Likelihood of raising a mortgage in this scenario

A

AOR

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This my current position, just wondering if anyone has any views:

Currently living in an apartment with my boyfriend which he bought 3 years ago.

Outstanding Mortgage: €360k approx
Current Market Value: €240k approx
Current monthly repayment: €1200 per month Tracker
My Salary: €55k
His Salary: €56k

My boyfriend's brother came in on the apartment with him. He's not on title but contributes around a third of the mortgage repayment. Initially it was supposed to be an investment property for both of them but obviously that's been overtaken by events. The brother isn't too fussy about what happens with the apartment as he has a fair bit of cash to spare.

We're looking to rent out the apartment and treat it solely as an investment property (or at least hang on to it until the negative equity has balanced out) and raise a mortgage between us for around €450k to buy a house. We're both in permanent jobs and expect decent increases in salary over the next 2 to 3 years.

I'm a first time buyer. Obviously my boyfriend won't have first time status. If we're buying together there'll be stamp duty hit. Apart from that does anyone see a problem with a bank giving us a mortgage for €450k, give that my boyfriend already has mortgage obligations on the apartment?
 
Sorry, may have posted in wrong area. Maybe mods would move this to general mortgage section, thanks.
 
Have you savings? Say the bank advance you €450,000. That's (say) 90% of €500,000. Plus the stamp duty has to be funded. Plus you've got to furnish the place. Plus you've the other incidental costs of aquisition.

The ownership of the apartment sounds messy to say the least. Is your "brother in law" named on the mortgage?
 
2 main problems I see AOR.

1) Some lenders will not lend to an applicant if they have a negative equity property so your boyfriend would have to come off that mortgage

2) Even if the lender allows him to stay on the mortgage, the lender may not take rental income into account so you will have to be able to cover those mortgage repayments from your salary. Basically they will treat the €1200 mortgage repayment as a loan, they will disregard the rental income. This will eat into your repayment capacity.

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You are looking for a lot of money even on those salaries, 450k is very high. Can you not buy a smaller place? My boyfriend and I got our morgage in Jan, 2.5 times our gross total salary, this is just to give you a guideline you want 4 times gross salaries. There are like Norfbank says other issues. You will not find it easy to basically get a 2nd mortgage for your boyfriend but good luck.
 
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Thanks for the replies.

Yes Bateman, brother in law is on the mortgage deed. In theory he's responsible for half the mortgage but this was really just him giving my boyfriend a dig-out which is why he only contributes one third on repayments. There's no question of things turning nasty and he's very relaxed about the arrangement. I think he'd be happy to stay on board for the long haul until negative equity was no longer an issue and the apartment could be sold off without dire consequences.
 
I just inputted your salary details on BOI's mortgage site. It suggested you could borrow €499,000. That was on the basis of you both being 1st time buyers and (obviously) no mention of your boyfriend's "investment" property. Based on this indicative figure, what you're looking for shouldn't be beyond the realms of possibility. Based on a 35 year mortgage, your total repayments would be circa €2,400 per month (including the 50% of the investment property mortgage repayment). Given your joint net monthly income should be circa €6,500 plus rent of (say) €500 (i.e. 50% of €1,000), I don't think your proposition is unrealistic. Plus, as you say yourself, you expect decent pay rises over the short to medium term. I'd suggest you have a chat with a broker. Best of luck. One caveat...as you're not married, tread carefully and cover yourself.
 
Cheers Bateman, it's a bit off yet but we'll start looking into it seriously next year.
 
