Mortgage Application

Hi

My partner and my financial details are as follows. I'm a PAYE worker but on contract work. My income is €45,000 per annum. My partner is self employed and earns roughly €20,000 per annum. I can see that these employment statuses could be a difficulty. We're both 27 and have combined savings of €100,000 with no debt and strong evidence of a savings record. We would be able to raise another €70,000 - €80,000 by way of family gift support.

Essentially then we can raise €170,000 (give or take) in cash. In addition my dad would be prepared to be a guarantor for a fixed period of the mortgage (not even sure if the banks allow such arrangements). We would be looking to buy for bout €370,000 so would need to borrow €200,000. Are we likely to be approved given our employment statuses and is it possible to have a guarantor for a fixed period of time? I also wonder would we be able to benefit from a better interest rate given that we would be putting 45% of the cost up front in cash.

You'd need to post more details before you can get a meaningful reply. Self-employed people can get mortgages. Some people on contracts can also get mortgages.

What do you do for a living? Does everyone else in your job also work on contract? (Example - Non-Consultant Hospital Doctors all work on short-term contracts but they can get mortgages.) How long is your current contract running for? How long have you been working for the same employer?

What does your partner do for a living? How long self-employed? What's been the average earnings (as per business accounts or tax return) for the past three years?

Some lenders do offer better variable rates for people borrowing <60%.

I work in legal services and contracts are standard in the market at my career stage. I've been with my current employer 2.5 years and would likely be made permanent in 2 more. I would expect my salary to increase over that time by 10-15k assuming I remain in situ.

Partner works in health services. There are no HSE jobs at the moment so she works in private practice. There is plenty of work for her and her practice has steadily built over 3 years from 15k profit to 20k. She has probably plateaued in terms of income growth but she is secure in terms of income maintenance. Conversely should an opportunity arise in the HSE she would get an increase of maybe 10k.

Banks will take an average of your partner's declared income over the past 3 years. If you can make the case that contract employment is the norm for your particular job and that your prospects are good, you should be able to get a lender to play ball. Assuming that you've got no other loans the amount you're looking for is within limits for your incomes, and your large deposit helps. You'll need to provide evidence of a history of regular savings for as long a time as possible.

Thanks LDFerguson, that is very helpful. Regarding a guarantor is this likely to be necessary and if not is there any advantage to be gained re repayment terms if offering such, in your experience?

Don't get a guarantor, don't get your parents involved.

Do a search on here for all the other people who got guarantors involved thinking there wouldn't be problems and see what they're saying now.

Also, which of you has provided the bulk of the €100k? If things break down you will want to have sorted who owes what to whom.

I'd agree with dereko1969 to avoid guarantor arrangements if at all possible. I think you should be able to get a mortgage without one and this would be far preferable. IF you get declined and IF you're 100% certain that your incomes are secure in the future and likely to increase substantially then maybe there's an argument, but not otherwise.

The guarantor will need to either have substantial assets available to pay off a chunk of the loan if you defaulted (think at least strong six figures savings) or substantial income - that s/he could make your repayments if you defaulted as well as any commitments of their own. So (purely for example) a retired parent living on a modest pension is not a suitable candidate even if they own their own home and it's worth lots with no mortgage. They wouldn't have the income to make your repayments and owning a valuable home isn't going to help either unless they sell it.

Having a guarantor doesn't get you better terms on a mortgage but if you're borderline, then it might make the difference between whether you get the mortgage or don't.