Chances of getting a mortgage?

Hi everybody,

Just wanted to see what your opinion would be on our chances of getting a mortgage.

We currently have two properties in negative equity:

3 bed townhouse D15
Mortgage outstanding: €220,000
Value of property: €150,000 approx

2 bed duplex in D8
Mortgage outstanding: €320,000
Value of property: €220,000 approx

Both properties are rented out, registered with PRTB etc, and are not quite washing their faces, but doing okay.

I'm a contractor (ltd company) and my wife is in the civil service.

Earnings:
My gross earnings: €115,000
My wife: €60,000

We're currently renting a family house in D14 - we've two kids under the age of 2, hence the move to bigger place. The rent is €1600.

We'll probably get first refusal on the place we're renting, as the owners want to sell in the next year or two. I reckon it's worth about €600,000.

By the time it's up for sale, we should have €100,000 in the kitty.

Potential mortgage request
So with a €100,000 deposit, what are the chances of securing a mortgage for €500,000 given all the other debt we have?

Your opinions and advice much appreciated.

Guide to calculation the max mortgage amount

1: Work out your net monthly wage amount
2: Subtract the Net Disposable Income required.
This is €1250 for a single person. €2000 for a couple. €250 add for each child.
[Note: some banks do have different figures but these have been reasonable accurate for both AIB and BOI]
3. Subtract out any loan or credit card payments.
4. Use a mortgage calculator to reverse the payments such as http://www.drcalculator.com/mortgage/ie/
To do this, tick the box beside the Principal line. Drag the years up to the desired mortgage term. [Note: BOI and AIB usually restrict mortgage terms to finish by the earliest retirement date if two people are applying]
Interest rates are stress tested at the current SVR + 2% or 6%, which ever is higher.


1. ~€8600 Net Income
2. €8600 - €2500 = €6100
3. (Taking a wild guess at the repayments for the loans) €6100 - €2800 = €3300
4. Using €3300 we get a total amount of €496k
I have assumed a mortgage term of 30 years and the interest rate was 7%.

Banks will probably stress test lower but I'd assume it might get in. It depends on what they decide on the negative equity part. You can met the repayments on their figures but given you have two other houses, they may try and force a sale on one first.

Thanks Ryaner. Really appreciate that. I'll use that calculation method - you're figures were fairly spot on.

Two questions:

Can we include rental income to bump up our net disposable income?

Can I assume from your answer that banks would actually consider us for a mortgage? I have been worrying that given all the debt on our hands, the would laugh us out the door.

Thanks again.

montonaught said:

Thanks Ryaner. Really appreciate that. I'll use that calculation method - you're figures were fairly spot on.

Two questions:

Can we include rental income to bump up our net disposable income?

Can I assume from your answer that banks would actually consider us for a mortgage? I have been worrying that given all the debt on our hands, the would laugh us out the door.

Thanks again.

Click to expand...

How can you include them if they're not washing their faces as you say? You are subsidising them. Why not move back into the 3 bed in D15 until you've saved up some more?

I would really doubt any bank would entertain an application given your exposure to property at the moment.

Policy on rental income varies quite a bit but last I saw they were taking 10 months X monthly rent. Given the changes to writing off interest on rentals last year, I'd expect this has changed. Your NE on the properties is likely the make the banks exclude this too just because.

Really they may just decide that you already have too much NE debt and not want to deal with you. As in you have two houses already, why do you need a third sort of thing.

I asked about the rental income because ryaner included the mortgage repayments in his calculations. But that's not the full picture as those payments are mostly offset by the rental income.

The place in D15 isn't suitable for small kids, sadly

I asked about the rental income because ryaner included the mortgage repayments in his calculations. But that's not the full picture as those payments are mostly offset by the rental income.

The place in D15 isn't suitable for small kids, sadly[

I'm currently going through mortgage applications and believe me they are lookng at every single movement in and out of all our bank accounts. Any blip on the radar so to speak and lo behold "Computer says no".
Sort out all the accounts first.

I have a feeling that as time goes on the amount of paperwork and undertakings will become a nightmare for borrowers as a consequence of the games that some people are playing in order to avoid paying what they borrowed. The banks will also become much more strict about valuations and earnings as well and probably will over react to the detriment of new borrowers. We will probably end up with a very very cautious banking system for a number of years after this mess is cleared up. BTW I am not inferring that people who cannot genuinely pay are playing games