Low-earner getting mortgage

[jake108]

Why do you seem to assume that somebody could not live on €700 p.m. as long as they live with their means.

Taking into account utilities, food, motoring costs etc, I don't think 700 per month is a lot to live on. That's 175 per week. Very little!

 

[colc1]

Why do you seem to assume that somebody could not live on €700 p.m. as long as they live with their means?
Who's "they"? I've never heard that rule of thumb before.
Interesting mixed metaphor.

Yeah how could u struggle to live on 700 a month? As a single person anyway you'd just have to give up the drinking

 

[colc1]

From what I can see what Irish people blow their money on two things that often arent necessities drink and cars (insurance, loan, fuel, etc.). Obviously if you smoke thats going to cost you a fortune too

 

[ClubMan]

Taking into account utilities, food, motoring costs etc, I don't think 700 per month is a lot to live on. That's 175 per week. Very little!

I can't imagine that it's too little to cover average general household and other regular expenses. In the context of the original scenario then the householder could always avail of the rent a room scheme to boost their annual income by up to €7,620 p.a. tax free if they find meeting the mortgage repayments a stretch.

 

[Sarah W]

Lenders do look favourably on *qualified* professionals - doctors, dentists, lawyers, accountants, vets - as their earning potential is greater than a non professional individual. However unless the usual pay increase that comes with qualification is imminent lenders will not stretch their criteria for trainees. Lenders will also work on the next rung of the payscale for people employed in the public sector as this increase is almost guaranteed.

I would suspect that in the anecdotal cases of people appearing to get very large mortgages on low wages there has been a parental guarantee in place - a lot of trainee professionals are following in family footsteps which suggests a wealthy family........

Sarah

www.rea.ie

 

[Sarah W]

The "net disposable income" (NDI) method of calculating how much you can borrow has been widely used by lenders for quite some time now but the amount you can afford to spend still comes down to the amount you earn.

As an aside credit card payments aren't taken into account when calculating repayment capacity - loans and maintenance are.

Sarah

www.rea.ie

 

[soc]

Who's "they"? I've never heard that rule of thumb before.

'They' being financial advisors, etc. Have you never heard of the 'Debt Income Ratio'?

Why do you seem to assume that somebody could not live on €700 p.m. as long as they live with their means?

€700 is not enough considering one must not only live on it, but be prepared for financial emergencies! To accumulate 6 months salary for emergency, pay bills, buy food, etc, €700 doesn't go very far.

householder could always avail of the rent a room scheme to boost their annual income

Yes, stretch yourself so far, to pay a fortune for your own pad, only to end up sharing it with strangers. Where's the value in going to all lengths to accumulate a property if you can't truly have it as your own? That's another reason why I think people are stretching themselves too thin just to get on the property ladder - if they HAVE to get a lodger in just to afford the place.

-soc

 

[ClubMan]

This is veering into Letting Off Steam territory so please take it there.

 

[colc1]

'They' being financial advisors, etc. Have you never heard of the 'Debt Income Ratio'?
€700 is not enough considering one must not only live on it, but be prepared for financial emergencies! To accumulate 6 months salary for emergency, pay bills, buy food, etc,

-soc

You have a point here but 6 months salary wouldnt be necessary surely in a secure job like the civil service or a big accountancy firm, big insurance company etc.? I would be a low earner on my salary approximately 22-23k (as just under 2 years after getting into the civil service), but at the same time I have a secure job, good earning potential (assuming partnership talks go well and possible promotion, etc.), I pay off my credit card every month in full and save 300 quid a week. Yet I am penalised (just stating the fact) as I am single and cannot get a loan of more than around 100k going by the banks websites and only a max of 190k (doubt I'd get that) under shared ownership from south dublin co. co. (where is that going to get yoiu in south dublin?). PS I am amazed at what Sarah said about credit card payments not being taken into account I will be spending everything on the credit card from now on

 

[soc]

You have a point here but 6 months salary wouldnt be necessary surely in a secure job like the civil service or a big accountancy firm, big insurance company etc.? I would be a low earner on my salary approximately 22-23k (as just under 2 years after getting into the civil service), but at the same time I have a secure job, good earning potential (assuming partnership talks go well and possible promotion, etc.)

In this day and age I wouldn't take anything for granted. The 'low income earner' may be in a secure job now, and everything looks hunky dory, but remember job losses still happen... poor health/accidents can happen... changing one's career path can also happens!

Remember, there used to be a time when working in a Bank was 'secure' - now look what's happening with the likes of BOI. If you're a junior, you could very well be the first person shown the door by the employer.

That's my 2 bits.
-soc