Savings for Mortgages

C

caroline_ire

Guest
Hi all, I would be grateful if someone could clear this up for me. I was under the impression that if you were paying 800 a month rent on your own and lets say saving 50 a week as savings, thats a grand a month, I thought the banks would take the rent into consideration ? I was told today by someone that I would have to save in 6 months approx. 7000/8000 euro and they wont take your rent into consideration? (getting gift deposit)

can someone who works with mortgages or has good knowledge clear this up for me :)
 
Hi,
In terms of repayment capacity they will take into account that you are paying rent that will then help to pay the mortgage instead of the rent. They still require a deposit and this is a % of the amount that is paid for the house, the current minimum is 8% but you would need to be in a very strong position if you only had the minimum. The higher your deposit the more willing they will be willing to lend as it gives the lender a safety net, the more that house prices fall.
In terms of the gift. This is nice but it doesn't show a savings record and you can put it towards the deposit but they will really want to see that you can save.
Mike
 
So 50 a week clearly isnt enough even when paying 800 a month on rent, even tho that is a grand a month ? agh
 
Look at your savings in terms of a percentage of your income, are we talking 5%? 10%? Also how long have you been saving for? Paying rent is simply not the same thing, though obviously they will consider it as being a payment that will be terminating once you move to your new purchase. Do yourself a favour though, make sure you have considerably more than the deposit saved. Even in the best of times, people feel stretched when they first purchase a property. Having savings in addition to the deposit makes that a lot easier.
 
Sorry for the slight thread hi-jack but this made me wonder about something related.

Using round figures for the example.
Lets say you are applying for a house and require 10k for a deposit which only brought you to the min 8%. You've also got the funds to cover survey, valuation etc.
You then also have another 10k in savings, call it rainy day fund, car fund, holiday fund, whatever. Would the banks want you to put more towards the deposit than keep the larger savings?
 
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