Chances of a Second Mortgage

L

LByrne

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Hi I was wondering for some advice;
I currently have a property (2-bed apartment) bought in 2008 with a mortgage of 216,000 euro- mortgage currently 198,000 euro left on mortgage. The property is approx 100,000 euro so i am around 100,000 euro in Negative..
I want to trade up in the future as it is only a 2 bed apartment. I am currently renting it out at the moment and the rent covers the mortgage repayments. it is a tracker mortgage of 1.5%+0.25% ECB with PTSB. The apartment is in an ideal renting location and I could even increase the rent if needed be. I dont want to see the apartment and want to keep it as an investment property.
My salary is 45K and my finances is 40K. We have 90K in savings and no credit card debt, loans etc.
I save 1,600 per month and my fiance saves 1,200 per month on top of we pay 400 euro per month on rent.
I am looking into getting a property at approx 230K and getting a mortgage of 190K
Any advice would greatly be appreciated.
 
Even forgetting the investment don't you need a 20% deposit, so 46K and a mortgage of 184K. You quite clearly can afford it as you have 1200 + 1600 + 400= 3200 available. But would a normal bank give it to you, I doubt it. There was a poster on here yesterday, Dave Curry, mentioned Pepper mortgages, that might be an option. Most certainly would advice a broker. Normally I'd say pay down the NE with some of your savings but because the rent covers the mortgage I don't see a need.

Why did you mention two interest rates?

What is the net salaries? You have very cheap rent for two people.
 
i would only need a 20% deposit on 190K (as that is the mortgage i am looking for) so that is 38K, therefore i have 52K left over which can give me a total of 230K.
The interest rate with tracker is 1.5% and then the ecb rate is 0.25%- total interest on tracker is 1.75%.
My net salary is 45K and my fiance is 40K. We rent a room in my parents house, therefore alot cheaper than renting a property.
We save everything we can in order to enhance our savings..
So looks like it is fairly unlikely for me to even be considered by a bank?
 
No you need 20% of the property cost.

I would never say never to anything but wait until one of the banker posters reply, and still I'd try with a broker to see what is or is not an options. Most brokers don't charge and they have their eyes directly on the business. I was amazed yesterday that Pepper will lend where other banks will not, and not at crazy interest rates.

Do you both own the apartment? Are you married?

What realistic income and expenditure will you have in your own home? Ballpark figures please.
 
Do the new central bank rules for mortgages apply to me as i am in negative equity? Therefore the 20% etc.
we are currently engaged and hoping to get married next year..
No the apartment is just in my name.
What realistic income and expenditure will you have in your own home? Ballpark figures please.
I dont know what you mean by this? as in bills etc? Our income should be after tax 5000 euro per month combined.. Expenditure per month... Food and bills (electrical, gas etc), Petrol costs (200euro per month), health insurance (100 euro per month), phone bill (40 per month).
 
LByrne my wife and I recently got approved on a second mortgage as we have an investment property. The bank did not care about the negative equity on our investment property only that when stress tested that we could cover that mortgage and our new proposed mortgage together if we had no tenants.

They stress tested the investment mortgage at around 6% and our proposed new one at the same and as long as we had €2000 disposable income every month left after paying these two amounts we were fine. Obviously we also need to have the 20%, regular savings record and no other loans and had to meet the central bank 3.5 times salary rule on the new mortgage.
 


Is it stressed tested on what is remaining on your first mortgage or what the original mortgage was?
Also on the second mortgage is it stress tested on what the actual mortgage after deposit etc or the price of the property you buy?

Is it 6% of i.e. 200,000= 1000 per month stressed is that how you work it out?

Thanks
 
There is quite a bit of detail missing (e.g. your ages, number in household, term remaining on mortgage, rental income, mortgage repayments), but if I was to make an educated guess, I would say you should be fine.

As Bronte said, the new mortgage will be a maximum of 80% of the purchase price, i.e. a mortgage of up to €184k. The Central Bank rules definitely apply to you, but with your savings, providing a deposit of at least 20% should be no problem. The other poster talked about their bank stressing the investment mortgage at 6% - this may have been correct for that particular bank, but it certainly doesn't apply to all of them (most would treat it more favourably, to varying degrees).

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl
 
LByrne it was 6% of the remaining mortgage instead of at our normal monthly rate - I think they also allowed 50% of the rental income as income now that I think about it!
 
Dave_Curry_IMC said:
The other poster talked about their bank stressing the investment mortgage at 6% - this may have been correct for that particular bank, but it certainly doesn't apply to all of them (most would treat it more favourably, to varying degrees).
Click to expand...

While this 6% stress test might be more relaxed for some banks, it is nevertheless a good stress test that poster LByrne should apply to herself in any case as one shouldn't rely on banks to be one's parent as whatever about parents, banks are not working in one's best interest but only their own.

Good news for her is that she seems likely to get a mortgage from what you've posted, if she fits the criteria.

Another option may be that her partner can go it alone as they are not married and he is not linked to the NE property. So if they have to go down this route, all the savings should be his, etc. And then later get married and sort out the ownership and mortgage in joint names then.
 
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