Can you secure a house you don't own, against a mortgage?

mickdw

mickdw wrote: »

Hold on there now. There are more angles that just stating thst a 20k car is a 20k car.

Not when you're buying a car, there aren't. A 20k car, will cost you 20k. Doesn't matter what badge, engine, shape or colour it is, you're not paying any less than 20k (+ interest). If you like a certain car, then that's personal preference, as she's not planning to sell it anyway.

JPup wrote: »

As far as I know parental guarantees are totally out now. That’s what I was told when I asked fairly recently anyway.

Could your friend move in with her mother for a while to build a deposit? Ideally get the car loan down to a more reasonable level and then build up a consistent record of two years savings. By 2023 your friend will be in a good position to buy.

The only real way I can think of to speed things up would be inheritance or a partner who can add a second income.

I think the real issue she's facing is the general rush/panic, as she's interested in a specific house, rather than just house-hunting in general. She's never really talked about mortgages in great detail before, or anything like that. But as I say, a house for sale on her mam's street is very rare.

runawaybishop wrote: »

She's your mate, you want to defend her. That's all fine. A new car with a loan that costs 650 a month on 37k is nuts. It's a massive cost and severely impacts her ability to borrow. Everyone is saying the same thing, sell the car.

Oh, I've no interest in defending her. Finances are finances, it's fairly black and white. Looking to buy a house now, in a panic, means a €650 car payment is not a good thing, and will not help her out at all. However, assuming this house didn't appear for sale, then a €650 car payment to get the car paid off quite swiftly and have the peace of mind on it, obviously made sense to her. Equally if the house appeared for sale just before she got the loan, or just after the car was paid for, she'd be laughing.



I do agree that just the car and rent are taking up nearly half her income, which seems a bit hefty, but she obviously can afford it and it hasn't fussed her at all since she took out the car loan. She's paid it on time and still has it 'legal' (insurance / tax) and still gets her weekly shopping in, etc. etc.


She's not the worst with money, from my brief overview, but she's not exactly Ms. long-term-thinker either (in fairness, she's 29). It was just the question mark of whether her mam could do anything to help with going guarantor, to get the mortgage over the line, that was what I was wondering about. It's a pity that she can't pull a rabbit out of the hat.

Wesser

The clio lost about 10 k off of its value the moment you drive it off the forecourt.
Better to buy a one or two year old clio where that loss has already happened on someone elses purse.

Car would still be in very good condition after only 1 or 2 years.
That means a year of repayments for you that youll never recoup when a one or two year old car is just as nice but costs 10k less

So 10k towards a deposit!

Bigfatmichael

So basically she has no savings history, no 10% deposit saved and another 5k for solicitor, stamp duty fees etc, has a 650 euro a month car loan and she wants to to get a mortgage and wants a 4.5 times mortgage? Yea good luck with that.

Will the parents pay her 10% deposit and solicitor/stamp duty fees? She hasn't a hope of getting a mortgage.

Her best bet would be to get the car loan paid off, save the 10% deposit and get a rebuilding Ireland home loan.

Diemos

Deleted User wrote: »

She'd still need a car, and selling it wouldn't wipe out the debt for it, so although it'd reduce the amount of time she'd owe on the car, there's only 18 months on it left anyway as far as I understand, so it's not likely to make a massive difference.

(besides, i think shifting cars is a bit tricky at the moment?)

The car is MADNESS, regardless of if this property falls through or not, she needs to sell the car. There are cars that get you from a to b for under 2k, a Yaris or Corolla would hold a decent resale value and is unlikely to through any huge gremlins while cash is tight.

Once that €650 per month is gone, she could build up almost €8,000 in 12 months just by paying it into her savings account rather than the finance company. If she had done that instead of buying the car she would have her deposit already.

As others have pointed out, the lending limit is to 3.5 not 4.5.

