Wages In Relation To Mortgage Application

M

Missing Link

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Long time reader, first time poster. In the past few weeks I have began looking at a number of houses with a view to purchase. My savings (following a lot of hard slogging) are currently at €30,000 (bank) and €2,000 (credit union) with a car loan of approx €7,000 to pay off. I have hopes to make an offer on a house in the area I live in and would need a mortgage approval of €200,000.

However my main problem has always been my gross pay. I have been fully employed in a family run business for the past 5 years. Up until recently my gross income was €26,000 as would be displayed on any p30 forms ect that the banks may look for as proof of earning. However in the past month I have gained a promotion and am now on gross wages of €49,000. My job is secure (or as secure as can be in the current economic climate) and I would be applying for the loan on my own.

My question is simple. As things stand would I have any chance of achieving the amount needed to gain such a sizable mortgage? From my understanding the banks will give a loan up to a maximum of 4 times your salary. If they take my original wage I will fall short by some distance.

Also if, (as I presume) a loan of that size would be turned down, how long would I need to wait before applying again. Would 3 or 6 months worth of wage slips at my new gross wages be sufficient or would I need a year plus?

I have been tempted to just go into my local bank and ask what they think is best or to contact a brooker in my area. However I fear it may damage any future attempts I make to gain a mortgage.

I am currently living with my parents and am at the age I feel would be best to move out. I appreciate the pitfalls currently in the housing market but feel I have found a house which best suits me in a good area at a reasonable price. That coupled with the impending end of the mortgage relief and a few personal circumstances have meant I feel now is the right time to move.

Any advise would on the matter would be greatly appreciated.
 
Assuming you are PAYE in the business, then the banks will take the current wage as what to base things on. You will just need a signed salary cert from the company.
For reference BOI used my increased wage before I had even got another pay slip showing the higher amount.
 
So your income has gone from 26k to 49k in the past few months in a family business and you now require a mortgage based on the higher figure. If I was a mortgage adviser I would smell a rat, not saying anything wrong is going on, but I would be looking for further confirmation of this, and even in the good old days it would not have been uncommon to get confirmation from a company's accountant of the income in a situation like this.
 
Yes wbbs my income has taken a huge increase but this is due to a promotion within the company. You are correct though in assuming that on the outside it may look suspicious. Thats why I appreciate any opinions people on the site can give. I'm really in the dark on the matter.

Getting a company accountant to confirm the increase wouldn't be a problem but would you suggest that I should just wait it out a couple more months before even contimplating applying for a loan? That way everything will officially be above board and might help with my application. Or should I speak to the appropriate people within the bank and see what they say?

As you say the "good old days" are long gone. I'm not trying to pull a fast one at all but my heads been turned by a house and the promise of freedom. Perhaps I'm attempting to run before I can walk and should just continue with savings for the time being. Is very frustrating though!!!
 
Once you have one or two payslips and a signed salary cert you should be fine. The bank may look for some additional letter or written confirmation from your Employer, but as you said, you should have no problem getting that.
 
Ryaner I am indeed paying full PAYE but only at the bigger wage rate for the past month. When did you get your loan with BOI? It would be great if they'll just accept the higher wage slip but with the clamp down on mortgages and the huge emphasis that is now put on what your wage is in relation to your loan I think Im at least 6 months to early on the buying thing. Might not be the worst thing in the long run. Thanks for your help!!!
 
I don't know what present requirements are regarding income, someone else will surely answer that soon, but back in the good (?) times I would have to look for 2 recent pay slips, last p 60 & salary cert from company and all were checked to ensure they tallied up.
 
Missing Link said:
Ryaner I am indeed paying full PAYE but only at the bigger wage rate for the past month. When did you get your loan with BOI? It would be great if they'll just accept the higher wage slip but with the clamp down on mortgages and the huge emphasis that is now put on what your wage is in relation to your loan I think Im at least 6 months to early on the buying thing. Might not be the worst thing in the long run. Thanks for your help!!!
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I got my approval about 6 months back. My increase wasn't as large as yours so it might have made it easier. It was with a multinational too so much less risk of wage manipulation as well.

Applying costs nothing, and the worst they can say is no.
 
My bank looked for a P60 - to show previous year's earnings.

If they turn you down it could indicate its for the best. looks like a big mortgage for the salary.

at a 5% interest over 20 years thats €1300 pm - on a Net salary c €2850 pm

i.e. > 40% net income on mortgage (assuming the rug is pulled from under mortgage interest relief)

factor in life assurance, home insurance, utility bills, property tax, water charges, maintenance and the picture starts to look nasty

and you can probably subtract 5k from the savings for cost of acquisition (legal fees, land registry, stamp duty etc)
 
Missing Link said:
Also if, (as I presume) a loan of that size would be turned down, how long would I need to wait before applying again. Would 3 or 6 months worth of wage slips at my new gross wages be sufficient or would I need a year plus?
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It wont be turned down if they think its too big they just offer you the highest amount they are willing to give you.

I think AIB want 3 months I think BOI just want a few

tradtshirt said:
If they turn you down it could indicate its for the best. looks like a big mortgage for the salary.
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Its 4x his salary which is pretty much the standard limit.

BOI took my P60s but didnt really use them for any calculations, there is about a 10% gap between my taxable and my gross and they used my gross to work out the figures
 
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