# 4 Children, 3 bed house, want to trade up...



## Anonxxx (29 May 2018)

Age: 35
Spouse’s/Partner's age: 33

Annual gross income from employment or profession: 48000
Annual gross income of spouse:0

Monthly take-home pay    3200

Type of employment: e.g. Civil Servant, self-employed       private

In general are you:
(a) spending more than you earn, or
(b) saving? Breaking even

Rough estimate of value of home 168000
Amount outstanding on your mortgage:128000 
*What interest rate are you paying? 4.5%*

Other borrowings – car loans/personal loans etc.     car loan 15500

Do you pay off your full credit card balance each month? 
If not, what is the balance on your credit card? No 1900

Savings and investments:8k credit union

Do you have a pension scheme? 
No
Do you own any investment or other property? No 

Ages of children: 1/3/6/9

Life insurance: 
Yes

*What specific question do you have or what issues are of concern to you?*

We live in a very small 3 bed semi. We need to extend/move in the future. We paid 163k for our house in 09 and instantly it was worth 90k. House prices have come back up so we now have 40k equity. I'm working on paying off the credit card at the moment. I'm basically wondering what can we do to get a mortgage once the credit union loan is paid off? How much do we need to be earning? We will need a mortgage of 160k? 
Thanks for any info


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## Brendan Burgess (29 May 2018)

I don't see how you are going to get a loan of that amount based on your salary when you have 4 young children.  So you should make sure that you adapt to living in your 3 bed house and work on improving your finances. 



Anonxxx said:


> What interest rate are you paying? 4.5%



What lender are you with?  You should not be paying 4.5% unless it's with a vulture fund. If it is, then you should look at switching. 

You should probably look at switching anyway. 



Anonxxx said:


> Other borrowings – car loans/personal loans etc. car loan 15500
> 
> Do you pay off your full credit card balance each month?
> If not, what is the balance on your credit card? No 1900
> ...



This is really terrible. You are probably paying about €1,500 interest a year on your Credit Union loan. Given that the net borrowing is €7,500, it means an effective interest rate of around 20%. 

You should ask the Credit Union to give you back €1,900 of your savings to clear your credit card. 

If they refuse, then at least insist that the entire €8,000 is set against the loan to bring it down to €7,500. 

You will need to work on eliminating your loans before even thinking of trading up.

Brendan


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## Palerider (29 May 2018)

You are young, have four children with time for more, I get why you want to trade up and your post is the germ of that idea, it is not for right now, if you can focus on getting the €15.5 loan cleared whilst keeping your mortgage up to date then in your excellent job you will get the mortgage required and could look at a 25 year term to repay, you will have ðmonstrated the ability to service both loans and be seen as a good money manager.

No fancy cars or holidays, you must focus on securing the four bed house that will meet your very long term needs.

You want extra then the spouse needs a part time job on top of child minding, if you pay for child minding with a non earning spouse then stop.


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## Anonxxx (30 May 2018)

Thank you for your feedback. 
We're with ptsb....I didn't think we would qualify to switch at the moment? I thought the criteria would be similar to getting a mortgage?? 
I know we will have to clear the debt first, i'm paying off 850e a month off the loans & credit card ...this is as much as I can afford at the moment. The car loan was for a car that turned out to be clocked so we're stuck with it and then had to top it up to get a 7 seater when we had number 4. They are 2010&2008 so no fancy cars
Thank you again for the advice


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## Brendan Burgess (30 May 2018)

Anonxxx said:


> We're with ptsb....I didn't think we would qualify to switch at the moment?



First of all , you can switch from your SVR to a MVR mortgage. ptsb has written to you at least three times telling you this. They will pay for the valuation. With 76% Loan to Value, you will pay 4%. Still an outrageous rate, but at least it's a saving of 0.5%.

https://www.permanenttsb.ie/mortgages/mvr-switch-offer/

As you have 76% LTV and 2.7 times loan to income, I would have thought that the other lenders would take you on.

If you wouldn't qualify for a switch to €128k, why would you think you might get a mortgage of €160k? 

Brendan


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## Autofill (30 May 2018)

If your take home income is only 3200 pm (738.46 per week) assuming no other income and you have 4 children you should be entitled to Family Income Supplement.  With 4 children you would get 60% of the difference of limit for 4 kids which is €834 per week and your take home pay (834-738.46)*60% which is €57.4 per week.  It might help to pay some bills.


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## Anonxxx (30 May 2018)

Brendan I know I won't qualify for a mortgage NOW. I was asking for down the line...I won't be on this money permanently.
Ptsb have written to us but the house prices hadn't gone up enough to get us out of negative equity. I have the voucher at the moment to get the valuation and indend on trying to get a better rate. I will look to other banks about a switch now too. Thank you for your help. 
Autofill thank you,we get FIS.


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## RedOnion (30 May 2018)

Your LTV and loan to income won't be an issue for switching. However your overall affordability will be.

If you switched at 3%, over 30 years, repayments would be 540 per month (I'm not sure what you currently repay).
With your take home, that'd leave 2,650. With 4 children it'd be tight to meet affordability criteria. UB will consider childrens allowance as part of their criteria so might be your best bet.

However, you other debt will be an issue, as it impacts your ability to service mortgage.

Having a constant credit card balance will count against you in calculating a credit score. As Brendan suggests, there's no point having 8k savings in CU when you're paying probably 20% interest on credit card.

Steps I'd take:
Immediately move to MVR with PTSB
Take 1900 from savings and pay off credit card. Don't use it again.
Ask CU to offset some of your remaining shares against the loan.

Next, explore options to switch to maybe UB. Your income is tight, so they might say no. If they do, ask how much your net pay would needs to increase by before they would accept you.

On a positive, you're both young so can get a long term (although will cost you more longterm). 

Realistically, I would have thought that your salary needs to be over 55k.  Each bank has slightly different affordability criteria, but generally, after mortgage is paid, they'd want to see a couple with 2k left, and an extra 250 per child.


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## Anonxxx (30 May 2018)

Thank you red onion,very informative answer, I appreciate your help


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## RedOnion (30 May 2018)

By the way, if you haven't already done so, you should review your mortgage protection insurance. Costs have come down since 2009, so you might be able to make a small saving there each month.


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## Fire away (31 May 2018)

Autofill said:


> If your take home income is only 3200 pm (738.46 per week) assuming no other income and you have 4 children you should be entitled to Family Income Supplement.  With 4 children you would get 60% of the difference of limit for 4 kids which is €834 per week and your take home pay (834-738.46)*60% which is €57.4 per week.  It might help to pay some bills.


 let me get this straight somebody with 4 kids that earns less than 834 per week which is over 50k per year gross is entitled to social welfare? Its a great county I tell you. No wonder we are broke.


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## MrEarl (1 Jun 2018)

Hello,

The original poster needs to:


get rid of short term / expensive debt
try and find ways to generate additional household income
consider starting to provide for a pension, for both adults

Forget trading up to a four bedroom house anytime soon, it's not affordable.

The children are far too young for each not having their own bedroom to really be an issue, so I'd be opting for bunk beds to meet requirements over the coming years, if floor space is at a premium in some of the existing bedrooms.

Mid to long term, explore the possibility of expanding your existing house (attic conversion or extension), that could provide the extra bedroom that's desired - it'll be cheaper than moving house, assuming the original poster intends to stay in a similar area etc.


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