Also again as pointed out, banks don't care that you've paid previous loans, they care is you haven't repaid a loan, but after that you get no brownie points. Regular repaying of small loans just shows that the borrower is poor at budgeting and impulsive. With €1k savings, it's not much of a rainy day fund and monthly out goings of €1,450 before she puts food on the table. This is financial Russian roulette.


I just feel sick for anyone stuck on a car loan to income ratio that high, I mean if she got this place, the mortgage repayments would be less than that on a 30 year. How do the people who sell this crap sleep at night.

Diemos

Bigfatmichael wrote: »

So basically she has no savings history, no 10% deposit and another 5k for solicitor, stamp duty fees etc, has a 650 euro a month car loan and she wants to to get a mortgage and wants a 4.5 times mortgage? Yea good luck with that.

it's not such a daft question, 15 years ago she would have go that in a heartbeat.

Rightly or wrongly.....but my point stands, the question is not without merrit.

SEPT 23 1989

Is it a Clio Williams?

runawaybishop

[Deleted User] wrote: »

.Oh, I've no interest in defending her. Finances are finances, it's fairly black and white. Looking to buy a house now, in a panic, means a €650 car payment is not a good thing, and will not help her out at all. However, assuming this house didn't appear for sale, then a €650 car payment to get the car paid off quite swiftly and have the peace of mind on it, obviously made sense to her. Equally if the house appeared for sale just before she got the loan, or just after the car was paid for, she'd be laughing.



I do agree that just the car and rent are taking up nearly half her income, which seems a bit hefty, but she obviously can afford it and it hasn't fussed her at all since she took out the car loan. She's paid it on time and still has it 'legal' (insurance / tax) and still gets her weekly shopping in, etc. etc.


She's not the worst with money, from my brief overview, but she's not exactly Ms. long-term-thinker either (in fairness, she's 29). It was just the question mark of whether her mam could do anything to help with going guarantor, to get the mortgage over the line, that was what I was wondering about. It's a pity that she can't pull a rabbit out of the hat.

Fair enough, I don't begrudge anyone spending their money how they choose and while a clio isnt for me if she likes it then that's that.

Nonetheless that car loan is huge, 37k is what, 2100 net a month? She needs to ditch it asap, house or not. I pay less than her car loan a month on my mortgage

Diemos

runawaybishop wrote: »

I pay less than her car loan a month on my mortgage

So would she if she got the house!

Bigfatmichael

runawaybishop wrote: »

Fair enough, I don't begrudge anyone spending their money how they choose and while a clio isnt for me if she likes it then that's that.

Nonetheless that car loan is huge, 37k is what, 2100 net a month? She needs to ditch it asap, house or not. I pay less than her car loan a month on my mortgage

37K is more like 2530 a month net. You start paying a ton of tax then if your salary goes up more.

runawaybishop

Bigfatmichael wrote: »

37K is more like 2530 a month net. You start paying a ton of tax then if your salary goes up more.

Thanks, I wasn't sure exactly. I used to take that home when I was on that but I also had contracting work on the side. Nonetheless it's a massive chunk of your take home for a car when you don't have a mortgage.

Imo drop the car, get the mortgage then if she really wants get a new car loan.

poker--addict

[Deleted User] wrote: »

What's the story with qualifying for exemptions, out of curiousity? What informs a bank's opinion on whether they'd grant one or not?

I was reading yer man Eoin McGee's book recently (how to be good with money) and he reckons the banks are more likely to give exemptions to those who aren't spending as much, as exemptions can only be a % of the amount of money they lend out (ie; because her house is half the price of your average new build, she'd be more likely to get one as she takes up less, as a percentage of their total loan base)?

I’d imagine in simple terms exemptions will go to those regarded as low risk, plenty of disposable income after stress testing, and probably in jobs income is secure and likely to increase, ie safe bets?

You need a small mortgage for car insurance for younger drivers in this country, but I struggle to understand the amount of people in debt for a car in this country. So many threads about mortgages have a big fat car repayment causing a big negative in them. You don’t need to drive a 1000 quid banger either as gets suggested in these threads, but skip the 20k car for a few years.

