Another how much of a mortgage can we get question?

Could anyone advice me on how much of a mortgage we can get. We are planning to talk to the bank next week but just to get an idea... We are a family of 4, my husband has started his business over 3 yrs ago and most of the money he earns go back to the business so it's really just me at the moment who pays all the bills. We are considering that I would apply for a mortgage as a single applicant (is it possible if we are married?) as my husband previously owned a property so we wouldn't be able to go as FTB. I earn 50k a year, in permanent job for last 4 yrs, no debts, have credit card but it's all always paid at the end of the month, rent is 1100/month, we have 70k in savings. We were thinking about borrowing 150-180k, is that reasonable?

You can't go on your own if you are married, I was hoping to do this myself but once you are married you have to buy together. But it may be different if you husband has property already!!

I don't know about the possibility of going alone, but just on the amounts side of things my situation was roughly comparable when I applied for a mortgage earlier this year. I was a sole applicant for the mortgage. Salary 52K, public sector permanent, rent 950K, 4K credit union loan, no credit card, with only 25K savings and was able to secure up to about 245K (didn't end up borrowing near this amount). What's changed in recent years is that the banks now look at the property you're buying - you have to nominate a property on your application, whereas years ago they just accepted a valuation. Also, would recommend going to a broker. There will probably be a small charge but it's worth it to present your application properly and to ensure that your paperwork is correct from the start so that there aren't any delays.

The other posters are correct in that married couples need to apply together.

As for the amount, then banks seem to be trying to reduce the gap between what they "approve" and let you actually borrow. They have a number of different criteria for working out the values.

First they work out your net income per month.
Next they remove 250 per child.
Mortgage is stress tested at the current rate + 2% or 6%, which ever is higher, then that is taken off.
Any loans are taken off as well.
The remaining amount then needs to be above their Net Disposable Income threshold. For a single person is it €1250 per month and I'm told a couple is €1750

A worked example
Assuming no pension or other deductions, your salary gives €2,927.78.
-2 kids = 2427.78
-NDI threshold = 677.78

Working backwards on a 30year mortgage @ 6% (http://www.drcalculator.com/mortgage/ is very good for this) you get a max mortgage approval of 113,418.

One thing to note is that I haven't heard how the stress tests are being done now that the rates are going up again so the amounts could be lower. Been a few reports of people getting lower amounts from the bank when they tried to draw down.

ryaner said:

First they work out your net income per month.
Next they remove 250 per child.
Mortgage is stress tested at the current rate + 2% or 6%, which ever is higher, then that is taken off.
Any loans are taken off as well.
The remaining amount then needs to be above their Net Disposable Income threshold. For a single person is it €1250 per month and I'm told a couple is €1750

Click to expand...

Thanks to a very helpful AIB employee on the property pin the current basic criteria of AIB are known. For a couple you need NDI of €2000 pcm, plus €250 per child. So the OP if applying to AIB they will see the OP needing €2500 per month left over after making stress tested payments on the borrowed amount.

If we focus on the OP's salary alone and leave the husband's income out of the equation, and assuming net earnings are €3215 or so per month (I think your figure is low, ryaner? Or maybe I'm too high), that leaves €715 after the NDI threshold is accounted for.

That would not service €150,000 of a mortgage at 30 year stress test levels. It would cover €120,000 maybe.

Not having been through the process myself I cant comment personally on whether this will transpire exactly as we think. You are in a less advantageous position than Elginelf due to having two kids and being a family.

Bank of Ireland may have looser criteria around the NDI. If you do talk to the banks OP please let us know how you get on and what they say - it seems few people come back on these threads to let us know exactly how things panned out. Best of luck.

Thanks for all your replies.
mairesile, my husband's property had been sold recently, that's where we got 70k from.
ryaner/bugler, my net monthly income is 3250 plus child benefits ( I suppose they are not counted as an income?) so it seems we might only get around 120k....
As we both have accounts with BOI, we will go there next week to see what they say and take it from there.
Elginelf, any good broker you can recommend? I thought brokers don't charge any fees to their clients?

I'll let you know how I get on

No, Child Benefit is not taken into account.

According to BOI's online calculator you could borrow cira 200k, which seems high. I'm told their criteria are less stringent than AIB's so it will be interesting to see what you are offered. Even an NDI requirement of €250 less than AIB would put put you in the frame for the amount you are looking at.

The broker I used was Frank Lenny based on South William Street in Dublin. He was recommended to me by a colleague. He's a 'no nonsense' kind of guy and really easy to deal with. I understand that since the collapse of the property boom some brokers are charging a small fee in order to survive the downturn. As I posted previously having a broker navigate the approvals system was invaluable - it took a lot of stress out of the process.

so just to keep you posted, we went to the bank (BOI) and were offered €230,000 - obviously we need to be approved for this but the worker was confindent that this won't be a problem as we have a good saving history, no loans, good income, no mad spending, etc. We have no intention to borrow the full amount, we still want to stick with approx. 150k as we don't want to buy a huge house & pay all that money just because the bank says we can
Elginelf, thanks a lot for the contact, we might contact him if any probs with our application.

Thanks for reporting back, Mauska. I'm glad to hear the bank accommodated you, and even gladder to hear you'll be borrowing sensibly.

When you say you were offered 230k, was this them telling you in person or have your got the AIP documents? If you haven't got those I'd suggest you wait. 230k is on the high side for a single applicant with no dependants earning 50k, let alone one who is technically supporting another adult and two kids.
When I applied BOI worked out the max amount until the easiest criteria and work downwards from there.