Second Mortgage for Self Build

M

Molly12345

Guest
Hi,
Looking for some opinions on applying for a 2nd mortgage..

Myself and my partner bought a house in 2005. We paid €270k on this, took out a mortgage for €240k. We currently owe €220 on this. God knows what the house is worth now, there are not any houses in the area for sale, but i would think if we sold we would get approx €190k.

Between us, we earn €95k, one of us is in the civil service. Both jobs are permanent and have been in the same jobs for 4 years +.
We have no debt, other than our mortgage, and have approx €25k in savings.

We were gifted a site, by my parents and would love nothing more than to build a house. We have got full planning permission and the ownership of the site changed to our names, so we would be ready to build, if we could get money!

Our preference would be to keep our current home and rent this out - The area has a very good rental market, and we dont want to walk away with negetive equity. Our plan long term would be to sell, as we wouldnt want to keep two houses, so as soon as the house can be sold for the OS mortgage we would sell.

Is there any point in even applying for a 2nd mortgage? What banks would be willing to do business with us? I know BOI are very un-reasonable these days!
 
Might be useful to post some more detailed info - e.g. term, rate and ongoing repayments for existing mortgage, net monthly income and outgoings etc. Have you crunched the numbers to assess the viability/profitability of the landlord/rental property scenario allowing for pertinent stuff like tax on rental income, possible additional costs of converting from owner occupier to rental property etc.?
 
You haven't put an figure on your proposed mortgage. However at minimum build cost of €100 psf and say 2K sf size minimum amount required is likely to be app 200K. Take net proposed rental income of max 10K and then see whether you can afford the 2 mortgages. I don't mean to be pessimistic but I can't see any Bank taking on this risk. Also if I were you I'd have a look at the figures and think again about even considering taking this burden on both of you. It's an extremely high risk in the current economic climate.
 
Hi,
Sorry, I realised after posting, i was indeed missing some details. taking into account the rental income, mortgage, tax etc, we would be approx €100 down each month. So this is not a big deal. Luckly the area has good rental potential.
Our take home pay is approx €4,800 per month, and with no loans etc OS, I think we are in a good position. Current morgage is approx €800 per month.

The proposed second mortgage would be €200k. I dont really see us as a high risk - we are not the generation of people who took 100% mortgages and had car loans for brand new cars aswell. But then again, that probubly doesnt matter to the bank now!

Thanks for your opinions - I just wanted to put the 'feelers' out there to see what people though...
 
Based on the data posted so far and very very roughly...

€95K gross is probably c. €68K net or €5.5K p.m.?

Assume existing mortgage is €220K over 30 years @ 5% then the repayments would be about €1.2K p.m. ignoring tax relief, additional insurances etc.

New mortgage €200K over 30 years @ 5% would be c. €1.1K p.m. again ignoring additional expenses or reliefs.

So c. €2.3K p.m. in mortgage repayments which, on the face of things but in the absence of any info about your other outgoings/lifestyle etc., seems manageable.

You should carefully crunch the numbers (and basically draw up a business plan) for the rental property scenario.
 
Thanks for all your replies.
The different in the income relates to bonus payments recieved in the year ( these are gauranteed). i just used a flat month to calculte the €4,800.
I suppose its a matter of as you say crunching the numbers, but i can crunch away all i want, the banks have the power.
Its just a pity we all get punished for mistakes in the past! I wish they could give us some credit for having the full deposit for our house, when others was taking 100%, buying flash new cars and fancy holidays!
We'll get there eventually i guess, but just not as soon as we would like!
 
We were something similiar. Only difference is I am self employed. I wanted to keep first house. We also had site and planning. We got offered mortgage from both pillar banks. We had 2.5 times your savings however and were looking for similiar amount. We have just drawn down first stage payment for build.
I would advise you to meet bank branch mortgage agent. They wont be long giving you an idea. However even if they accept application and send it up, mortgage section will have the real say. After that you will get a list of conditions to fill.
keep saving and good luck
 
You must log in or register to reply here.
Back
Top