low income but two investment properties - possibility of mortgage?

bossdrum

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Hi, I'm looking for advice on whether I have any chance of getting a mortgage.

I'm 43, married with 3 kids. Wife does not have a job.
Civil Servant Salary: €36,000
Rental Income: €7,800
Savings €7,000

Car loan of 120 pm
Mortgage on Rental Property €112,000
Repayments €620

Due to family reasons I moved to a different area a few years ago and I am renting a house there for €700 per month. I am paying cash for this so there is no record of this on my bank account.
I would like to buy a house in this area now and hopefully €220,000 might get something suitable.

Property 1 I'm hoping to sell my rental property to the sitting tenants but the current economic situation might put a stop to that if they cannot get the mortgage required. The house next door to the rental (semi-detached) was sold for €200,000 a couple of years ago so I would be hoping for something similar?. Whatever happens I will be putting it for sale when they move out towards the end of the year. (No CGT as would be selling at a loss)

Property 2 I also have another house for sale that I was renting out up to March. This does not have a mortgage. It had a valuation of €140,000 but realistically I cannot see it getting anything like that now. (No CGT as would be selling at a loss)

If I managed to sell one of these houses before the end of the year and ended up with a minimum of €90,000 cash deposit, would I be able to borrow €130,000. Would the other unsold house help as I would reluctantly start renting that again if it didn't sell. Possible rent €500pm (no mortgage)

P.S. these properties were bought many years ago when I wasn't a Civil Servant, wasn't married and was earning more.
 
On first look, I would say no. You've a low income, 4 dependents, and existing committments. Car loan will count significantly against you - it would reduce the amount you can borrow by c. 25k.

I would suggest that your best option might be to sell both the properties, take the equity and you'll end up needing to borrow less than 40k, to cover all your costs. You'd need to borrow a bit more than that for it to qualify as a mortgage.
 
The €700 cash with no record for rent on top of your other expenses would potentially look like a pretty extravagant lifestyle to someone assessing your outgoings.
 
The €700 cash with no record for rent on top of your other expenses would potentially look like a pretty extravagant lifestyle to someone assessing your outgoings.
Unless it's cash from undeclared rent....
 
On first look, I would say no. You've a low income, 4 dependents, and existing committments. Car loan will count significantly against you - it would reduce the amount you can borrow by c. 25k.

I would suggest that your best option might be to sell both the properties, take the equity and you'll end up needing to borrow less than 40k, to cover all your costs. You'd need to borrow a bit more than that for it to qualify as a mortgage.

I could clear the car loan easily enough with the savings.

Both properties are effectively for sale right now but I'd imagine its going to be difficult to find a buyer for both this year. They are in a rural town and village.

Unless it's cash from undeclared rent....
No i've only one house rented and all is declared:)

What if the €700 was saved in a deposit account every month rather than paid in Rent. Would that increase my chances? (I have an option of moving to a house with no rent payable)

Thanks for the replys
 
You must put the two houses up for sale as quickly as possible.

If you have a lot of cash, you will be in a good position in this market.

If you sell both, you will have about €200k after the mortgage is paid off.

You should be able to get €20k somewhere else. Maybe a credit union? Maybe a family member?

Savings €7,000

Car loan of 120 pm

Can you pay off the car loan? What is the interest rate? What is the balance?

You certainly won't be able to do anything until you have sold at least one of the houses. So you may as well pay down the car loan. The €7k cash is not going to make any difference to you buying a house.

Brendan
 
Rental Income: €7,800
Per month?
Per annum?
Car loan of 120 pm
Mortgage on Rental Property €112,000
Repayments €620
Details of loans?
Rates?
Remaining terms?
Outstanding balances?
I am renting a house there for €700 per month. I am paying cash for this so there is no record of this on my bank account.
I don't understand this.
As a civil servant you presumably don't get paid in cash so where is this money coming from?
You probably need to post more details of your monthly outgoings.
But Brendan's advice is basically on the ball.
 
You must put the two houses up for sale as quickly as possible.

If you have a lot of cash, you will be in a good position in this market.

If you sell both, you will have about €200k after the mortgage is paid off.

You should be able to get €20k somewhere else. Maybe a credit union? Maybe a family member?

Can you pay off the car loan? What is the interest rate? What is the balance?

You certainly won't be able to do anything until you have sold at least one of the houses. So you may as well pay down the car loan. The €7k cash is not going to make any difference to you buying a house.

Brendan

Yes one of the houses is are already on the market and the sitting tenants in the other are interested in buying if they can get finance so its just a waiting game now.
€6k will clear the loan so i'll probably do that.

Thanks
 
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