Mortgage Application Process

[Lucky27]

Hi All,

First post! Myself and boyf are considering applying for a mortgage now, we did get mortgage approval in principal in July through a broker for €300k 92%ltv(prime mortgage). We have seen a house in the country close to work and familys on the market for €300kWe don't have the best financial records, as we are just starting to earn proper money now-both earning 35k now(last year we earned say €25k each), we both have car loans and repayments on these loans would total nearly €1000 for the two of us per month-we wanted to pay the loans off over the shortest time possible!Also we would have small credit card debts and overdrafts. We have done the math and we believe we can def afford the repayments.
Family will be providing the 8% deposit as previously we wern't in a position to save.
If we were to go for full approval now what would be the chances of success?
What is the process like from here if we were to proceed?About how long does the whole thing take?
Thanks

 

[NorfBank]

Welcome to AAM Lucky 27.

Unfortunately your chances of success are small due to the €1000 in personal debt.

On a combined income of €70,000, your take home pay is about €4970.
The lenders will allow you to use 45% of this to fund your mortgage repayment so 45% x €4970 = c €2240.
From this figure the lenders will then subtract all personal debt so in your case €1000.
This will leave you with €1240 to cover your mortgage repayments.

This might not be far from what your repayments will actually be but the lenders do not make a decision on the affordability on today's rates. They must allow for several rate increases when they calculate affordability so they stress test at ECB + 2.5% (6.75%). Repayments on 300k at 6.75% would be about €1860 i.e a lot more than the €1240 you are left with to cover the mortgage repayments.

Your income is strong enough to support a €300k mortgage but you must try and bring your personal debt down to a much lower level.