Mortgage approval if have investment property

D

dec1892

Registered User
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121

Hi all,

I would be grateful if you could give some advice on my situation out lined below and how you believe this affect my application for a mortgage.

My wife and I are currently living in a house in my name but are looking to upgrade – the house still has €80,000 positive equity. My wife has an apartment in her name which has been let out for the last 2 years (never any delay on rent or with repayments, rent more than covers the repayments).

We are both in our early 30’s with no kids (yet!). Our joint salaries are €120,000 with both us working in the private sector and both in our current jobs for over 2 years. Currently we have savings of €50,000 – the mortgage on the house we are living in is €950 per month, and in addition to this we save €1,700 per month.

Our plan is to sell the house we are living in and thereby have a healthy deposit of roughly €130,000 (savings + 80k positive equity) – and look for a mortgage from the bank of between €400,000 and €450,000.Do you think this is realistic and likely to be approved?

My main concern is the apartment in my wifes name as this is probably in negative equity by €20,000, however on the plus side we have never had an issue with repayment as it’s always been let out without any trouble.
Does anyone here know how banks are currently treating situations like this when going for mortgage approval? Is it a case of writing off any negative equity against what loan the bank will give you for your new mortgage? Or do they write off the total remaining loan on the apartment against the new mortgage they will give you?

All advice appreciated.

Thanks

dec1892
 
I think that the bank would see you as having €650,000 in loans on a salary of €120,000.

Why are you keeping the wife's apartment? Why not sell it as well and reduce your overall exposure and risk?

Have you a cheap tracker on your current home? If so, the bank would be very happy to give you mortgage approval for a new loan to get you off the tracker.

Brendan
 
Yep, have the tracker on the current home (ECB +0.6% with AIB) so I have that on my side when I approach AIB for a new mortgage. As you say, they'll be keen to get me off it......

It gets a bit tricky with the apartment - a relative of my wife helped her with the deposit to purchase the apartment and so it was like an investment him....it's not gone so well seeing as it is now negative equity! But suppose we could always cut our losses and sort something out with the relative.....
 
You could have an initial chat with AIB and ask them what their attitude would be to lending you money. They will certainly give you mortgage approval. But once you have sold your home, all bets would be off.

The mortgage approval is not binding. You might be able to get your solicitor to do a binding agreement with them to give you a loan at a particular rate.

Good business would suggest that they should, but the lenders are not thiinking like that at the moment.

Brendan
 
Thanks Brendan for the feedback.

So basically you are saying, I would need some sort of binding contract with the bank (AIB) to say that I'll come off the tracker mortgage on the condition that the bank agree to lend me X amount, and only then should I go about selling the house?
 
Just to be clear. It is difficult to get loans, so don't rely on their loan approval. I don't know if they would be prepared to enter into a legally binding commitment, but you can ask.

You should not buy a property without selling your existing one first.
 
If I negogiate with AIB a new mortgage approval and to come off the tracker on my existing property (by selling it), how can I be certain that the bank will stand over this new mortgage approval after I have sold my current property? Could they not just pull the plug on me then?
I'm confused!
 
dec1892 said:
So basically you are saying, I would need some sort of binding contract with the bank (AIB) to say that I'll come off the tracker mortgage on the condition that the bank agree to lend me X amount, and only then should I go about selling the house?
Click to expand...

In an ideal world, this would be the advice but these days banks have a finite amount of money to lend and they are lending it to the simple, safe, risk free borrowers. If you go in looking for a binding contract with conditions you will not get very far.

As Brendan said, you will have to sell your house first and then try and get a mortgage. You may even have to pay off some of the mortgage on the apartment to get it back into positive equity.

It is not a borrowers market anymore.

www.moneybackmortgages.ie
 
Hi Norfbank

It's not a borrower's market. But against this, Dec has a cheap tracker, so a commercially sound lender should try to deal with him.

Have you been involved in arranging mortgages for anyone surrendering a cheap tracker?

Brendan
 
Brendan Burgess said:
It's not a borrower's market. But against this, Dec has a cheap tracker, so a commercially sound lender should try to deal with him.

Have you been involved in arranging mortgages for anyone surrendering a cheap tracker?
Click to expand...

They should try to deal with him but this would take a bit of lateral thinking on the part of the bank. Good luck with that.

The lenders now have a set of rigid rules, there is no discretion, then again discretion on the part of the underwriters is what us got into this mess in the first place so maybe it's a good thing.

I'd like to be more positive but the banks do not seem to have any inclination to negotiate in such a scenario even though commercially, it's in their best interests.
 
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