Savings strategy for new mortgage

T

tomred

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Hi, we are preparing to apply for a mortgage in the next 6 months to 1 year. From reading other posts I can see that we need to demonstrate capacity to service the proposed mortgage by showing savings that will cover the monthly repayments which are stress tested to 6%.

We aim to borrow 300K to build a house on our own inherited site. We will have a deposit of 150K. We both work and have combined income of c. 130K.

We currently have a property which we have a have a tracker mortgage on (0.75% above ECB). We pay €900 per month on this mortgage. We estimate that there is c. €40K equity on this property but this does not form part of our €150K deposit.

Our question is in relation to how much we need to show as savings per month to help improve our chances of being granted a mortgage. Do we have to show cash savings to the value of 6% interest on the new mortgage amount or can we include the €900 we already pay towards our current mortgage on the basis that we will either sell or rent out this property when we build our new home.

Many Thanks for any input
 
If you sell your current property then you just need to show that you can afford the new stress tested mortgaqge repayments.

If you rent out the property, then you may need to show you can afford the new stress tested repayment and the mortgage on the rental property. This will depend on the lender, some will allow rental income in calculating how much you can afford to borrow, others will not take rent into account.

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Thank-you - In the event that we decide to sell will the lenders accept that we will sell at a point in the future i.e. at point of mortgage application we will not have sold as the new house will not be built for up to one year afterwards?
 
If the OP can't get a mortgage in his/her circumstances, this country is genuinely goosed.
 
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