Mortgage exemption for second time buyer

Hello all, here's my financial situation:

Apartment: 250k - owned outright
Savings: 120k
Combined income: 100k - permanent jobs
Age 32, no children, no loans or debts, living in Dublin

We want to buy a house worth 550~570k, and for that we will need a mortgage. So I see these options going forward:

1. We get a normal 3.5x LTI mortgage, sell the apartment and rent another place while we find a house to buy. I find this option too expensive if considering a cost of 20~25K in rent in Dublin over a 12m lease, not to mention the hassle.

2. We get a normal 3.5x LTI mortgage, and manage to coordinate the sale of the apartment and the purchase of the house at the same time. Not sure if this is even possible but I don't like the many variables and risks involved.

3. Keep saving for another 2+ years until we have enough money to buy the house with a normal 3.5x LTI mortgage, assuming house prices won't change much.

4. We get a 4.5x LTI exemption that allows us to borrow 450k. With the exemption approved, we can then take our time to house hunt, buy and move into the new house, and only then sell the apartment. Then we use the 250k from the sale to make a lump sum payment into the mortgage, lowering it to a manageable 200k. So getting such a large mortgage on variable rate doesn't worry me too much. Also, after the lump sum, the LTV will be <50% which will allow me to renegotiate the terms or even switch.

Questions:
A) Is option 4 doable?
B) Is it possible to get a reliable LTI exemption confirmation that I can count on before actually knowing which house I want to buy, or do I have to first find the house to then apply for the exemption? If the later, I imagine it would put me in a weaker position as a buyer, as the seller might have other bidders ready to close.

I haven't spoken to any mortgage advisor or broker yet, but I'm planning to. Just thought it would be valuable to also get other people's views on this. Any ideas or comments are very welcome!

Thanks.

Hi,

Option 1 - I agree.

Option 2 - this can work on a case-by-case basis - ideally, you'd try & close both transactions within a day or two of one other.

Option 3 - this can work too based on the assumptions you stated

Option 4 - typically what happens here is people apply for an LTI exception and input the property they want on the cover letter. However, even if you get the LTI exception there is no guarantee you won't be outbid on that property. You won't lose the LTI exception if this happens.

If, for whatever reason, you can't raise a sufficient mortgage on the new property based on your income levels/repayment capacity/overall case profile etc - then releasing equity on the apartment to make up the difference(if the location & rental income fit credit criteria) may be an option worth exploring. You can always sell it once you move into the new property & then clear that mortgage.

Good luck!




justin.griffith@mortgagebrokers.ie

Fahrenheit said:

releasing equity on the apartment to make up the difference(if the location & rental income fit credit criteria) may be an option worth exploring.

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Thank you for replying. I thought equity release was only allowed for certain purposes like refurbishments, medical, education etc. If you don't mind, could you explain how that would work in my case please?

daswerr said:

2. We get a normal 3.5x LTI mortgage, and manage to coordinate the sale of the apartment and the purchase of the house at the same time. Not sure if this is even possible but I don't like the many variables and risks involved.

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This is the usual way to proceed. Certainly difficulties can arise, but nothing that would justify the cost of renting an apartment for a year, in my opinion.