Exploring Options

Current Status
Value of Property: 285k
Amount of Mortgage: 235k (originally 320k) tracker with BOSI
Term remaining: 16years
Monthly repayments: 1265pm
Savings: 30k


Employment Situation (both mid to late 30's):
65k, employed skilled trade.
60k public sector (10 years)
2 children
Childcare cost: 600pm
Car Loan taken out in 2014: 14k

Interested in Properties valued approx. 320k

So we are thinking it might be nice to move and gain some additional space. I've seen from other posts we would need a 20% deposit so I know we haven't enough savings. It is either stay put and spend some money converting attic or building extension but for various reasons we think we would not want to ultimately stay where we are as there is a possibility of a very large estate being built adjacent to our house with a through way right in front of it.

Any advice on where we go from here or if there are any other options other than save another 30k.

Thanks a million.

How much are you saving monthly
When does the childcare costs stop or reduce
What is the interest rate on the car loan
Would you prefer to stay put and do an extension if the new estate does not materalise. You're well on your with with 30K for an extension expecially into the attic. What kind of extra space do you really need.
How do you know about the road
What is better about the 320K house than your current home.
Will the road affect the value of your house.

Not only do you need 64K deposit (20%) but you need around another 10k to sell and buy.

There is the possibility of only needing a 10% deposit. As non-first time buyers, this would involve getting an exception to the CBI lending restriction that currently requires non-FTBs to have a 20% deposit. Shopping around is essential (unless the bank with the best terms approves you straight away, of course).

There are no hard and fast rules about how to get such an exception (as the situation is too fluid), but if you can show banks the required repayment capacity, and your account operations are squeaky clean, they you may have a chance.

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl

Saving: 600pm (another loan finished about 6 months ago) we can certainly up this if we stopped spending unnecessarily.
Childcare costs will continue indefinitely I pay a family member to mind both. Youngest is only 1.
Interest rate is about 8% off top of my head (through credit union)
I'd prefer not to stay if the estate goes ahead. I really don't want people passing my front window and having houses overlook our back garden. The plans for the estate which were originally rejected show the through way (path) it isn't a road for vehicles. The planning was rejected on account of upgrades that need to be done to sewage or something and they have been completed. Nama are in possession of the land.
The new house has more space internally (extra living space) and externally larger garden. Realistically our current property would be very hard to build an extension on back without compromising on a very small garden.

Dave if I understand correctly the 10% people are easier at the beginning of a 'year' as the bank have a figure on the amount they can give out and last year, 2015, they had no more to give out at the end of the year.

CailinNua said:

Saving: 600pm (another loan finished about 6 months ago) we can certainly up this if we stopped spending unnecessarily.
Childcare costs will continue indefinitely I pay a family member to mind both. Youngest is only 1.
Interest rate is about 8% off top of my head (through credit union)
I'd prefer not to stay if the estate goes ahead. I really don't want people passing my front window and having houses overlook our back garden. The plans for the estate which were originally rejected show the through way (path) it isn't a road for vehicles. The planning was rejected on account of upgrades that need to be done to sewage or something and they have been completed. Nama are in possession of the land.
The new house has more space internally (extra living space) and externally larger garden. Realistically our current property would be very hard to build an extension on back without compromising on a very small garden.

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Normally I'd tell you to pay off the car loan but you are trying to buy so in that circumstances I'd say no. If you can get under the 10% rule that broker Dave used, you need then 32K, and about 10K to sell/buy. That's 20 months of saving at €600 to get your 12K extra.

So what is your unnecessary spending? New house - versus - unnecessary spending.

What about the attic, how much to do it and what extra space would you like. Can you plant a hedge at the bottom of your garden if there will be cars?

Thanks Bronte. Very helpful. Unnecessary spending is just that, stuff we don't need but want. Clothes, eating out etc. We make sure the bills are paid and food is on the table but realistically are spending too much. I think we need to look at that in general terms too even if we don't decide to move so that we have plenty of savings.

The attic is an option and others have done it. We really would just like a space for the kids to play and have an adult space too (I know that is a luxury) but we do love where we live. Neither of us are sure how much we would love it if there were more houses beside and people passing in front. Planting a hedge is definitely an option. Unfortunately where we live we cannot build a wall.

But you are in positive equity of 50K - surely this is your deposit. Thats how I bought my house anyway - equity was my new deposit.

Bronte said:

Normally I'd tell you to pay off the car loan but you are trying to buy so in that circumstances I'd say no. If you can get under the 10% rule that broker Dave used, you need then 32K, and about 10K to sell/buy. That's 20 months of saving at €600 to get your 12K extra.

Click to expand...

Paying off a loan can make a big difference. The bank will look at net disposable income after all obligations are met, they will include care loan repayments and childcare as well as the stress tested mortgage repayments.

A discontinued loan can be used as part of your proof of ability to meet repayments. If you pay it off early, make sure you save those repayments and don't spend it.

Getting a mortgage these days is more about ability to repay and net disposable income than anything else.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Bronte said:

Dave if I understand correctly the 10% people are easier at the beginning of a 'year' as the bank have a figure on the amount they can give out and last year, 2015, they had no more to give out at the end of the year.

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That's right, Bronte. The banks seem to be stricter about offering exceptions this year, so that will hopefully mean that exceptions will be available further into the year than in 2015. The only absolute is that they cannot exceed their annual limits, so there is no question but that they will pull down the shutters before the end of the year if they feel there is a danger of doing so (some did so in September of last year, IIRC). Another likely scenario is that they may tighten their own criteria for qualifying for an exception as the year goes on, if they feel they need to. It's impossible to predict, of course, but if I needed an exception this year, I would be looking to secure approval in principle within the next couple of months.