Another 2nd time buyer!

phileasfogg

Registered User
Messages
66
Negative equity of about €100,000. Currently renting a family home 100 miles away, moved for many reasons, work, needed bigger accommodation, closer to family so got help with childcare. All is working out in new location.
We are just wondering if it will ever be possible to but a family home and if so, what are absolute minimum conditions we would need to meet?
We never had difficulty meeting our mortgage repayments or paying any bills. Unfortunately we didn't act to move out of Dublin quickly enough (we were afraid to give up jobs when recession hit). So for a few years we absorbed huge creche fees, major paycuts (both public sector) and the same tax increases as everyone else.
My husband has now found a private sector job €64,000, I have a public sector job €44,000 and our situation is greatly improved, we will be able to start saving €800 from next month.
Our dilemma is should we save hard and try and put aside €1000 a month for the next 5 years (60,000 ) for a 20% deposit and hope that we will not have so much negative equity that bank will say no to mortgage application. If it's going to take longer than 5 years, then realistically there is no point as our children will be almost adults and we will have no need for dream house with garden for playing in. In this case we could enjoy some lovely holidays, put savings in a college fund instead and start planning for retirement and put lesser savings to buy a smaller house in a longer time.
 
Extra info: childcare costs €150/ month
Rent €800/ month
Tax/fees on house we own (renting it out) €500/ month
Car loan €250/ month
 
We are just wondering if it will ever be possible to but a family home and if so, what are absolute minimum conditions we would need to meet?
Yes, it should be possible. The minimum conditions would be having a 10% deposit, and qualifying for the required amount, based on lenders' usual affordability and credit criteria at the time of the application. As non-first time buyers, this would involve getting an exception to the CBI lending restriction that currently requires non-FTBs to have a 20% deposit. There are no hard and fast rules about how to get such an exception (as the situation is too fluid), but if manage to save at the rate you described, there's every reason to think you could get an exception, if these rules still apply at that time.

Clearing the car loan and maximising your rental income may also help, if you need to bridge a gap between what you qualify for with the status quo, and what you would like to qualify for.

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl
 
Thanks for reply! Would first house need to be out of negative equity? Or would we have to sell it and pay off the difference! This would be a big financoal burden.
 
The negative equity isn't necessarily a big problem. The lenders focus more on your long-term ability to service your current and future mortgages on a monthly basis (at stressed rates), based on your overall income and outgoings. Many other people are in the same position. Everything else about what you described sounds very positive - the most important factor seems to be the deposit.
 
Back
Top