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Question on purchasing a second property.

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  • 20-06-2020 4:11pm
    #1
    SpencerJC
    Registered Users Posts: 56 ✭✭


    Hey Folks!

    Quick question I have. I purchased an apartment with my girlfriend recently, we are both currently living here but I am thinking of buying a second apartment in the next 12-18 months. I know the interest rates at the bank are different if you are buying to let vs residential. If I purchase a second apartment with two rooms, one that I will keep for myself and another that I would rent out, could I avail of the residential interest rate? Anything I should be anticipating here? Thanks!


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    #2
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    SpencerJC wrote: »
    Hey Folks!

    Quick question I have. I purchased an apartment with my girlfriend recently, we are both currently living here but I am thinking of buying a second apartment in the next 12-18 months. I know the interest rates at the bank are different if you are buying to let vs residential. If I purchase a second apartment with two rooms, one that I will keep for myself and another that I would rent out, could I avail of the residential interest rate? Anything I should be anticipating here? Thanks!

    If you're planning on living there then you can avail of owner-occupier rates. As a non-ftb you'll be expected to have at least 20% of the purchase price as a deposit. If it's not a BTL mortgage you will need to satisfy the loan-to-income requirements (3.5x income). If You've an existing mortgage on your first apartment this will be factored into the calculations and as a result reduce the amount you can borrow towards the new apartment. You will also be stress-tested on your current and potential debt this may also reduce the amounts a bank might lend you. There are exceptions to the rules but right now it seems banks are very cautious and are not using them.

    It's possible that your existing mortgage provider may look to increase your rate if you're not using it as your primary residency.


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    #3
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    Q&A wrote: »
    If you're planning on living there then you can avail of owner-occupier rates. As a non-ftb you'll be expected to have at least 20% of the purchase price as a deposit. If it's not a BTL mortgage you will need to satisfy the loan-to-income requirements (3.5x income). If You've an existing mortgage on your first apartment this will be factored into the calculations and as a result reduce the amount you can borrow towards the new apartment. You will also be stress-tested on your current and potential debt this may also reduce the amounts a bank might lend you. There are exceptions to the rules but right now it seems banks are very cautious and are not using them.

    It's possible that your existing mortgage provider may look to increase your rate if you're not using it as your primary residency.

    Thanks for the reply. The 3.5 limit could be tricky then, I was thinking if I got another place I would rent the spare room helping to pay the mortgage, I suppose this wouldn't be factored in, it needs to be either residential or buy to let, theres no in-between?


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