Would we qualify for a second mortgage

F

Fluffymub

Guest
Hi there,
I am looking for ABM members to give me their opinion on the following situation:

My gross annual income: 57K
My partner annual income: 12K

Left to pay on our mortgage: 160K - 3% fixed (bank staff rate mortgage)

My wife has been given a site beside her mother to build a house. We have made inquiries about planning permission and from the initial conversations we have had with the planners, they would see no reason why we should not get planning permission.

The house we are currently living in is in my name and the plan is to try to obtain planning permission and rent out our house as it's in the town and central to shops etc...

My question is: What would be our chances of getting second a mortgage of 150K to build? We would hope to rent out the house we are currently living in so the mortgage is covered on this.

All comments welcome.
Regards
G
 
Hi Fluffymub - what is the value of your home? the LTV ratio may make a difference. Also, how much of a deposit have you saved?
 
Fluffymub,

There are too many unknown variables.
Age, kids, other loans, rental income?

If you could do a 30 year term, have no loans, secure jobs, well managed current accounts, no children and if the rental income would cover 1.5 times your current mortgage repayments stress tested at capital and interest payments of 5% then this would probably be a runner.

Bear in mind, it is still tough to get investment mortgages approved unless they are rock solid.

You would also need savings to cover overruns on the build of roughly 15% of the build cost.

The loan to value on your current house will need to be < 70%.


www.moneybackmortgages.ie
 
NorfBank said:
Fluffymub,

There are too many unknown variables.
Age, kids, other loans, rental income?

If you could do a 30 year term, have no loans, secure jobs, well managed current accounts, no children and if the rental income would cover 1.5 times your current mortgage repayments stress tested at capital and interest payments of 5% then this would probably be a runner.

Bear in mind, it is still tough to get investment mortgages approved unless they are rock solid.

You would also need savings to cover overruns on the build of roughly 15% of the build cost.

The loan to value on your current house will need to be < 70%.


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Thanks for your replies so far.
I am 38 and my partner is 36.
I work in the Financial Industry and my wife is an on-call care assistant.

We don't have any children yet! but my wife found out she is pregnant and due the end of July.

Besides our mortgage, we have only one (credit union) loan of 9K for a car, which I am paying 80 Euro a week on.
We have 5K in savings and I also have a site given to me by my parents which I haven't done anything with.

I spoke to a local letting agent and he said we could get 600pm rent for the house. Our mortgage is 530pm. I am only four years into my mortgage.
 
Hi Fluffymub
You will probably find that most Lenders will require you to have proven savings (5K may not be sufficient for the likes of AIB) to cover any potential cost over runs... just another point to bear in mind. Most Lenders will still offer 100% of the construction cost of the property if you are not purchasing the site.
 
Fluffymub said:
Besides our mortgage, we have only one (credit union) loan of 9K for a car, which I am paying 80 Euro a week on.
We have 5K in savings and I also have a site given to me by my parents which I haven't done anything with.
Click to expand...

You are unlikely to be approved due to the loan and a lack of savings.
Obvious advice alert - pay off the loan and increase your savings.

The projected rental cover is not too strong either especially when rates increase in the next 18 months.

As you are having a baby there will also be a lot of unexpected expenses coming from July - maybe not the best time to build?

www.moneybackmortgages.ie
 
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