Mortgage help

Hi - newbie here - forgive my lack of knowledge - I have never owned a house and have no idea of any of the processes involved.

The big problem stopping us buying our own house is our debts - now we pay these regularly and have not had any problems with any lenders - indeed I received a small loan from BOI recently.

We could afford the repayments on the house we are looking at without any problem if it wasn't for the repayments we already make to pay our debts - the BOI online says we would qualify for a mortgage of 157,500 and the house I'm looking at is only 119,500.

We are currently council house renters and have been for a long time and with our rent going up as my wages go up it is making more and more sense to look into buying.

A work colleague once told me that we can get a mortgage that covers the cost of the house and clears our debts to give us the one repayment but I cannot find any evidence of this online - does anyone know if sch a thing exists?

Obviously to consolidate the loans and a house in one monthly payment would be an ideal soluton for us but it does seem to good to be true.

Thanks for your ime.

How much are your debts?
Was the BOI figure worked out after taking your debts into account?

Hi

The debts are in the region of 25K.

The BOI figuure was taken from their website when I entered my salary etc.

The trouble is - banks will only lend you a max of 92% of the value of the home - in your case about 110k . You will not be able to get more than that off any lender (and some won't even give you that much). You will need a deposit of about 9 or 10k (which I guess you haven't got if you have debts of 25k?)

Best kind of advice you can get is to gto into a couple of the main lending institutions (BoI, AIB, First Active etc) and talk to one of their staff. They will tell you exactly what they can and can't do for you, and you will have a clear plan of action as to what is needed then.

In my case, I was told to repay ALL of my debt/loans/credit card (even though tehre was only €13 owing ffs!!) before I could get the loan. And that was during the good times. I imagine lending criteria are a lot tougher now.

Thanks.

Yes - I thought what my colleague said sounded too good to be true - I think clearing the debtsis the only way by the sound of things - we could easily afford the mortgage without the debts.

I am just a bit concerned as we are both getting on a bit (in our late thirties) which will reduce our repayment options - can we only go for a 20 years or less mortgage?

ZOLTAN28 said:

I am just a bit concerned as we are both getting on a bit (in our late thirties) which will reduce our repayment options - can we only go for a 20 years or less mortgage?

Click to expand...

Some institutions offer 35 year mortgages, others 40 years. Some want it repaid by the time you're 65, others 70.

So basically the criteria is, the age of the oldest person on their next birthday, subtracted from the maximum age, gives you the number of years you can have the mortgage over.

As an example, you're the eldest of you and your partner, and you'll be 40 next birthday. That means you'll get either a 25 or a 30 year mortgage, depending on the institution.

Cheers for that - I was worried 60 was the cut off age - for the price of the house we are looking for we could easily manage a 20 year mortgage but I just need to work on clearing those debts.

If it is a tenant purchase you are after then you may get your house at a reduced price and the lender may work off property value rather than the purchase price.Therefore being able to consolidate your personal debts.

Best to talk to a broker about your options as not every bank has the same criteria.

Zoltan, if you are looking to buy a council house, you will get a reduction for the length of time you have been living there, blus first time buyers grant. My house in Kerry was valued at 155,000 and by the time tenants' reduction was taken out the price had reduced to 96k. The bank went with the 155,000 valuation and gave me the full 96k. Maybe you can work something like that out with them?

Cheers - we have considered tenant purchase but rejected it as I don't particularly want to be stuck where I am living now - we want to move out of Dublin for the children. However, although I was aware of the generous discount I didn't realise the bank would take the property value when considering a mortgage - this makes this avenue sound more promising.

Paddy - did the council put a restriction on you being able to sell your house in the future?

Well, my parents still live there so I can't sell it, obviously, until they are gone (not that I would anyway!). After that it's mine to do as I please.

ZOLTAN28 said:

The big problem stopping us buying our own house is our debts

We could afford the repayments on the house we are looking at without any problem if it wasn't for the repayments

Obviously to consolidate the loans and a house in one monthly payment would be an ideal soluton for us but it does seem to good to be true.

Click to expand...

HI Zoltan

I just wanted to pick up on a theme in your posts.
That "we can easily afford if it wasn't for the debts"
The thing is the debts are yours, part of your spending pattern, a reflection on the way you live, proof that you spend more than you earn.

I say this as a recovering spender...who would still be in denial if I wasn't married to a saver, who points out my faulty logic at every oppourtunity!
I'm now almost fully brainwashed!

Thing about being a saver...is that you tend to have the money to pay for the emergencies,cars etc....that drive spenders to seek loans....loans cripple you because you have no flexibility...you have to pay every month...whereas saving you can stop paying for a while and start again as life allows.

I have work a work colleague who lived in council accommodation and paid for her extension out of her credit union account...she was AMAZING.
My sis, her OH and kids live in social housing and are debt free even though their business is tanking.

You can make all the excuses you want for these debts but the fact is...even if you paid for a heart transplant with the money...it is your spending...and the repayments burdening you now are a result of your spending habits...which are probably ongoing.

Dave Ramsey is a good suggestion and one that many of my US friends use...its kind of like weightwatchers for spenders...get the book out of the library, don't buy it . In order to buy a house you need to change your attitude to money. You need to recognise these debts are yours...not enforced by the bank.

You sound like a competent intelligent person and you will succeed...but 25K is alot of debt. It will require dramatic changes.

Edited to add: adding these debts to your mortgage might be an option.
But the reality is, even though the interest rate is lower, you will be repaying for longer and therefore the debts will cost more.
So to do this without changing the other things would be crazy.

I think you'll find that if you want to sell the house within 20 years of buying it from the Council - you need their permission. I don't know if/when they would refuse to allow you to sell it or if anyone has ever been refused permission to sell.

This was never mentioned when I bought my council house links. Have you any link to where it states that?

Very good, thank you my friend.

It would be interesting to know if anyone has ever been refused permission to sell?

Yes, it definitely would be.

My first house was a former council house and we had to get some documents from DCC to sell it...even though we bought it privately from a private owner...can't remember the exact details...but it was no problem, just bureaucracy.