Save or pay off loans

E

eiregal

Registered User
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My boyfriend and I are planning on buying a house together next year. There will be a new development coming on the market in about a years time which we are interested in. We both have loans, mine a bank loan of €13,500 and his a credit union loan of approx. €7,000. Over the next year, should we concentrate on paying off the loans or should we pay our normal loan repayments and save any extra money to pay towards the deposit to keep mortgage repayments down? We would probably be looking to borrow about €230k and our salaries are currently €30k and €24k. Is this feasible?
 
eiregal said:
We would probably be looking to borrow about €230k and our salaries are currently €30k and €24k. Is this feasible?
Click to expand...

Not with those loans outstanding I'd say. My brother is on 35k his GF is on 23k they could get 240k if he paid off his 12k car loan, or 185 if he didnt. (it was PTSB btw)
 
Thanks for that, looks like I'll be getting serious about clearing the loan then.
 
tbh try getting mortgage arrpoval anyway to see what they say, his situation might have just been something unique to PTSB.

there is a user who posts here (cant remember their nick) from http://www.rea.ie/ who might be able to give you more information
 


It's MMMEEE! With no loans you qualify for up to €300,000 at a 92% advance. I'm not sure what your car loan repayment is but if I assume it's €300 a month you still qualify for €250,000 however I would recommend clearing it if at all possible to put yourself in the best posistion.

Sarah

www.rea.ie
 
We will probably be able to clear one of the loans, but probably not the 2. My monthly car repayments are €290 per month and my boyfriend's Credit Union repayments are roughly the same. Will Credit Union history be checked by the bank? Do they need to know about the CU loan?
 

Sorry - I saw your boyfriend's loan as €700 - not €7000! OK, with both loans remaining (and yes, you would have to disclose it regardless of whether it shows on the ICB or not) your capacity is €200,000 at 92%. You should concentrate on getting at least one of the loans repaid before thinking about getting a mortgage.

Sarah

www.rea.ie
 
Yeah, I thought that. I just needed someone else to tell me! Thanks for the help, we will certainly start knuckling down to try clear at least one of the loans, and a good portion of the other. The savings might have to wait though and I wanted to save to keep the mortgage and repayments down. Roughly how much would repayments be on a loan of €230k if we managed to clear the loans? Thanks in advance.
 
Well myself and my GF are borring €240k over 30 years which we should be drawing down in a few weeks all going well. We are getting 2.5% APR for the first year which is roughly €950 pm and going to 3.3% after that or to a 3.1% tracker - I think they will be around €1050 pm after that ....thats before mortgage interest relief as we are FTB.... so we may get around €100 off per month for 7 years I think it is.
 
You say you want to keep the mortgage and repayments down and therefore want to put money into savings. Do check the interest rates before you do this; the interest rate on your loans will vastly outweigh the interest in the mortgage and the interest in any savings account. So it makes sense to clear the loans, then overpay into the mortgage if you want to clear that early too. No point in using your hard earned cash to pay interest charges if you can avoid it.
 
Sarah,

It's very interesting to see the impact of outstanding loans on a persons Mortgage borrowing capacity. Could you clear up one thing for me:

You said...
With no loans you qualify for up to €300,000 at a 92% advance

eiregal mentioned they had combined incomes of 54K. So your mortgage
multiple seems to be 5.5 of gross salary.

But how did you calculate her borrowing capacity of 200K when loans where taken into account?

Did you come at it from the perspective of the Net Monthly Income Less the Loan Repayments? Or did you look at the overall Balance of the loans.

-Rd
 
I've tried that calculator and used others like it before but I'm presuming that the repayment amount is before tax relief and I don't know how to calculate the tax relief we would be entitled to. My BF is on the higher tax band with me on the lower so what would the position be with regard to our tax relief? The repayment on €230k over 30 years using a rate of 4% is €1098.
 
Your tax relief should be in the region of €100. I know that's roughly what we get on a loan of €207000. We've paid in a certain amount ahead of schedule, and the repayments are now at about €850, with a litlle over €750 being charged to us.
 
Have you taught of selling your car and buying something cheaper and putting the proceeds towards paying off the load?

gg
 
I've also heard that if you say you will rent out a room, the banks put that in your favour. Maybe someone else can elaborate / correct me on that!
 
Selling my car is not an option, I love it too much! The bank loans is a consolidation of car loan with 2 other loans so even if I sold my car, the proceeds wouldn't clear the loan. I'll just have to stay in for a couple of weekends a month!
 
FTB mortgage advice needed

I’ve posted here before on the same topic but some of my details have changed so I would be grateful if someone could help me out. I’ve used several different calculators and am getting different results so I’m a little confused. My BF and I have seen a house that we are interested in and need to know how much we can borrow. His salary is €30,000 and my basic is €23,000. I get bonuses every year which vary widely. They probably average out at about €2,000/€3,000 p.a. I have a personal loan of €12,000 paying €290 p.m. and my BF owes €6,500 to the credit union and repays €300 p.m. The house value is €234,000 and we would be looking for a 100% mortgage. Is this possible? Also, I have an SSIA which is due to mature in 2007. Would it be an idea for me to withdraw from this now as I figure I need the money more now than I would it later? Any advice would be greatly appreciated.
 
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