Chances to get mortgage with existing debt

M

Marinchik

Registered User
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Hi All,

Any advise on my situation will be much appreciated;-)

I’m looking at buying a house in Mullingar for circa €130,000.

My details are as follows:
Female, 29 years of age, single, earnings €30,000pa. Have started savings for €500.00 per month so to try to accumulate €6,000 by the end of the year.

I have a personal loan with the balance of €8,500 with monthly repayments of €265. due to end in 2012. This is with GE Money. Also I have a small loan for my laptop, repayments €50pm but will repay in full before the end of the year.

I’m renting at a moment a studio apartment for €525pm.

My queries are:

  • Can I not tell about my loan with GE Money (they not shown on ICB report) so to increase my chances to borrow (although it probably will be seen on bank statement)?
  • Is there any chance to avail of 100% mortgage and if not, who would be the best lender at a moment for say 95%-98%?
Thank you and regards,
 
Based on your income and current debt you would only qualify for a mortgage of €100,000 and you would need to have at least an 8% deposit. You won't get a 100% mortgage anymore and some lenders are looking for 10% to 20% deposits. My advice would be to stick with saving as much as you can and clear all your debt and have at least 8% in savings for a deposit.
 
Why do you want to buy a house now?
In Mullingar? Have you got specific house in mind?

Do you feel BAD that your monthly rent is more than what monthly mortgage would be?

Theres no harm in going through the mortgage application process now and finding
out how much you can borrow,
and then stress-testing it, ie what if mortgage rates went up 1%? 2%? etc

My advice, dont worry about buying a house yet... but do see what approval value
you can get.

How much could you borrow if you had no monthly personal loans repayments?

Dont bother saving the e500 a month, and use this to clear your other 2 loans
faster.

what savings rate are you getting?
what are the interest rates on your loans?
each e500 outstanding on your loan is PROBABLY doing you more "damage" than e500 in savings.

can you change your lifestyle and get this e500 monthly up to e600 or more??
-> pay off loans even quicker

When it comes to having deposit, can you borrow money of relative?

JR.
 
Hi JR
No lender will give you 100% finance, max available is 92%
You should be disclosing all loans on the mortgage application, is your loan paid by direct debit from your bank account? If so, they will ask questions about the direct debit, even if it does not show up on the ICB.... but as far as I know GE Money loans do show up on ICB.. check www.icb.ie for full list of institutions that show up on it.
 
Hi All,

Thank you so much for all your replies.

That’s actually exactly why I want to buy my own house, because my rent if nearly the amount of the potential loan repayments! At least I know I would be paying for my own place, not to someone else’s pocket.

My savings are with Credit Union at a moment.
Interest rate on GE Money loan would be around 16.5% or something like that they would be very high. I’m actually considering to move this to other bank (Ulster Bank) if they would have money to lend;-))

I can borrow from my parent, but don’t really want to go that route, unless I’m really stuck.

To byrnsey09

A year ago I requested my ICB report and it didn’t show anything, so maybe they added GE Money just recently or something….
 
I agree with the other posters that you're not in a position to be saving or getting a mortgage this year.

Use the €500 to pay off the debt asap.

House prices are likely to continue dropping (emigration, job losses, people unable to pay their debt, worsening economy due to NAMA, etc.) so you'll be in a better position in 18 - 24 months.
 
Marinchik said:


That’s actually exactly why I want to buy my own house, because my rent if nearly the amount of the potential loan repayments! At least I know I would be paying for my own place, not to someone else’s pocket.
Click to expand...

do you really WANT your own place in todays irish economic environment???

ALOT of young irish people also felt same as you do now in 2006-2008
they bought and now they are in DEEP negative equity...

keep renting:-
1) house prices still dropping, so you'd be making repayments into house
thats getting less and less in value
-> let your landlord worry about this, you as a tennant dont have the
stress of going to sleep every night wondering "when will they stop dropping?"

2) you'd still be paying interest on your mortgage loan, which is basically
dead money especially if the house is decreasing in value.

3) how would you feel paying e525 if interest rates were 1 or 2% higher??
ie have you stress tested your future potential mortgage repayments.

4) by renting you have greater flexibilty with your life in todays ireland
Mullingar is oversupplied with houses, so prices HAVE to keep dropping.

JR.
 
Marinchik said:
Hi All,

Thank you so much for all your replies.

That’s actually exactly why I want to buy my own house, because my rent if nearly the amount of the potential loan repayments!
Click to expand...

...at current interest rates. Have you factored in what the repayments will be at historically-average interest rates?
 
Marinchik said:
My savings are with Credit Union at a moment.
Interest rate on GE Money loan would be around 16.5% or something like that they would be very high. I’m actually considering to move this to other bank (Ulster Bank) if they would have money to lend;-))

I can borrow from my parent, but don’t really want to go that route, unless I’m really stuck.
Click to expand...

16.5%????!!!!! :mad:
change this loan to cheaper rate ASAP and/or pay it off

this is around 6 times what mortgage rate
so mathematically your GE loan is same repayments as having e50,000+
mortgage outstanding
by clearing this loan before getting mortgage
you could boost your target house price by over e50,000

first step
go to credit union ASAP,
close your account
pay off your GE loan with any from this.

I'm sorry to say if you want mortgage right now you ARE really stuck,
and would need to get assistance from parents
however you shouldnt feel that uncomfortable about this
its very very common, and banks expect it

but as said before, whats your rush???

JR
 
Hi All,

I get the point! Will try to repay my outstanding loan by the end of the year and in the meantime will try to switch to a cheaper lender.

It was probably one of these moments when I was looking through daft.ie and just start dreaming how nice would it be living in your own house, decorate it the way you want it, arghhh... and just went like, thats it I have to have it now..lol

I guess I'll wait another year and see what my situation will be then.

Thanks a mill,
 
hi Marinchik,

If the rent is bothering you why not ask for a rent reduction? If you are a good tenant, which can often be hard to find, your LL may be want to hold on to you and drop the rent.

What have you got to lose by asking?

Best of luck & definitely hold off on buying.
 
Marinchik said:
I get the point! Will try to repay my outstanding loan by the end of the year and in the meantime will try to switch to a cheaper lender.

,
Click to expand...

Can you not start repaying the loan now? 16.5% is complete madness. Why on earth did you borrow at such a rate, before you make any other financial decisions you should address the fact that you borrowed at 16.5%.

I've never heard of a loan for a laptop? Is this a common thing?

What was the purchase price and what interest rate over what term are you paying on this loan?
 
Hi Bronte,

At the time i was taking out the loan GE Money was the only one to offer me and I was really stuck for money at that time so I just didn't have a choice.

I bought my laptop in Harvey Norman, they have this thing called flexirent, they give you 3 option. I took up one where I can pay in instalments for 12 months and then I will pay one months extra and laptop comes to my possesion. But you can also upgrade 3 months before contract expires.
 
Hi
I hope that you are using your savings and any extra money to pay this GE money loan off asap? Have you tried calculating the total amount of interest you are paying GE Money? If not you should look at the statements or ask them. It's probably going to wipe out any savings you can make in the meantime.
A
 
Marinchik said:
I bought my laptop in Harvey Norman, they have this thing called flexirent, they give you 3 option. I took up one where I can pay in instalments for 12 months and then I will pay one months extra and laptop comes to my possesion. But you can also upgrade 3 months before contract expires.
Click to expand...

Marinchik, I'm confused. If you were paying for the laptop by installments, why did you need a lump-sum loan from GE Money for it? Am I misunderstanding this?
 
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