Loans ruining mortgage quote

D

Dualtha

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Hi,
we are a newly married couple so the new 100% mortgage was of great interest to us as you can imagine. we are both working in secure jobs and earn approximately 85k between us a year plus bonus'. We both have however combined loans of 900 monthly. We are both saving with the SSIA scheme due to mature in 2007. Out mortgage quote so far is in the region of 196k only! we need 330k for a house where we live. We have been paying 1200 rent for the last 4 years so makign repayments even up to 1400 would nto be an issue however the personal loans are killigign the amoutn we can borrow. What I would like to be advised on is "would it be worth our while cashing in the SSIA'S and paying off one of our loans to redure payment to 400 monthly" or continue saving them and reapply in 12 months. I think property will have risen by then so that would cancel out the value of waiting. Could someone please give us some advice as we would liek to get on the property ladder asap and stop paying such rent.
Thanks in advance.
 
Hi,

I think you are panicking a bit, and panic is not a good base for financial decisions! I feel that the banks are correct; taking up a mortgage when you are paying 900 per month in loan repayments is not good for you financially. Owning a house is expensive (repairs, redecoration, furniture etc) and it is very easy to underestimate this while renting. So comparing rent with a mortgage directly can be misleading.

As for the SSIAs, why cash them in now and lose the lovely 25% present the minister of finance is giving you? You say you need 330K because this is what the houses in your area cost, but the bank will only give you 196K. Remember that the fact that houses cost 330K does not make them affordable to you.

I think that the property rises have cooled a bit so you should not panic yourselves into such a large financial decision. Owning a house is not something you have to do immediately; many many couples in Europe are happy to rent for decades. Why not put the extra money you would be paying on your mortgage into hammering the loan, paying it off as early as possible, then reapply in a 18m or so, using the SSIA money as a nice ready made deposit? The SSIA will also cushion the costs of buying the house in addition to the deposit, solicitors, stamp duty etc.

I hope the above does not sound harsh, I've been there myself. But you cannot buy what you cannot afford. Do the maths, put yourselves in a position of affordability then go for it!

cheers,
Diziet
 
How long do you have left to pay on your loans? Can you move to renting somewhere chepaer for a few months or make any other cutbacks to facilitate clearing those loans quicker? I don't really subscribe to the idea of living miserably for years while scraping together a deposit but for a few months (even up to a year maybe) if it clears your loans and leaves you in a position to get a good mortgage then it might be worth living in a smaller place etc. Do you know how much of a mortgage you would qualify for if you weren't paying off these loans?
 
Thanks for replie guys. We have just moved outside Dublin and are savings 250 a month on rent now but that is as cheap as we can get barring 50 or so less a month so not worth moving etc as had hectic year with wedding preparations etc.
As for anyone lending us the cash, most of our friends have either bought or are in sam situation as us so that not an option. We were told that without the loans we would get 340k or more. It's a tight situation. Migth just concentrate on paying off extra on the laons for a few months and then see what happens. property were we now live is rising also every qtr it feels like.
 
I'm sure you've seen some of the other threads on similar topics re paying off loans. It's worthwhile taking a good look at your outgoings and making sure there are no other places you can save a bit with a view towards clearing those loans quicker i.e.

Loans - 900
SSIA - ?
Rent - 1200 (or is it now 950?)

At a rough estimate rent and loans are taking up a bit less than half of your combined salaries before bonuses. Where's the rest of it going (I don't necessarily want to know but you should think about it). How much for groceries, utilities, socialising, pension, transport etc. etc. etc. If you've never taken a good hard look at this try keeping a money diary for a week or two (a full month is best) and then checking to see if you can put anything else towards the loans. Even if you can only make one or two extra payments it could be worth it if it gets you closer to your goal of buying a home. I'm in a similar situation in that I have a big loan to pay off but would love to get on the property ladder. With the 100% mortgage that's more of a possibility but I still need to get that loan cleared to be able to get enough of a mortgage to buy somewhere decent (saw a one room cottage with corrugated iron roof in Offaly that I could afford now but that's not quite what I'd like!) and I'm nervous that by the time I can do so house prices will have gone up so much I still won't be able to get somewhere decent. But at this stage my hands are tied and I feel it's not worth wasting my energy worrying about the property market which I can have no influence on. Better to devote my time to working a bit extra (I do Tupperware parties to try and make a bit extra) and getting the loan cleared as soon as possible.
 
As a total aside, one of the conditions for an SSIA to qualify is that the money invested can't be sourced from borrowings... just be aware of this.
 
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