Chances of a Mortgage

M

marathonic

Registered User
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122
Credit Cards: Always paid in full but closed last month.
Salary: €32,000

Rental House
Value: €110,000
Mortgage: €90,000
Monthly Payment: €350
Monthly Rent: €520

Tenant has been there for 3.5 years

Prospective Purchase
Asking Price: €175,000
Possible Offer: €125,000

House is a repossession and EVERYTHING of value has been removed. Houses in the area have sold recently for €250,000 (but in moving-in state). It'd take about €50,000 to bring it up to standard - albeit, probably not as high a standard as the one that sold recently. I have €32,000 in savings and, therefore, would require a mortgage of around €145,000 (a 4.5 salary multiple).

How possible is the above and would it help if I used the bank that actually owns the house for the purchase? I could reduce the €50,000 if required and refurbish the house, room-by-room, over a few years.
 
I'd consider putting 8% of the €125,000, or €10,000 down as a deposit and doing €20,000 worth of renovations (doing the remainder over a number of years). The house is too big for me now as a young, single person so I'd just concentrate on downstairs initially.


I'm thinking that, in this case, the bank that hold the house could look at it as:

Best Case Scenario

I take on a mortgage and pay it fully over, for example, 25 years.


Worst Case Scanario

I pay over a number of years, then default - in which case the bank are in the same position as they are now but with at least 8% less debt outstanding and additional work done (although they may assume that I'd do the same as the previous owner and remove everything).
 
I pay over a number of years, then default - in which case the bank are in the same position as they are now but with at least 8% less debt outstanding and additional work done (although they may assume that I'd do the same as the previous owner and remove everything).
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This is not a scenario that will be considered by any bank at present. Also, there is no advantage in applying through the Bank that are forcing the sale of the property. You either qualify for the mortgage under normal criteria or don't. If not, your proposal will be declined.
I haven't completed any assessment as to the merits of your mortgage application. Go online & assess whether you meet the criteria using the templates on bank websites.
 
Well BOI's website states a max mortgage of €136,000 for my salary which would be sufficient.

The problem is, will I be penalised for the rental property even though the rent covers the mortgage and there's still equity in it.
 
Not necessarily penalised. The net rent will be added to your income & loan repayments to your outgoings. However loan repayments will be sensitised at a higher rate to allow for potential future rate increases.
 
44brendan said:
Not necessarily penalised. The net rent will be added to your income & loan repayments to your outgoings. However loan repayments will be sensitised at a higher rate to allow for potential future rate increases.
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Thanks for your responses. I might go ahead and request a copy of my ICB report (which should be good) and try applying.
 
Absolutely! Primary issue here is that you have a good savings record and are comfortable with the repayment level on the proposed new loan.
 
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