but only the banks can tell you for sure.
I have heard anecdotally that they are less likely to give exemptions to single applicants but not sure how true it is.
Do you have any savings on top of the money received, bank would ideally like to see that you are putting money aside every month also, though that does depend somewhat on how much you are paying in rent.

I haven't been putting any savings aside ever, so no history on that.
I am paying 700 Eur rent (renting room)
Also have credit card for past 3 years which I've never missed payment on (with regular use)
And have loan with bank for 3'500 Eur which I have nearly paid off.

dubrov

I can't see an exemption being granted with no history of saving.

The numbers you quote are probably the maximum you would get and likely lower.

I'd say save for 6 months to a year and you may be in a much better position then

c.p.w.g.w

OP do you have a history of consistent savings? Mates brother won money on the lotto(70k or something) but no history savings and found it next to impossible to get a mortgage despite having that lump sum in the bank

JonathanM93

JonathanM93 wrote: »

I haven't been putting any savings aside ever, so no history on that.
I am paying 700 Eur rent (renting room)............

You've no chance of an exemption........... you've a demonstrated history of saving nothing while paying €700/month rent on a salary of €47k .......... borrowing €166k over 35 years puts repayments at €640/month at 3%.

If stress tested to 5% then your repayment is €837 ............ I'd not consider you a great candidate to borrow 3.5 times your income tbh as you can't demostrate that you can pay a stress tested amount on your current income (saving nothing while paying rent of €700)

Have others have said, save a few hundred a month for 6 to 12 months, clear credit card / pay it off 100% every months and clear the loan.

I would imagine there is great potential to save tbh so don't be overly disheartened, start tracking your expenditure to see where it's all going, hopefully you'll save a few quid by just tracking it as it might spot some unnecessary spending.

JonathanM93

Augeo wrote: »

You've no chance of an exemption........... you've a demonstrated history of saving nothing while paying €700/month rent on a salary of €47k .......... borrowing €166k over 35 years puts repayments at €640/month at 3%.

If stress tested to 5% then your repayment is €837 ............ I'd not consider you a great candidate to borrow 3.5 times your income tbh as you can't demostrate that you can pay a stress tested amount on your current income (saving nothing while paying rent of €700)

Have others have said, save a few hundred a month for 6 to 12 months, clear credit card / pay it off 100% every months and clear the loan.

I would imagine there is great potential to save tbh so don't be overly disheartened, start tracking your expenditure to see where it's all going, hopefully you'll save a few quid by just tracking it as it might spot some unnecessary spending.

I suppose that's an option.
If I was to use some of those 70k to clear all loans, credit card etc.. I could save about 500-600 Euro per month.

Would 6-12 months of savings suffice to have decent chance for mortgage?

JonathanM93

JonathanM93 wrote: »

...........

Would 6-12 months of savings suffice to have decent chance for mortgage?

Yup ...... 6 months of bank statements and 12 months of credit card statments are usually enough.

If you can save 500-600 Euro per month and pay your rent of €700/month you'd be grand for a mortgage if you can hold on to the bulk of your €70k (it was €60k at start of topic iirc :pac: )

JonathanM93

Augeo wrote: »

Yup ...... 6 months of bank statements and 12 months of credit card statments are usually enough.

If you can save 500-600 Euro per month and pay your rent of €700/month you'd be grand for a mortgage if you can hold on to the bulk of your €70k (it was €60k at start of topic iirc :pac: )

Let's just say it's between 60k-70k (Don't want to mention precise, so rounding off).


Well I've been only putting aside 50 euro for past 4 months just randomly into savings (as it's a negligent amount).

Tbh up to this point I was reckless in personal finances, I took out bunch of loans here and there (CC, Personal Loan, Car Loan, Flexifi Loans etc..) and it builds up to about 890 Euro monthly repayments and I still have a lot left over for my own personal expenses.

By my rough calculations if I use 7900 of that 60k-70k to pay off all those loans/finances - I could easily save 900 Euro per month for a year.


(I am more reckless with finances than I realized after I just calculated all of that)

Thanks for suggestions anyway, it made everything clearer now.

JonathanM93

JonathanM93 wrote: »

..........


(I am more reckless with finances than I realized after I just calculated all of that)

Thanks for suggestions anyway, it made everything clearer now.

