Will I be able trade up

M

Mr Mister 2022

Registered User
Messages
8
Hello

I'm hoping to be able trade up and move to a bigger house, I'm just not sure it's viable. I have a good bit of equity built up in my current home, but would need to buy and then sell so think I'll come a cropper with the mortgage rules unless it's possible for this equity to be taken into account (bridging loans are no longer available I think?)

Details
Single income household, I earn 45,000 (3.5 times gets me nowhere near 220k) my wife is at home with 3 kids. She receives Carers allowance

We have savings of 24,000 (potentially could raid kids college savings of 18k but would obviously have to repay this post sale of current home)
Current house valued at 180,000
Owe 56,000 still with PTSB

New house would be around 220,000
 
Mr Mister 2022 said:
Single income household, I earn 45,000 (3.5 times gets me nowhere near 220k)
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But you don't need to borrow 220k.
Mr Mister 2022 said:
We have savings of 24,000 (potentially could raid kids college savings of 18k but would obviously have to repay this post sale of current home)
Current house valued at 180,000
Owe 56,000 still with PTSB

New house would be around 220,000
Click to expand...
You have 124k equity in your current house.
So you need to borrow less than 100k.
And as little as 76k if you put your savings towards it (even if you don't touch the college fund).
(For simplicity I'm ignoring legal fees, ancillary costs etc.).
 
Mr Mister 2022 said:
Hello

I'm hoping to be able trade up and move to a bigger house, I'm just not sure it's viable. I have a good bit of equity built up in my current home, but would need to buy and then sell so think I'll come a cropper with the mortgage rules unless it's possible for this equity to be taken into account (bridging loans are no longer available I think?)

Details
Single income household, I earn 45,000 (3.5 times gets me nowhere near 220k) my wife is at home with 3 kids. She receives Carers allowance

We have savings of 24,000 (potentially could raid kids college savings of 18k but would obviously have to repay this post sale of current home)
Current house valued at 180,000
Owe 56,000 still with PTSB

New house would be around 220,000
Click to expand...
Thanks. I know affordability isn't an issue as such, it's just the bridging aspect I was wondering about. I.e having to apply for a 220k mortgage before we have sold our house would banks be allowed take the unrealised equity into account?
 
I understand the attractiveness of buying and holding. Let's assume your existing property would attract enough rent for a lender to ignore your existing borrowings.

As a non-ftb borrower you would need a 20% deposit. That's 44k ... Including college fund your a little short but not a huge amount. The lender will want to see the deposit and change to cover other costs associated with purchasing so close but not there yet. As it stands you would need an exemption.

Let's assume you pull together the required deposit (and change) that leaves a loan amount of €176k. That's about 3.9 times your income. So you would need an exemption.

Whatever about your chances of getting one getting both an LTI and LTV exemption together is rare. We're talking single digits handed out last year.

Keeping your existing property, in the short term or otherwise, doesn't appear to be an option.
 
skrooge said:
I understand the attractiveness of buying and holding.
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You're answering a question that wasn't asked - i.e. "can I trade up AND keep my former PPR as a rental property?".

Back to the question that was asked, it is possible to arrange things so that you close the sale of your property and the purchase of the new one at the same time so that bridging finance is not required. But it obviously takes careful planning. I know someone who did it recently though - and they had a new baby during the transition just to add to the fun. :)
 
skrooge said:
I understand the attractiveness of buying and holding. Let's assume your existing property would attract enough rent for a lender to ignore your existing borrowings.

As a non-ftb borrower you would need a 20% deposit. That's 44k ... Including college fund your a little short but not a huge amount. The lender will want to see the deposit and change to cover other costs associated with purchasing so close but not there yet. As it stands you would need an exemption.

Let's assume you pull together the required deposit (and change) that leaves a loan amount of €176k. That's about 3.9 times your income. So you would need an exemption.

Whatever about your chances of getting one getting both an LTI and LTV exemption together is rare. We're talking single digits handed out last year.

Keeping your existing property, in the short term or otherwise, doesn't appear to be an option.
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Hi

I've no intention of holding onto my current property to rent it out, its just thay I doubt it'll be possible to sell and buy at the same time. So I'd need to apply for new mortgage before I'd be able to sell
 
ClubMan said:
You're answering a question that wasn't asked - i.e. "can I trade up AND keep my former PPR as a rental property?".
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I was actually addressing the bridging loan aspect. What I outlined is the closest you can get these days. While it is possible to do it in some cases for the reasons I've outlined above it's not a runner for the OP.
 
skrooge said:
I was actually addressing the bridging loan aspect. What I outlined is the closest you can get these days. While it is possible to do it in some cases for the reasons I've outlined above it's not a runner for the OP.
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So my options are really just to keep saving, or hope that I can be lucky enough to arrange a chain sale?
 
