Are current loans positively considered when assessing capacity to repay?

Aodhán

Registered User
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My gross annual income is €49,000, and my net annual income is €29,431.

My net monthly income is €2453. I have two outstanding loans, for a car and education. €10k is the combined balance on these. The total repayment amounts to €462 per month. My rent is €675 per month. This is a total of €1,137 per month, or 46% of my net monthly income. I have not missed any of these payments. I have no credit card debt, or overdrawn account.

Will the bank deem me capable of repaying a mortgage of €1,137 per month, or of just €675 per month?

A second question then arises, would it be more advantageous to pay these two loans off before applying for a mortgage, or will they just roll them into the mortgage debt? Thanks.
 
Very unlikely to roll them into the mortgage debt, this just isn't done anymore. 46% of net monthly income on debt would be over the limit for most lenders so unlikely to get a loan with that level.

The bank will have an amount that you need to have left after paying all debt payments, what you actually pay has no bearing on that, you need to fit within their figures.

You would probably find you can borrow more if you clear those loans first.
 
Aodhan,

Before rent you have 2,000 left.
If house costs 250,000 you have to have 50,000 deposit ie 20%. (presume you have that)

200,000 over 30 years @ 4% = monthly = 955 each month.
Rent monthly= 675 each month.
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Extra payment = 280 per month.
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Bring your figures to any Bank , if you are accepted = grand.
If not you will get a handle on their ground rules, and can plan from that.
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Let the Bank walk you through what is best to do about the loans etc.
No doubt that with loans gone your medium term repayment capacity increases.ie you can pay 1137, but other considerations such as employment status, how much you have saved ,future plans etc come into play.
 
if you dont mind me saying but your tax seems very high, you pay out 20000 a year in taxes just seems alot, no harm to check up on your income tax and tax credits etc and see if your entitled to tax back, i understand every ones tax is different but no harm to check
 
The short answer is €1,137. I am going through the mortgage process at the moment, and they're taking the following things into accounts for my affordability calculation:

- Exisiting mortgages
- Rent
- Loans
- Savings
- Pension AVCs

That's subject to the loans being cleared of course.
 
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