Iodine1

Quote: "The car is MADNESS, regardless of if this property falls through or not, she needs to sell the car. There are cars that get you from a to b for under 2k, a Yaris or Corolla would hold a decent resale value and is unlikely to through any huge gremlins while cash is tight"

All cars regardless of brand lose a load of money the day you take it out. No car costing 2k has any resale value only what you get for it and at 2k is risky, it could be great or a rusty unreliable money pit. That's why people buy new or fresh secondhand. Saying that it looks like op had little or no deposit or trade in either when buying a brand new car so repayment is nonsense for someone in that position.

Yes, extend the loan or get rid of the car to clear the debt, but the real problem is no savings whatsoever and the history of loans really says "living beyond your means" and that's what the bank will see. Sorry for the pessimistic outlook.

billo516

She is not sensible with money. No chance of a mortgage for the next few years until she gets her house in order i.e. savings history must be good. she has to plan ahead. It will take time.

Diemos

Iodine1 wrote: »

All cars regardless of brand lose a load of money the day you take it out. No car costing 2k has any resale value only what you get for it and at 2k is risky, it could be great or a rusty unreliable money pit. That's why people buy new or fresh secondhand. Saying that it looks like op had little or no deposit or trade in either when buying a brand new car so repayment is nonsense for someone in that position.

My meaning when I talk about resale value on a runaround is, if you drive it for 2 or 3 years and take care of it, you could pretty much get your cash back.

People need to change their mindset that just because they can make the payments fools them into thinking they can afford the car. There's a lot of people who look like they are doing great in this country but are living paycheck to paycheck. And won't be told any other way of living is possible.

Bigfatmichael

650 euro a month on a clio yikes.

I wouldn't spend 65 euro a month on one.

Meeoow

She might as well keep the car. She will lose a fortune selling it. And at least she knows its history.
I think the 800 rent is more of a problem. She should move in with her mother and save like mad.
Her mothers house couldn't be used as collateral, as a bank would find it hard to take a house off a widowed pensioner if she defaults.

Iodine1

Diemos wrote: »

My meaning when I talk about resale value on a runaround is, if you drive it for 2 or 3 years and take care of it, you could pretty much get your cash back.

People need to change their mindset that just because they can make the payments fools them into thinking they can afford the car. There's a lot of people who look like they are doing great in this country but are living paycheck to paycheck. And won't be told any other way of living is possible.

Agree broadly with your post, but posters were claiming other makes would have held the value. only a well minded used car might hold its value. My main point was any new car regardless of make would take a big hit in the first few years. Op's car is a 191. I agree too that many are struggling to make payments on a new car and as soon as they are free, dive back in again!

Cash_Q

Sounds like this house coming up has been a wake up call for your friend. There are people with years and years of savings, good salaries and AIP who can't secure a house purchase because the market is tough right now. How on earth she thinks she has a hope in hell of getting this house is beyond me.

At this rate I think she should just get serious about saving, and that will involve one major sacrifice, either move home to save money on rent, or change the car. She's only 29, setting herself a goal of a few years to save will still see her with plenty of time for a 30 year mortgage.

Soilse

Costs nothing to ring her bank and arrange a meeting to discuss a financial review can ask them they will tell her exactly what they want at least then she knows what's needed

FromADistance

I'm afraid there's no scenario where a bank will take unencumbered property, in the name of another person, as security against a PDH mortgage in lieu of cash to bring down the LTV / circumvent current Central Bank lending rules.

The only mortgage that could be raised for a person retired would be a 'lifetime' loan e.g. https://www.spryfinance.ie/ but I would strongly advise that they do not consider a lifetime loan. Lots of people have got stung with this sort of lending in the past.

spaceHopper

Sell the car can clear the loan buy a run around, move back home for two years and save like crazy. She should be able to pack away 1000 a month easily while still paying her mother something towards bills.