Mortgage App - Married Although Wife Has Apartment in Negative Equity

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pele10

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Got married this year and now looking at buying first place. My wife bought an apartment with a friend 6 years ago. Its probably lost 180k in value, although the mortgage is being paid off by renters since they moved out three years ago, so it does not 'cost' her anything at the moment each month.

Looking at the mortgage calculators, It looks like I would get 300k+ based on my salary for a single application. I have no outstanding debts of any kind and a good bit of savings. Between myself and my wife we have enough for a deposit of 10% in savings. We have paying 1200 in rent in for last few years and saved a lot for our wedding earlier this year which would show a good record of savings for last two three years.

My question is can I make a single application for mortgage without my wife? If not and it needs to be a joint one, would I be entitled to the First Time Buyer and would her negative equity have an impact on the application? She also has a credit card bill of about 3k.

thanks in advance in for any replies.
 
Hi - you would have to apply jointly. - Your half would be entittled to FTB --- but you are cutting it fine to qualify
 
@pele10 note that the property would need to be in your single name - even though as Winup says you have a joint loan.

The Revenue - for some complex reason only known to some deranged person(s) in Dublin Castle - treat the situation that if any of the two joint owners have had FTB relief - then they wont give further relief. Keep the property in single name if the relief is important.

One of the more deviant rules of Revenue
 
WindUp said:
Hi - you would have to apply jointly. - Your half would be entittled to FTB --- but you are cutting it fine to qualify
Click to expand...

When you say cutting it fine, when does the qualification for FTB run out after your married?
 
WizardDr said:
@pele10 note that the property would need to be in your single name - even though as Winup says you have a joint loan.

The Revenue - for some complex reason only known to some deranged person(s) in Dublin Castle - treat the situation that if any of the two joint owners have had FTB relief - then they wont give further relief. Keep the property in single name if the relief is important.

One of the more deviant rules of Revenue
Click to expand...

Thanks, going to start looking into it in detail this week.

In terms of a deposit, for 250/300k, would 10% be enough or are some banks looking for more?
 
Mortgage interest relief is gone after 31.12.2012 so no more trs next year
 
10% deposit is "enough" but consider that property has depreciated roughly 10% in the last year alone. You may be better to wait a bit and save some more, personally I feel much more comfortable with at least 15-20% down payment. To give yourself some wiggle room if you need to sell in future. (Even if its your dream home, circumstances can change - there is always the possibility of needing to go overseas for work etc)

Other things to consider include the possibility of your wife's apartment becoming vacant or suffering a rent reduction in the future, as well as the associated property taxes.

The banks are stress testing up to 6% interest rate the last I heard, and will require you to have 2k income left (plus 250 per child) after the mortgage and other loans are paid, including childcare. Take into consideration if you may have children the effect that will have on your financial outgoings each month (you didn't mention whether you have kids or not yet).

Remember property tax, water rates and other increases in tax are coming over the next few years which will further reduce your disposable income.

Some of the online calculators say you can borrow over 5 times your annual income, I think this is mad given the high cost of living. Borrowing that much can often leave you unable to save anything each month or have a decent quality of life.

Different banks may treat your wife's negative equity differently in relation to your own application, so it is worth talking to them but my advice would be to look at your own budget and spending habits/wishes and then work backwards to see how much you want to borrow. Its like speed limits - they are limits not targets - don't borrow as much as the bank will lend just because you can.

You did not mention your combined net salary and relative job security, those are the key to how much you can comfortably borrow.

Best of luck with the application and the house search.
 
lovelyhorse said:
10% deposit is "enough" but consider that property has depreciated roughly 10% in the last year alone. You may be better to wait a bit and save some more, personally I feel much more comfortable with at least 15-20% down payment. To give yourself some wiggle room if you need to sell in future. (Even if its your dream home, circumstances can change - there is always the possibility of needing to go overseas for work etc)

Other things to consider include the possibility of your wife's apartment becoming vacant or suffering a rent reduction in the future, as well as the associated property taxes.

