Saving for mortgage deposit

Skittles5

Registered User
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6
I suppose this is a 2 tiered question:

Dh and I are currently saving approx. €700 a month - we live in my husbands very small 2 bed mid terrace townhouse and had hoped we could save for a deposit to move up to a 3 or 4 bed semi d in Dublin but with approx 60k negative equity on an apartment I own and have rented out and the fact we have tracker mortgages on both (taken out 2006/2007) and I'm only working part time the banks obviously wouldn't look at us right now but did say they would lend us €405k if I was working full time, we sell the 2 properties we currently own and if we had 40k (10%)savings. We actually love where we live (apart from its size) so hoping to save for a couple of years and I hope to be back working full time again in a year or so. Anyhow to cut a long story short we have been saving with the credit union with no return on the savings so just wondering if you could advise on a good savings or investment plan with any of the financial institutions which is giving optimum results on their money? We have around 20k saved so far and with houses rising fast a 3 or 4 bed in our area would be 400k+ We have one child at the moment so our house is fine for another few years.

Hate to lose the trackers btw! The house we live in would break even with no negative equity and little or no profit on a sale. My mortgage on the rented apartment is with PTSB and they told me they would only allow me to keep the tracker on the negative equity being moved to a new mortgage on a like for like basis i.e. the current mortgage is out in my name only so it would have to be moved to a new mortgage in my name only and not in both our names (this isn't an option as I would only get buttons on my own). The other problem being the ever increasing house prices in Dublin so a 405k mortgage might be useless to us in a few years time.

I suppose our immediate concern is to get a bit of a return on our savings and our future concern being the loss of our trackers! Any advice greatly received.
 
Can you give a bit more information.

Who is your husband's mortgage with? How much is it and what rate. What is the house's current value?

What rate are you paying on your tracker? Again how much do you owe and what is it worth?

As you both have trackers, you are making huge capital repayments every month, which is a real form of saving.

Brendan
 
husbands: AIB 1.4% 260k outstanding valuation 265k in June
mine: ptsb 1.3% 198k outstanding valuation 145k in June
 
How much would the type of house you want cost you today?

At the moment, you have a €410k stake in the property market. So if you can buy a house for around €410k, then rising house prices won't cause you much trouble. In fact, they will help you, in that they will eliminate your negative equity and boost the value of your equity.

I understand that AIB will allow the transfer of a tracker mortgage from a single person to a joint ownership. So if you sell your husband's house and buy a house for €400k today, you would end up with the following:

€260k@ 2.4%
€140k @4.5%

It's best to move the AIB mortgage rather than your own smaller one.

With that in mind, I think you should probably move your bank accounts to AIB so that they get full visibility of your income and savings records.

Check out Liam Ferguson's excellent Key Post Preparing for a mortgage application
 
thanks for your response Brendan - I am interested to know do ptsb not have to agree to allow me sell the apartment for a loss i.e. have 55k+ negative equity and then aib take on the negative equity to the new mortgage or how will the negative equity from the apartment sale be paid back to ptsb?
 
Why would you sell the apartment?

mine: ptsb 1.3% 198k outstanding valuation 145k in June

The interest is costing you only €2,500 a year. Presumably you are getting around €7,000 a year in rent?

This is a very profitable investment for you. You are probably paying €900 a month in repayments, but €700 of this is capital. If house prices don't change over the next two years, your tenant will have reduced your negative equity by around €16,000. If you have to sell it then to trade up, fine.

But this is a great investment and you should try to hold onto it as long as possible.

1) Yes, ptsb have to give their permission for you to sell the apartment at a loss. They would want your savings to pay off the shortfall immediately. The remaining balance would become an unsecured loan.

2) AIB would not take on the negative equity from your apartment. You would not want them to anyway, because ptsb will probably allow you to keep the tracker on the mortgage shortfall which would be a lot cheaper than AIB's standard variable rate.

3) AIB would probably not give you a mortgage if you had unsecured loans of €60k outstanding.

Brendan
 
Ah I see thats great to know the apartment is pretty much breaking even for me taking into account tax on rental and mgt fees, insurance etc. The rental income is strong in this area but I don't feel the 145k valuation was realistic judging from the number of similar apartments in this area dropping in price on daft. I am due to go back to work full time next August so I think that is a good time to aim for a mortgage approval from aib by the sounds of things. That key post was very helpful as we have our savings going in and out of different accounts to 3 different credit union savings accounts. Thanks again for all your help.
 
Skittles is there any possability that yo could extend the house that you are in. As you said you like where you are living and it is only size that is the problem. Might be worth getting an architect in and see what the options are if you think you might have the room.
 
We went to the open house architects consult a couple of months ago and got an overview but there is very little attic space and the architect felt it would cost 150k to extend to give a decent size living space and extra bedroom. So I asked ptsb about it and they said when the house wouldnt increase in value by 150k then they wouldnt approve such a remortgage. We would be left with a tiny back garden also.
 
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