Tracking your spending will help even more
Best of luck.

theboss80

When we were looking to buy our first home a few years ago the bank was willing to accept we had been paying €700 rent for a house as "savings" because it was being paid by direct deposit out of our bank account and that same bank is where we were also getting our mortgage from. There is ways and means to everything, book an appointment with your bank and talk to them and they will tell you straight up what is and isn't possible.

theboss80

theboss80 wrote: »

When we were looking to buy our first home a few years ago the bank was willing to accept we had been paying €700 rent for a house as "savings"..........

That's the case with most if not all banks.
the case in this topic is that the chap want's to borrow more then the mortgage amount that would equate to €700/month over 35 years and he has demonstrated that he saves nothing after his rent and other outgoings are paid.

JonathanM93

Sorry another side question (don't feel like it deserves new thread):

Is it true that it's better to get 35 year mortgage with low-ish monthly repayments than it is to take shorter mortgage but with higher repayments?

At work someone advised me that's the case as you can put big lump of money (savings, lottery, sales, inheritance etc..) into mortgage at any time and it brings repayment down thus eventually lowering repayments to basically negligent sum?

Heres Johnny

JonathanM93 wrote: »

Sorry another side question (don't feel like it deserves new thread):

Is it true that it's better to get 35 year mortgage with low-ish monthly repayments than it is to take shorter mortgage but with higher repayments?

At work someone advised me that's the case as you can put big lump of money (savings, lottery, sales, inheritance etc..) into mortgage at any time and it brings repayment down thus eventually lowering repayments to basically negligent sum?

The longer the term of the mortgage, the more interest you pay so makes it dearer. The person in work equating getting a longer term mortgage with the benefits of putting lump sums into it is talking tripe and you shouldn't take their advice. He/she is confusing the benefits of cash flow with cost. Yeah, you'll have more money this month and next month if you go for longer term but by the time it's paid off and cleared you will have paid more. Much more. Much much more.

GocRh

JonathanM93 wrote: »

Sorry another side question (don't feel like it deserves new thread):

Is it true that it's better to get 35 year mortgage with low-ish monthly repayments than it is to take shorter mortgage but with higher repayments?

At work someone advised me that's the case as you can put big lump of money (savings, lottery, sales, inheritance etc..) into mortgage at any time and it brings repayment down thus eventually lowering repayments to basically negligent sum?

It's usually better to get a mortgage with a shorter repayment term, if you can afford the higher monthly repayments, as you'll spend less on interest (servicing your debt).

Longer repayment terms can make some sense if interest rates are really low (as is the case in some countries in the continent where interest can be lower than 1% per year). In that case you could use the spare money for something more productive, such as an investment with higher return than the interest rates, or voluntary pension contributions. With mortgage interest rates where they are in Ireland at the moment (2.5%+), it is probably better to go for a shorter mortgage term and spend less on servicing your debt as you will struggle to find a better place to use your money.

If I'm not mistaken if you go for a fixed interest rate mortgage you cannot make a lump sum payment during the fixed interest term. Lump sump payments are only possible if you're on a variable interest rate mortgage.

tscul32

If you can afford the higher repayments of a shorter term then you could take the longer term and assuming you're on a variable rate you could overpay to the equivalent of the shorter term. What that gives you is the option to revert to the actual lower repayment if you ever need it. Much harder to extend a mortgage if you should ever need to reduce payments.
That's the only reason I could think of .

Uncle Pierre

Something else to consider if you take out a longer-term mortgage with the notion of putting in a lump sum from time to time is that it takes great financial discipline of a different sort to actually put a lump sum against the mortgage.

Say you've a windfall of €5,000 or €10,000 (or any figure you care to mention) in a couple of years' time. It's far more tempting and far more likely with human nature the way it is to decide you'll upgrade the car or have a nice holiday or even renovate the house a bit, than to pay off some of your mortgage.

I know my brother and his wife took out a 35-year mortgage around 12 years ago, with the idea that they could pay off a lump sum if they ever got the chance. About five years ago, they won close to €15,000 on their local GAA club lotto. Do you think any of that money was used for the mortgage? Not a bit of it!

dubrov

Definitely pay off all your debts first (loans, CC etc.) . Not only will you save on the high interest rate, the banks will count them against what you can borrow anyway.

Don't miss a payment on them as well as it will damage your credit rating and reduce your ability to borrow.

Graham

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