Getting a mortgage advice

antimatterx

Hi

I'm looking for some advice on getting a mortgage. I'm mid-20s, working as a software developer, I make 45K (literally got a pay rise from €32K last week), a year and I'm permanent in my job for nearly 2 years.

Savings wise I think I'm going OK. I'm not sure. I save around €1500 a month and will probably manage around €2200 when the new pay comes in next month. I have €35K sitting in a savings account right now.

I'm looking to by 1 - 2 bed apartments in Dublin for between 200 - 275K. Ideally, I could get 275K, any advice on how I could achieve an exception from the bank?

Snotty

Sorry to say but no chance of 200k+ and your 3.5 times wage might not include the pay increases straight away, you might need to be in the new role 5 month or more, not 100% sure might be different from bank to bank

Ruggabugga101

Speak to a broker, they'll know what the lenders appetites are at the moment, info you get here might not be accurate.

On the face of it you may need to wait a bit longer.

You can't get 100% finance and even eith an exception
you'll be very close to the borrowing cap. Repayment capacity looks ok though.

Smee_Again

Nobody gets 6 x salary so that’s not going to happen.

Why would they give you an exception? Are you on a guaranteed incremental pay scale? Have you a huge deposit?

When I applied I had just received a 30% pay increase and BOI based the application on the new salary as long as I could show an updated payslip before drawdown so you should be ok on that front.

antimatterx

Smee_Again wrote: »

Nobody gets 6 x salary so that’s not going to happen.

Why would they give you an exception? Are you on a guaranteed incremental pay scale? Have you a huge deposit?

I'll probably have >50K saved this year, I'm in tech so will be have substantial salary increases over the next few years.

Smee_Again

antimatterx wrote: »

I'll probably have >50K saved this year, I'm in tech so will be have substantial salary increases over the next few years.

15% deposit (plus whatever H2B) isn’t all that much, remember you won’t be able to save as much once you’re not being supported by mum and dad, and unless those increases are guaranteed you don’t seem a great candidate for >4.5 x salary.

MAULBROOK

First thing first you should be proud of yourself for what your trying to do, personally i would avoid a apartment as they are usually made of ****. But if you insist go for apartment that has a OTIS or Kone lift in it.
Why? I am a Lift engineer and from my 20 year experience if a building has a cheep lift in it then the rest of the building is very cheaply built.
The 2 company's i mentioned don't do cheap.

thegills

If you say you're doing rent-a-room can you claim say €6k pa extra salary? Used to work in the old days!

rostalof

MAULBROOK wrote: »

First thing first you should be proud of yourself for what your trying to do, personally i would avoid a apartment as they are usually made of ****. But if you insist go for apartment that has a OTIS or Kone lift in it.
Why? I am a Lift engineer and from my 20 year experience if a building has a cheep lift in it then the rest of the building is very cheaply built.
The 2 company's i mentioned don't do cheap.

Very good point. I worked in the building game at the end of the boom, apartments were extremely poorly built then and from what I can see, things haven't improved since. There's absolutely no way I'd pay nearly €300k for a ringside seat in my neighbours bedroom.

Jim2007

antimatterx wrote: »

Hi

I'm looking for some advice on getting a mortgage. I'm mid-20s, working as a software developer, I make 45K (literally got a pay rise from €32K last week), a year and I'm permanent in my job for nearly 2 years.

Savings wise I think I'm going OK. I'm not sure. I save around €1500 a month and will probably manage around €2200 when the new pay comes in next month. I have €35K sitting in a savings account right now.

I'm looking to by 1 - 2 bed apartments in Dublin for between 200 - 275K. Ideally, I could get 275K, any advice on how I could achieve an exception from the bank?

You are a software engineer, so do the math. Even if you could get an exception, you don't have the income to realistically support such a loan. Look around you, Ireland has plenty of examples of people doing precisely what you are proposing to do and their poor financial decisions are likely to dog them until retirement and perhaps beyond. That is not a club you want to join.

You know outside the IRL/UK bubble, buying property is considered a very high risk investment and rightly so. When you buy a property, you break every rule of thumb of investing: invest in a high risk asset class, fail to diversify, borrow to do so and accept a low return for having taking on the risk in the first place. Ignoring reality got a lot of people into trouble last time around. Learn the lesson.

Even from a utility point of view it makes no sense. Of course you need somewhere to live, but your needs change over time. Early on an apartment suits you fine, but then at some point you will have a family and later you'll be back just the two of your rattling around in big house. And while you are not paying rent, there are maintenance, heating etc... the risk of falling values, ability to dispose of the property when you want to etc...

Finance is one place you need to make cold calculating decisions as it can have very serious consequences. Sure, owning your own place is a nice feeling, but its not worth taking on the kind or risks you are proposing as it could have long term impacts on your lifestyle.

Trish56

OP you need to be earning minimum of 50k to qualify for an exception of 4 times salary that is if you have no short term borrowings. Max. exception is 4.5 times income however you would need a higher income again. You have excellent savings so you should have no problem with repayment capacity.

Before you decide to buy you need to take into consideration that in the future if you decide to move to a bigger property then as a 2nd time buyer you will need a deposit of 20% and there is a possibility that the value of your property could reduce so may not have any equity when yo decide to sell.

I don't think its all negative as I know people who purchased property many years ago and rented out two rooms which paid for the mortgage and rental income was tax free once below 14k however this rental income would not be considered when applying for a mortgage.

dotsman

thegills wrote: »

If you say you're doing rent-a-room can you claim say €6k pa extra salary? Used to work in the old days!

And that was exactly the problem 15 years ago. People lying so they can borrow as much money as possible, and then complaining about the banks when everything went tits up.

OP, you had a thread on this in the accommodation & property forum, where you got some good advice. To be honest, in my opinion, you are simply not ready for this yet (very few people are in their mid-20's!). In just a few short years, you will be in a far better position.

Jim2007

dotsman wrote: »

And that was exactly the problem 15 years ago. People lying so they can borrow as much money as possible, and then complaining about the banks when everything went tits up.

Yep, when I started out as a newly minted Chartered Accountant in Dublin, 2.5 times the main income earner and 1 time the second salary was considered the maximum risk one should take on.

When it comes to property, people in IRE/UK do not want to hear about the negatives and close their eyes to the examples in front of them. Of course there are situations where there is not choice but to buy, but in any situation where there is another option, a very cold, careful analysis needs to be done