Eur1m - mortgage - help needed

M

mybelle

Guest
Hi guys,

I have my heart set on a house. However, its Eur 1.1m. If I buy (if I can afford), it will be my second house purchase - so already heaving at the thought of Stamp duty costs!!!

My question is : Assuming I get approval for a loan for Eur1.1m, whats the minimum amount I can repay a month on such a mortgage (can I stretch it out over 50 Years). Here are the facts of my case:

Current House market value = €450k
Current Mortgage = €280k
New House price: Eur 1.1m

Mortgage needed - aprox Eur1m

I dont mind whether its fixed or variable - just the lowest possible amount to repay per month.

Thanks

m
 
What is your gross/net income as this will be key to how much you can borrow? I doubt that you will get a 50 year term from any lender. I think that 35 years might be the normal maximum. You can use Karl Jeacle's mortgage calculator to estimate the repayments on an annuity loan of a particular amount, term and rate. Interest only would obviously be cheaper but you may not be able to get it and it may not be the most prudent thing to do anyway.

Post crossed with the good Doctor's.
 
I have seens loads of houses values at 1m+ that I also have set my heart on.....however I realise that it is not realistic.

No you cannot get a 50 year mortgage - 40 is the max that was being offered by a few banks - I believe only for certain professions such as accountants, nurses etc... - They will not allow your term to go past retirement age.

What is your income?

methinks you are dreaming

Paddy
 
Just for the craic - the monthly repayments on an annuity mortgage for €1M over 40 years at 5% would be c. €4,900 ignoring mortgage interest relief and not including mortgage protection life assurance etc. You'd need to be earning €85K p.a. to just cover this cost and obviously more to cover other living expenses. You'd also need to be earning enough for the loan to income multiple to be crazy (e.g. €100K p.a. would mean a 10x multiple which few lenders are likely to countenance). The dream house in this case may be just that - a dream.
 
Hi mybelle,
It is of course possible to get a mortgage for €1M - but you need a very high income. You didnt provide any info about this. Some banks will stretch term to age 80 - an offer which i would not advise anyone to take up!
 
Thankyou all!.

Yes it is a dream house - in dream location, so that is why I am not just dismissing it without finding out what the repayments would be like.
Okay - so 50 yrs doesn;t seem possible, so lets assume 40yrs mortgage.

We have savings of Eur100k, plus equity of Eur 150k in our current house.

We have family who can hopefully lend Stamp duty fees (lots of family may chip in small amount each ;-)) , so I could try and get a mortgage for
let says Eur 950k.

You can assume that the bank will lend me this money, our earnings are ok, and I can get guarantor's also.

Are we saying about Eur 4,500 per month!? thats alot. I will have to suplement my income each month I think. Plus house is not in good condition - but willing to live in it - long term investment. ohh - are we mad. Secondly - I am only assuming our current house will sell at the mv of Eur450k (although it is a slow market at the mo). oh stress!.

Live in relative luxury now (with liquid assets) or live in half derelict house, with no liquid assets, and lots of debt!...and stress.

Questions:

(1)Am I best to stick with a cheaper Variable interest rate or the more secure and more expensive fixed interest rates - Are the interest rates set to rise more.

(2)If I plan to do the house up over the years, could i get an interest only mortgage for the begining, then get it revalued and change the repayments into a capital and interest repayments.

(3) How much would the interest only mortgage be - I hadn';t thought of that - so thanks.

Thanks for all the help thus far.



m
 
Talk to your bank. See what they have to say.
You have not said what age you are. If I was young and asked to make a decision as to live in comfort in an average house or live with far less comfort in a house with a great future then I would go for the latter if I could mannage it.
 
mybelle said:
Okay - so 50 yrs doesn;t seem possible, so lets assume 40yrs mortgage.

...

so I could try and get a mortgage for
let says Eur 950k.

...

Are we saying about Eur 4,500 per month!?
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Yes - about that ignoring mortgage interest relief and additional mortgage protection life assurance premiums etc. You should do a few online checks for mortgage protection life assurance premiums for €950K over 40 years to get an idea of how much additional this will cost - could be significant. As could buildings insurance on an seemingly old and in partial disrepair house selling for €1M (even if it's the reinstatement value rather than market value that matters for insurance purposes). And then there's the running costs (e.g. heating an old/possible poorly insulated house etc.).
You can assume that the bank will lend me this money, our earnings are ok, and I can get guarantor's also.
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Why - how much do you earn (gross and net)?
ohh - are we mad. Secondly - I am only assuming our current house will sell at the mv of Eur450k (although it is a slow market at the mo). oh stress!.
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As I and others have said it certainly sounds like a long shot from what you've posted to date.
(1)Am I best to stick with a cheaper Variable interest rate or the more secure and more expensive fixed interest rates - Are the interest rates set to rise more.
Click to expand...
See the many existing threads on the whole fixed versus variable/tracker rate and should I fix questions.
(2)If I plan to do the house up over the years, could i get an interest only mortgage for the begining, then get it revalued and change the repayments into a capital and interest repayments.
Click to expand...
Why would the revaluation matter? You mean to get a lower LTV assuming that the property continues to appreciate in value into the future?
(3) How much would the interest only mortgage be - I hadn';t thought of that - so thanks.
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Interest only on €950K at 5% would be €950K @ 5% / 12 months = c. €4K p.m. ignoring interest relief. You would still need some way to clear the capital at the end of the term. To be honest I reckon that interest only on such a PPR is also a long shot.
 
