First time buyer question - consolidating a loan into a mortgage?

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tronman

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Hi all,

My wife and I are looking to buy our first home in the next 6 months. Our price range is around 250k. As things stand at that time we will have outstanding personal loans of about 15k with about 13k saved up (i know we will need more for our deposit). Our combined income is 69k per annumum before tax. I have a couple of questions:

- I know the 15k outstanding loans will reduce the amount we could borrow but would it stop us being approved altogether? Do you think a bank would allow us to consolidate that into our mortgage?
- Is there any flexibility around deposits? Does the full chunk need to be paid up front?

Thanks in advance
 
tronman said:
- I know the 15k outstanding loans will reduce the amount we could borrow but would it stop us being approved altogether? Do you think a bank would allow us to consolidate that into our mortgage?
- Is there any flexibility around deposits? Does the full chunk need to be paid up front?
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It won't stop you being approved but it will mean a lesser sum. No chance of consolidating loans onto new mortgage.
You will need to show a minimum deposit of 8% before a lender will allow you to drawdown on the mortgage, it will have to be paid up front. This is the insurance policy for the seller in case you pull out after signing contracts.

www.moneybackmortgages.ie
 
Thanks for the quick reply. What you say there is no chance of consolidating loans onto a new mortgage, do you mean the loan will need to stay separate from the mortgage and repaid at the current set timescale?
 
You can vary the terms of your loans if you wish but they will have to be kept separate from the mortgage.
 
Ok I see. We also both have a credit card. We repay it regularly but I'm guessing we should get rid of them? Do banks give mortgages to people with credit cards in general?
 
No need to get rid of credit cards once balance repaid each month. Credit cards only an issue when there is a large outstanding balance and you are only paying back the minimum each month.
 
tronman said:
Ok I see. We also both have a credit card. We repay it regularly but I'm guessing we should get rid of them? Do banks give mortgages to people with credit cards in general?
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Everyone have a couple of CC, if your payment history is good you will get mtg. But as posted earlier you will need min. 8% deposit plus legal fees (around 1% of price). So you are roughly looking at around 25k in saving for 250K house. Save another 10K in next 6 months and put in an application for morgage.
 
Cheers for the info. Let's say we put in a mortgage application and it was rejected... do we have to wait a while before we can apply again? Do rejections count in any way against you?

Also, say for example we decided to bid 200k for a house with an asking price of 250k. Would the bank have objections at lending only the 200k (-8%) even though the house is valued at 250k?
 
Rejections shouldn't count against you but if a lender sees several previous ICB credit checks being run by different lenders, they may draw a negative conclusion from that.

I don't really understand your second query, the bank will lend you up to 92% of the market value of the house. Are you looking to buy at below market value?
 
tronman said:
... Also, say for example we decided to bid 200k for a house with an asking price of 250k. Would the bank have objections at lending only the 200k (-8%) even though the house is valued at 250k?
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An "asking price" is not a valuation, it is simply the price the vendor would like to get for his house.

Similarly an "offer price" is not a valuation, it is simply the price a buyer would like to pay for a house.

You could have the following scenario :

Asking price - €250k
Buyer offer - €200k
Bank valuation = €185k - arrived at by the bank's valuer independent of either asking or offer price

or various combinations thereof.
 
Thanks, sorry I know my 2nd question was a bit confusing. Mathepac answered what I had in mind though. Thats useful to know, thanks.
 
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