DarraghK1978
Registered User
- Messages
- 13
Apartment | ||
Rental Income | 26,400.00 | 2,200 * 12 |
Expenses | 4,640.00 | Property Manager @ 10%, misc |
Interest | 7,475.00 | 250000 * 0.0299 |
Taxable Income | 14,285.00 | Income - ( Expenses + Interest) |
Tax @ 52% | 7,428.20 | |
Mortgage Payments | 22,800.00 | |
Cashflow | - 8,468.20 | Income - Expenses - Tax - Mortgage Payments |
@Big Pud During the application to your new bank how was the existing mortgage treated? Did they do x3.5 salary minus existing mortgage?
However, the house is in an excellent location and we’d like to have the option of using it to help nieces and nephews in future if they decide to study or work in this city- but that’s a long way off and the property would be mortgage-free at that stage.
Also, given Covid impact on house prices is unknown, I’d prefer not to be facing into a sale in the next while.
If I read this right, then monthly for two adults in employment:
Net income €8.6k
Savings €5k
Mortgage € 1.9k
Everything else €1.7k?
As far as I know the existing mortgage was not looked at for the 3.5 LTI limit. An exemption was never mentioned and our income figures which would be max €110k (including 50% non-guaranteed bonus) would not cover the existing and new mortgages combined (€450k) without one. We actually went to 2 banks and received AIP within a few days from both.
Not sure if it was intentional but looking at the CBI's website where they explain the mortgage measures here it includes links to the relevant regulations. The 2015 SI here which defined the 3.5 LTI limit doesn't look to take into account any existing mortgages or loans. The actual definition is; “high loan-to-income housing loan” means a housing loan advanced by a lender in respect of a residential property under which the total amount advanced is greater than a multiple of 3.5 times the borrower’s income. I can't see the definition being amended by the later SIs only the percentage of lending it applies, i.e. 20% of loans for a lender can be 3.5 LTI exempt was changed to 10% for non-FTBs in 2017.Is this a glitch in the matrix?
Not sure if it was intentional but looking at the CBI's website where they explain the mortgage measures here it includes links to the relevant regulations. The 2015 SI here which defined the 3.5 LTI limit doesn't look to take into account any existing mortgages or loans. The actual definition is; “high loan-to-income housing loan” means a housing loan advanced by a lender in respect of a residential property under which the total amount advanced is greater than a multiple of 3.5 times the borrower’s income. I can't see the definition being amended by the later SIs only the percentage of lending it applies, i.e. 20% of loans for a lender can be 3.5 LTI exempt was changed to 10% for non-FTBs in 2017.
I presume banks are interpreting the above as the "total amount advanced" by them "in respect of [that] residential property". I'm not sure if that is bending the rules or maybe what the CBI tried to implement to stop the regulation applying to accidental landlords. Also banks may not all have the same interpretation of the regulations and I presume their own underwriting and affordability criteria would stop someone amassing a property portfolio over a period of time by going to bank C, D, etc to buy house 3, 4 and so on.
If I read this right, then monthly for two adults in employment:
Net income €8.6k
Savings €5k
Mortgage € 1.9k
Everything else €1.7k?
@NoRegretsCoyote what can happen if you don't voluntarily tell bank 1 it is not a BTL?
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