Mr Mister 2022 said:
So my options are really just to keep saving, or hope that I can be lucky enough to arrange a chain sale?
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It's a lot more common than perhaps you realise. I imagine most people can't afford to buy without selling. Most houses that transact are likely existing stock. There's no where to rent while Inbetween... Bring all that together and the only way anything transacts is via a chain.

It's a buyer's market out there so unless there is good reason to think otherwise there should be interest in your property. As the seller you don't need to over commit until you're reasonably advanced on your own purchase. any potential purchaser should understand this.
 
ClubMan said:
You're answering a question that wasn't asked - i.e. "can I trade up AND keep my former PPR as a rental property?".

Back to the question that was asked, it is possible to arrange things so that you close the sale of your property and the purchase of the new one at the same time so that bridging finance is not required. But it obviously takes careful planning. I know someone who did it recently though - and they had a new baby during the transition just to add to the fun. :)
Click to expand...
As said above it's common, and I've done it 3 times since 2017 (don't ask!!). Each time the new mortgage was subject to the sale of our current property, so we weren't getting the new mortgage to finance the new house until the other sold. As above we were told it can be done on the same day, but realistically, twice it took 2 weeks in between, so we had to find somewhere for those two weeks, and most recently we were renovating & renting anyway so didn't care about pushing it quickly, but it did take around 2/3 weeks.
 
I am not sure what the problem here is.

You have equity of €160k and want to buy a house for €220k.
You need a mortgage of €60k
And you have a salary of €45k.

You absolutely must sell your current home before you commit to buy your new home. Even if you could get a loan to buy another house while retaining your current home, you should not do so.

A chain is messy, but it's often done. Some sellers won't accept offers from people in chains and that is fair enough.

If there are plenty of houses available which you would like to buy, then test the market. Start viewing other houses. Put your own house on the market. When you get an offer which is acceptable, then put an offer in on another house.

It is risky selling your own without having exchanged contracts to buy. A few people do find themselves out of the market for a year and if house prices continue increasing, you could lose out.

On the other hand, if you buy first with the intention of selling your own, and house prices fall, you could lose out.

But you have plenty of scope either way as you have so much equity.
 
Mr Mister 2022 said:
(potentially could raid kids college savings of 18k but would obviously have to repay this post sale of current home)
Click to expand...

As your wife is at home with the kids, I presume they are at least ten years away from college.

The best investment for your children would be to give them a better home.

The best return on a kids college savings fund is for you to pay down your mortgage as you get a risk-free, tax-free return of 2.5% on the money paid off the mortgage.

If you are mortgage-free when your kids reach college age, you will be in a better position to fund them.

Brendan
 
Brendan Burgess said:
I am not sure what the problem here is.

You have equity of €160k and want to buy a house for €220k.
You need a mortgage of €60k
And you have a salary of €45k.

You absolutely must sell your current home before you commit to buy your new home. Even if you could get a loan to buy another house while retaining your current home, you should not do so.

A chain is messy, but it's often done. Some sellers won't accept offers from people in chains and that is fair enough.

If there are plenty of houses available which you would like to buy, then test the market. Start viewing other houses. Put your own house on the market. When you get an offer which is acceptable, then put an offer in on another house.

It is risky selling your own without having exchanged contracts to buy. A few people do find themselves out of the market for a year and if house prices continue increasing, you could lose out.

On the other hand, if you buy first with the intention of selling your own, and house prices fall, you could lose out.

But you have plenty of scope either way as you have so much equity.
Click to expand...
No problem as such, was just looking for clarity as to whether banks would look at the equity we have built up and take that into account for a loan on the basis of selling straight away after buying. But not going to happen so will have to look at saving more or trying to get a chain sale

Thanks for all the advice everyone
 
Brendan Burgess said:
As your wife is at home with the kids, I presume they are at least ten years away from college.

The best investment for your children would be to give them a better home.

The best return on a kids college savings fund is for you to pay down your mortgage as you get a risk-free, tax-free return of 2.5% on the money paid off the mortgage.

If you are mortgage-free when your kids reach college age, you will be in a better position to fund them.

Brendan
Click to expand...
Very true, we've been in the lucky position to overpay our mortgage and take 10 years off it. Deposit rates are no incentive to save
 
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