Trading up in current climate. Can you give opinion on figures below.

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kkmaan

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Hi Folks,
300k left on current mortgage. got a valuation for quick sale at 238k yesterday. Looking at a house with asking price of 295k, rock bottom price apparently.
Wife is a civil servant on 75k per annum. I am an engineer on 60k per year.
I have a 16k loan, paying 400 per month. wife has 10k loan, 300 per month.
I have 10k savings.
both aged 36
take home approx 5600k per month net.
Good credit history, but bad savings history.
Am I wasting my time aplying for a mortgage for the 295k house?
Apologies in advance, I am useless with money so would appreciate any advice before applying. Thanks in advance for replies, any help appreciated.
 
Who is your current mortgage with?

Do they allow negative equity mortgages?

If you have a cheap tracker and are prepared to give it up, then they may well give you a mortgage.

But, you will have to forget about the house you are currently looking at. You will have to sell your own first before you can start looking at other houses.

A very tricky area and you may be better off going on a massive savings binge to eliminate your negative equity and other loans first.

Brendan
 
You're basically seeking a loan of 355k -the only security being the property asking 295k, which the lender will most likely value at less.
Plus you owe loans of 26k (though it's unlcear if that is the amount outstanding or the original amounts).

On the above basis I'd say you're wasting your time.

But considering you're young and your gross salaries are a whopping 135k then I'd say go now and speak to your lender.

Also try a mortgage broker. Some people don't think much of them but you're in a strange situation -high income yet asking for a loan with security worth far less. In those sitiations a clever mortgage broker can help if your lender proves tough.



Incidentally, I assume your nett figure of only 67k is after all taxes and loan/mortgage deductions.
 
That 5600K per month looks like it's after tax and pension contributions but before mortgage deductions. I'd almost bet money on it if there was anything left of my fat cat public sector pay-check at the end of the month!

OP would need an 8-10% deposit for the new property and have no loans and then he might be able to make a deal with his current lender.
 
Brendan Burgess said:
Who is your current mortgage with?

Do they allow negative equity mortgages?

If you have a cheap tracker and are prepared to give it up, then they may well give you a mortgage.

But, you will have to forget about the house you are currently looking at. You will have to sell your own first before you can start looking at other houses.

A very tricky area and you may be better off going on a massive savings binge to eliminate your negative equity and other loans first.

Brendan
Click to expand...
Current mortgage with AIB and variable rate.
 
So you'd sell with NE of 62 to add to a new mortgage of 100% of 295K. More with 62K being 357K mortgage.

3 times your salaries is 402K. If they're giving 3 times salary they might go for it.

Have you looked at it from a repayment capacity.

How much is your current mortgage, how much would a 357K mortgage be. Stressing testing the 357K by 3% would be repayments of how much?

You're both on good salaries, how come the other two loans? As in addition to the mortgage you have 700 repayments monthly. When do these loans end?

If you've a bad savings history, then is seems you are already spending all your salaries?

Whatever you do sell before you even think of buying. If you give more figures you will get better advice.
 
I think, before you do anything else, you need to work out why when you're both on such large salaries you have significant personal debts and low savings.
 
kkmaan said:
Am I wasting my time aplying for a mortgage for the 295k house?
Click to expand...
Yes. I can't see any bank facilitating what you want to do. If it were me, I would review and reign in all spending. I would clear the 10k loan with the savings and then pay the 16k loan back quickly (over 5 or 6 months) . . then review things re trading up/down.
 
Also take account of the fact that you will lose TRS relief and will need to fund the transaction costs of the deal plus any furnishings/renovations to the new house. Without savings or a friendly relative, this approach would not be advisable nor supported by any Bank.
 
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