The banks are stress testing up to 6% interest rate the last I heard, and will require you to have 2k income left (plus 250 per child) after the mortgage and other loans are paid, including childcare. Take into consideration if you may have children the effect that will have on your financial outgoings each month (you didn't mention whether you have kids or not yet).

Remember property tax, water rates and other increases in tax are coming over the next few years which will further reduce your disposable income.

Some of the online calculators say you can borrow over 5 times your annual income, I think this is mad given the high cost of living. Borrowing that much can often leave you unable to save anything each month or have a decent quality of life.

Different banks may treat your wife's negative equity differently in relation to your own application, so it is worth talking to them but my advice would be to look at your own budget and spending habits/wishes and then work backwards to see how much you want to borrow. Its like speed limits - they are limits not targets - don't borrow as much as the bank will lend just because you can.

You did not mention your combined net salary and relative job security, those are the key to how much you can comfortably borrow.

Best of luck with the application and the house search.
Click to expand...
Thanks for detailed reply, many factors I had not thought of. Between us we earn around 120k and are both in fairly secure jobs. Problem is that herself has a mortage with another girl with over 340k outstanding on it. We have no kids at the moment and not planning on any for a few years. just looking to see if we can get a mortgage approved and then go looking for a bargain, but also something we really want and not settling for a cheap option. Might be worth saving for another year and beefing up the deposit, although we are afraid of missing out on the 'good deals'. I suppose the money we would save by having a greater deposit would out weight any increase in prices.

The budget should be interesting that's for sure and might have a bearing on our next move.
 
I am unsure, after reading this, whether you have to apply jointly when married ? Can one partner not take on a mortgage without the spouse being assessed or included on the paperwork?

I have a terrible negative equity issue and an underpaying my mortgage and a bit behind in payments, and have recently married and my husband may want to invest and buy something. In Ireland I think its standard community-in-property but we have an ante-nuptial contract which deems us to be separate legal entities. But not sure if Irish law would recognise this
 
Hi OP,

Have you actually approached a bank with your application? I am essentially in the same position as your wife and have an apartment in negative equity. I married my husband this year and after we married we approached BOI. Unfortunately, due to my negative equity I reduced down the amount we could borrow significantly. My husband could not apply for a mortgage on his own as I would need to be on the mortgage and title deeds as the house would be a family home. This is a legal requirement.

We really, really regret not approaching the bank for a mortgage before getting married as my husband could have gotten a mortgage on his own.

Would be interested in hearing how things progress for you, we had considered getting an investment mortgage in my husbands name only but would pay a higher interest rate. We're a bit stuck at the moment ...

We also have no kids and our combined income is €140k.
 
denise2007 said:
Hi OP,

Have you actually approached a bank with your application? I am essentially in the same position as your wife and have an apartment in negative equity. I married my husband this year and after we married we approached BOI. Unfortunately, due to my negative equity I reduced down the amount we could borrow significantly. My husband could not apply for a mortgage on his own as I would need to be on the mortgage and title deeds as the house would be a family home. This is a legal requirement.

We really, really regret not approaching the bank for a mortgage before getting married as my husband could have gotten a mortgage on his own.

Would be interested in hearing how things progress for you, we had considered getting an investment mortgage in my husbands name only but would pay a higher interest rate. We're a bit stuck at the moment ...

We also have no kids and our combined income is €140k.
Click to expand...

Hi there, I am working with a broker at the moment who is looking at various options. When I sent in all my details, he also looked for the details of my wives mortgage, including outstanding balance and current monthly payments. I had no idea that both of us would be on the mortgage and her outstanding negative equity would have a bearing. It will definately have a major impact on the total amount we can get. When I fill in our details on the BOI page, it comes up 550k max mortgage. We are looking at getting 250k approved so even with the negative equaity, we should be able to get it.

Have you tried a mortgage broker?
 
Hi,

No, we haven't tried a broker but will def try, do let me know how it goes and fingers crossed for you. We would like to borrow approx. €340k. Will contact a broker in the New year. Would be great if there are options for us, BOI pretty much told us to go away !
 
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