Thanks Woods,

We are couple. no kids, double income, I am in late 20's.

M
 
Given your age, Ulster Bank and First Active will probably stretch to 40 years.

Taking a 4.95% interest rate as an example, €950,000 x 40 years would be €4,549 per month. Interest-only repayments would be €3,920. Figures quoted before tax relief.

Lenders are likely to be wary of offering someone a mortgage of ~€1M if they need a guarantor. Unless the guarantor is named Smurfit or hangs around in those circles. ;)

Liam D. Ferguson
www.ferga.com
 
mybelle said:
(1)Am I best to stick with a cheaper Variable interest rate or the more secure and more expensive fixed interest rates - Are the interest rates set to rise more.

(2)If I plan to do the house up over the years, could i get an interest only mortgage for the begining, then get it revalued and change the repayments into a capital and interest repayments.
Click to expand...

1. Tricky one (or Trichet one, as they say). The long-term Bundesbank average interest rate is higher than rates are currently. This says to me that rates are not at the top they could be over the next 40 years. Over the last forty years the highest rate reached by the Bundesbank was 9.75%. The reason I use the Bundesbank rate is that Germany is the largest economy in the euro zone and inflation in Germany is likely to lead to higher interest rates for the euro.

2. Revaluing will only help you if:
a) the price of your house has stayed the same or gone up due to market conditions
b) the renovations you have done have increased the value of the house
c) both a) & b) above have changed the LTV of your mortgage to a level where you could get a marginally cheaper rate.

I think it would be quite dangerous for you to start off with an interest only mortgage for such a big loan. If one of you lost your job or interest rates rose significantly, you would have no room for movement. At least if you have a repayment mortgage, you can maybe switch to interest only temporarily if times get hard.

Yes, I think you are probably quite mad. What does your other half think?
 
Hi Mybelle,

You're forgetting just one tiny thing - You say your house is valued E450,000, in current climate you might not achieve that. My own house was valued at E700,000 to E750,000 by 3 EAs, I'm in a rural location ready to walk into condition, we have it for sale now at E665,000. We have it on market since march with a joint agency who were useless hardly any viewings, changed in June to new EA whom I'm very happy with, no offers on table yet. I wish you all the best but look at www.daftwatch.atspace,com to give you an idea of what competition is out there. At the moment there are almost 55,000 houses for sale on Daft alone. For the moment I will keep house on the market, we are hoping to build again but being a realist could be staying put for a while if maket keeps going the way it is.
 
You must have great family to help you out with 99 K stamp duty - how are you going to pay them back? Plus your 10 percent deposit of 110K and circa 10K in legal fees. Leaving you with nearly zero to do anything else. Unless you have a massive salary I don't see how a bank would lend this amount.

If 4500 K a month in repayments a month seems a lot why don't you say what your earnings are. It won't make sense until you do.
 
dont pay the asking price for it anyway, not with the way the market is today. I would wait a good while before committing to anything that price.
 
Bronte said:
You must have great family to help you out with 99 K stamp duty - how are you going to pay them back? Plus your 10 percent deposit of 110K and circa 10K in legal fees. Leaving you with nearly zero to do anything else. Unless you have a massive salary I don't see how a bank would lend this amount.

If 4500 K a month in repayments a month seems a lot why don't you say what your earnings are. It won't make sense until you do.
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I have lots of family members - all older, all with ssia's. Who have agreed to lend me money. expecting small inheritance to come through shortly too.


My savings plus perhaps a CU loan will see me through the deposit (?). Yes - I could be talking through my hat, must discuss with bank to see if they will lend me this money. We are both professionals, our jobs are stable, and we qualify for the 100% mortgages too.

Thanks for all the comments from everyone. It's great to have a sounding board. I will discuss with banks now, before my heart has fallen completly for the house.

M
 
This is a pointless discussion unless you disclose your joint income. If its 200k p/a then your going to get more positve feedback. If its 100k then your probably aiming slightly too high.
 
mybelle said:
We have family who can hopefully lend Stamp duty fees (lots of family may chip in small amount each ;-)) ,
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I presume you will still have to pay back your family! If one of my siblings were young and broke I would lend them a few quid to get on the housing ladder. However, if one of my siblings were being greedy and wanted to buy a house way beyond their means they woouldn't get any help from me. Furhermore, if you ever have kids your costs will increase massively.
 
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