If it's any help, LTV on the new one 35%. LTV on existing 37%.
Would the lower LTVs on both maybe work in my favour in this situation in that a conditional on sale clause might not kick in?
Age: 45
Spouse’s/Partner's age: 44
Number and age of children: 1 @ 11yrs
Income and expenditure
Annual gross income from employment or profession: 90k
Annual gross income of spouse: 35k
Monthly take-home pay We pay ourselves expenses as required as opposed to a monthly salary, and save the remainder.
Type of employment: Both self-employed directors of limited company. 50k of my yearly income is tax exempt (this goes straight into savings)
Summary of Assets and Liabilities
Family home worth approx €800k with a €250k mortgage
Savings of €800k cash
But only temporarily if he plans to sell the PPR anyway. Another thing you could do OP is pay off the old mortgage either, then the bank have no argument.You would have a total of €650-700k mortgage debt on an income of €125k. Your self employed status would also be another risk here so there is no way you should proceed without selling your home first. Your solicitor should be making this absolutely crystal clear and the bank will not be releasing funds or changing your AIP.
Except he'll then have to borrow an extra 250k for the new place. Which no bank will lend on the numbers quoted.Another thing you could do OP is pay off the old mortgage either, then the bank have no argument.
How would the bank have no argument. He would still need to borrow 650k as he would have 250k less cash. The Bank doesn't care I would say about the fact it's temporary.
Fair point, I didn’t think of that!Except he'll then have to borrow an extra 250k for the new place. Which no bank will lend on the numbers quoted.
Thanks, income quoted here is what we pay ourselves from the limited company to remain in lower tax bracket since some of that is tax-free, but also have approx 200k accumulated in the company so not entirely sure how to list our 'true' income tbh.If the numbers from your previous money makeover are still broadly correct, then it should be obvious why the bank are insisting on this condition.
You have an interest only mortgage of €250k. Assuming you are using the bulk of your €800k savings and your new house is in the €1.2m range as you've mentioned, that means you now want to borrow a further €400-450k.
You would have a total of €650-700k mortgage debt on an income of €125k. Your self employed status would also be another risk here so there is no way you should proceed without selling your home first. Your solicitor should be making this absolutely crystal clear and the bank will not be releasing funds or changing your AIP.
That's fair enough, you've a successful business generating more than you are taking out but as far as the bank can see, you are earning €125k.income quoted here is what we pay ourselves from the limited company to remain in lower tax bracket since some of that is tax-free, but also have approx 200k accumulated in the company so not entirely sure how to list our 'true' income tbh.
I still don't follow this. If you sell the PPR then you will have ~€1.35m in cash. Why do you still need a new mortgage at all?May well even be an idea to pay off the other mortgage altogether and then the PPR sale clause becomes less of an issue but then we would indeed need to borrow more so it's Peter/Paul.
That's the crux of the issue, it's a timing thing. Unfortunately I need finance in order to buy the new place before selling the old one (completion date on this is imminent), but did not anticipate that the bank might insist on doing so first. Hence my panic!That's fair enough, you've a successful business generating more than you are taking out but as far as the bank can see, you are earning €125k.
I still don't follow this. If you sell the PPR then you will have ~€1.35m in cash. Why do you still need a new mortgage at all?
my solicitor has pointed out that I shouldn't enter into contracts on the house I want to buy in case mortgage is conditional on PPR sale.
I’d def sign the contract for the new place then. You can easily afford the house, but not to miss out on it!Thanks, income quoted here is what we pay ourselves from the limited company to remain in lower tax bracket since some of that is tax-free, but also have approx 200k accumulated in the company so not entirely sure how to list our 'true' income tbh.
Seems like I need to go back to the bank and outline everything as discussed before they issue the letter of offer, and find out what they think. May well even be an idea to pay off the other mortgage altogether and then the PPR sale clause becomes less of an issue but then we would indeed need to borrow more so it's Peter/Paul.
Thanks all!
In the land of property "temporarily" can be a very long time, and in some cases, forever.But only temporarily if he plans to sell the PPR anyway.
As above, this becomes a problem for the bank if the OP later decides they don't want to sell the house or a significant defect is uncovered that makes it difficult or impossible to sell. The bank is now facing a significant increase in risk for no added benefit, and trying to get to OP to honour the agreement would be time consuming and expensive.But only temporarily if he plans to sell the PPR anyway.
This is absolutely shocking advice.I’d def sign the contract for the new place then. You can easily afford the house, but not to miss out on it!
If it's any help, LTV on the new one 35%. LTV on existing 37%.
Would the lower LTVs on both maybe work in my favour in this situation in that a conditional on sale clause might not kick in?
Not at all, he’s in a good position to get terms changed in the meantime and letter of offer not a guarantee of anything anyway. Nothing a done deal until money drawn down and in solicitors account!This is absolutely shocking advice.
The poster does not have cash to complete the purchase, so they need to borrow funds. They might well be able to afford repayments on a mortgage, but they may need to reapply for a mortgage to get it.
This is for the purchase of a 1.2m+ house; there is more than a bit of lose change at stake. They need to follow the advice of their solicitor.
What are you talking about, you are literally contradicting yourself.Nothing a done deal until money drawn down and in solicitors account!
Are you having a laugh, or just trolling???Not at all, he’s in a good position to get terms changed in the meantime and letter of offer not a guarantee of anything anyway. Nothing a done deal until money drawn down and in solicitors account!
That subject to loan clause is a legal necessity these days, so I’d imagine that goes without saying. So it should be grand regardless?Are you having a laugh, or just trolling???
If he signs a contract, unless it has a 'subject to mortgage' clause, he's legally bound to contract, and can be sued to complete if he's not able to get a mortgage.
It's not a default clause. It needs agreement from seller to add. And if the OPs solicitor is warning him about it, he should listen to his solicitor, not a random stranger in the Internet telling him it'll be grand.That subject to loan clause is a legal necessity these days, so I’d imagine that goes without saying. So it should be grand regardless?
Far from it really, a developer will never include such a clause in the contracts they draw up and will more often than not refuse a purchaser's request to insert one. Vendors of a second hand properties usually accept such a request, but they are by no means obliged to.That subject to loan clause is a legal necessity these days, so I’d imagine that goes without saying. So it should be grand regardless?