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2nd Property.

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  • 17-07-2020 12:12pm
    #1
    SpencerJC
    Registered Users Posts: 56 ✭✭


    Hi,

    If someone buys their first property with someone else and then one of the two people decides to move out and buy a second property to live in. I assume this person could avail of residential mortgage rates even though they still partially own the initial property? There is a difference between residential and buy to let interest rates so just curious.

    Thanks!


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    #2
    [Deleted User]
    Posts: 3,505 ✭ [Deleted User]


    If you're living in it then it's residential.


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    #3
    Claw Hammer
    Registered Users Posts: 6,236 ✭✭✭Claw Hammer


    SpencerJC wrote: »
    Hi,

    If someone buys their first property with someone else and then one of the two people decides to move out and buy a second property to live in. I assume this person could avail of residential mortgage rates even though they still partially own the initial property? There is a difference between residential and buy to let interest rates so just curious.

    Thanks!

    You may have an issue with a bank being willing to lend in those circumstances. You will be jointly and severally liable for the rent on the first property, even if you don't live there. This may result in the bank requiring the much higher deposit than normal to cover themselves for requiring you to be earning enough to be able to fully afford both loans.


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    #4
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    Claw Hammer wrote: »
    You may have an issue with a bank being willing to lend in those circumstances. You will be jointly and severally liable for the rent on the first property, even if you don't live there. This may result in the bank requiring the much higher deposit than normal to cover themselves for requiring you to be earning enough to be able to fully afford both loans.

    Yeah, I was thinking this but at the same time, I would likely be funding about 35% of the property price myself due to lending restrictions, the 3.5 times salary rule so I'd be hopeful this would cover it.


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    #5
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    SpencerJC wrote: »
    Yeah, I was thinking this but at the same time, I would likely be funding about 35% of the property price myself due to lending restrictions, the 3.5 times salary rule so I'd be hopeful this would cover it.


    Just one other question someone might know. Is stamp duty on a second property 7.5% even if it's residential? I thought it was 3% but not sure now.


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    #6
    Baby01032012
    Registered Users Posts: 1,622 ✭✭✭Baby01032012


    SpencerJC wrote: »
    Just one other question someone might know. Is stamp duty on a second property 7.5% even if it's residential? I thought it was 3% but not sure now.

    It’s 1% it doesn’t matter whether it’s first second or 10th. Commercial is 7.5%


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    #7
    Marcusm
    Registered Users Posts: 10,320 ✭✭✭✭Marcusm


    SpencerJC wrote: »
    Yeah, I was thinking this but at the same time, I would likely be funding about 35% of the property price myself due to lending restrictions, the 3.5 times salary rule so I'd be hopeful this would cover it.

    But the affordability component will take account of your existing mortgage obligations......


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    #8
    Claw Hammer
    Registered Users Posts: 6,236 ✭✭✭Claw Hammer


    SpencerJC wrote: »
    Yeah, I was thinking this but at the same time, I would likely be funding about 35% of the property price myself due to lending restrictions, the 3.5 times salary rule so I'd be hopeful this would cover it.

    As I read this, it seems your new mortgage is going to be 3.5 times your salary. How will you be able to pay your current mortgage?


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    #9
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    Claw Hammer wrote: »
    As I read this, it seems your new mortgage is going to be 3.5 times your salary. How will you be able to pay your current mortgage?

    Combined I would be keeping it to 3.5 times my income.


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    #10
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    SpencerJC wrote: »
    Combined I would be keeping it to 3.5 times my income.
    Would the total of both mortgages be below 3.5 times your earnings .
    You may be jointly and solely liable for the first mortgage.


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    #11
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    brisan wrote: »
    Would the total of both mortgages be below 3.5 times your earnings .
    You may be jointly and solely liable for the first mortgage.

    I am basing the 3.5 off half of the first mortgage (which is split with someone else) and the new mortgage. Do you think they'd may take the entire first mortgage into my 3.5 even if its split with someone else?


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    #12
    [Deleted User]
    Posts: 3,505 ✭ [Deleted User]


    SpencerJC wrote: »
    I am basing the 3.5 off half of the first mortgage (which is split with someone else) and the new mortgage. Do you think they'd may take the entire first mortgage into my 3.5 even if its split with someone else?

    If the person you've split your mortgage with stopped paying it, the bank would hold you liable for the full amount. Since that's your ultimate liability, I think they'd be doing you a favour if they measure it at 50% of the value.


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    #13
    Claw Hammer
    Registered Users Posts: 6,236 ✭✭✭Claw Hammer


    SpencerJC wrote: »
    I am basing the 3.5 off half of the first mortgage (which is split with someone else) and the new mortgage. Do you think they'd may take the entire first mortgage into my 3.5 even if its split with someone else?

    Yes.


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    #14
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    SpencerJC wrote: »
    I am basing the 3.5 off half of the first mortgage (which is split with someone else) and the new mortgage. Do you think they'd may take the entire first mortgage into my 3.5 even if its split with someone else?

    Yes.

    If the other person does a bunk tomorrow morning, the bank aren't going to be knocking on your door looking for half the mortgage to be repaid.


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    #15
    SpencerJC
    Registered Users Posts: 56 ✭✭SpencerJC


    Graham wrote: »
    Yes.

    If the other person does a bunk tomorrow morning, the bank aren't going to be knocking on your door looking for half the mortgage to be repaid.

    If that's the case, I won't be getting finance. I would have thought if someone jumps ship there is a vacant property which could be serviced through rent. I will call up a few banks and see if I can get anywhere.


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    #16
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    SpencerJC wrote: »
    If that's the case, I won't be getting finance. I would have thought if someone jumps ship there is a vacant property which could be serviced through rent. I will call up a few banks and see if I can get anywhere.

    As long as one or both of you keep repaying the mortgage you're unlikely to have a problem with the existing mortgage

    For an additional mortgage it's a different story.

    A bank is less likely to consider just half the outstanding mortgage on the first property.


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    #17
    Claw Hammer
    Registered Users Posts: 6,236 ✭✭✭Claw Hammer


    SpencerJC wrote: »
    If that's the case, I won't be getting finance. I would have thought if someone jumps ship there is a vacant property which could be serviced through rent. I will call up a few banks and see if I can get anywhere.

    It is also possible that someone could simply stop paying and stay in occupation while the arrears build up. No bank is going to take that chance.


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