After putting it off for a while, I have decided to finally get a foot on the property ladder. To be honest, it was the advent of 100% mortgages that finally allowed me to do this as I have no savings for a deposit. I am currently earning €65,000 pa with guaranteed extras (bonus/on-call allowance) of about ~€12500 (possibly more depending on overtime). I am currently paying back one loan at €560 a month which will be paid in full by September next year. I will be a first time buyer, and would prefer to buy a second-hand property around the €300k mark (or rather under the €317 stamp duty mark). From plugging values into online calculators, I can see that, were it not for the loan repayments, I should be able to qualify for a mortgage higher than this amount. However, the loan repayments bring this way down.
I did notice on some online calculator that loans that will be cleared in full over the next six months are not taken into account. Is this standard practice? If I keep paying back the loan at the current monthly amount, does it mean that by March (six months before it's fully cleared) I should be able to apply for a mortgage as if I was debt free? (Is the six months thing more an assumption that it is going to take this long between initially seeking approval and drawing down the mortgage??)
Another option I have is to lower the monthly repayments on the loan to such an extent that it allows me to borrow the sum I want. How do banks calculate how loans affect borrowing potential? And what would I have to reduce the loan repayments to in order to be able to borrow €317k?
Of course, the third (and most sensible) option would be to ramp up the payments in order to clear the loan before September next year, but this brings me back to the original question - can I start the process six months before the loan is cleared and know that I can expect to be able to borrow my required amount?
Any help on this is appreciated so that I can have an idea of when I should be prepared to take the plunge.
I did notice on some online calculator that loans that will be cleared in full over the next six months are not taken into account. Is this standard practice? If I keep paying back the loan at the current monthly amount, does it mean that by March (six months before it's fully cleared) I should be able to apply for a mortgage as if I was debt free? (Is the six months thing more an assumption that it is going to take this long between initially seeking approval and drawing down the mortgage??)
Another option I have is to lower the monthly repayments on the loan to such an extent that it allows me to borrow the sum I want. How do banks calculate how loans affect borrowing potential? And what would I have to reduce the loan repayments to in order to be able to borrow €317k?
Of course, the third (and most sensible) option would be to ramp up the payments in order to clear the loan before September next year, but this brings me back to the original question - can I start the process six months before the loan is cleared and know that I can expect to be able to borrow my required amount?
Any help on this is appreciated so that I can have an idea of when I should be prepared to take the plunge.
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