Pat Bateman said:
I just inputted your salary details on BOI's mortgage site. It suggested you could borrow €499,000. That was on the basis of you both being 1st time buyers and (obviously) no mention of your boyfriend's "investment" property.One caveat...as you're not married, tread carefully and cover yourself.
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OP - There are many threads with people giving personal experiences of getting mortgages recently and the amount they could borrow etc. There is no standard it seems, all depends on personal debt (should have none really as that's what banks seem to want) and savings and job security etc. I would not be basing anything on an online calculator especially the above based on being 1st time buyers with no investment property, then it's just not relevant to your case is it? You should get a mortgage broker (you don't usually pay them the bank do if you get a morgage)

Pat - what does it mean tread carefully if not married?? Both parties would be named on the mortgage and the house deeds so how is this important?
 
Pat Bateman said:
I just inputted your salary details on BOI's mortgage site. It suggested you could borrow €499,000. That was on the basis of you both being 1st time buyers and (obviously) no mention of your boyfriend's "investment" property. Based on this indicative figure, what you're looking for shouldn't be beyond the realms of possibility. Based on a 35 year mortgage, your total repayments would be circa €2,400 per month (including the 50% of the investment property mortgage repayment). Given your joint net monthly income should be circa €6,500 plus rent of (say) €500 (i.e. 50% of €1,000), I don't think your proposition is unrealistic. Plus, as you say yourself, you expect decent pay rises over the short to medium term. I'd suggest you have a chat with a broker. Best of luck. One caveat...as you're not married, tread carefully and cover yourself.
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Protocol said:
Have we not all learned from the financial crisis 35-year mortgages are crazy and irresponsible??
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fizzelina said:
OP - There are many threads with people giving personal experiences of getting mortgages recently and the amount they could borrow etc. There is no standard it seems, all depends on personal debt (should have none really as that's what banks seem to want) and savings and job security etc. I would not be basing anything on an online calculator especially the above based on being 1st time buyers with no investment property, then it's just not relevant to your case is it? You should get a mortgage broker (you don't usually pay them the bank do if you get a morgage)

Pat - what does it mean tread carefully if not married?? Both parties would be named on the mortgage and the house deeds so how is this important?
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Protocol, the OP and her partner want to purchase a home. 35 year mortgages for people buying homes did not cause the financial crisis.

Fizzelina, note my use of the term "indicative" and the caveat included in my post. As far as I know, there are no online mortgage calculators where you can enter details such as the OP's. I wouldn't suggest basing anything on an online mortgage calculator either. However, they are useful for establishing whether a proposition is ridiculous or not. Clearly, the OP's isn't. That's why I suggested the next step should be speaking with a broker.

As for my warning about "treading carefully", I think that's sound advice for any boyfriend and girlfriend purchasing a home together. What if the relationship turns sour? Who's contributing what? And let's not ignore the slightly unconventional funding arrangement in relation to the apartment purchase. A quick search of this site throws up quite a few tales of woe in relation to property purchases by unmarried couples. Justification for advising someone to "tread carefully", no?
 
Pat Bateman said:
Protocol, the OP and her partner want to purchase a home. 35 year mortgages for people buying homes did not cause the financial crisis.

Fizzelina, note my use of the term "indicative" and the caveat included in my post. As far as I know, there are no online mortgage calculators where you can enter details such as the OP's. I wouldn't suggest basing anything on an online mortgage calculator either. However, they are useful for establishing whether a proposition is ridiculous or not. Clearly, the OP's isn't. That's why I suggested the next step should be speaking with a broker.

As for my warning about "treading carefully", I think that's sound advice for any boyfriend and girlfriend purchasing a home together. What if the relationship turns sour? Who's contributing what? And let's not ignore the slightly unconventional funding arrangement in relation to the apartment purchase. A quick search of this site throws up quite a few tales of woe in relation to property purchases by unmarried couples. Justification for advising someone to "tread carefully", no?
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I think Protocol is misguided as to what caused the financial crisis.100% mortgages are a bad idea. Borrowing more than you can afford is a bad idea. However, there's nothing wrong with a 35 year mortgage, particularly if you're buying when the market has bottomed out and you're in a decent job with decent salary that mitigates against defaulting on the loan in the short or long term. Furthermore, the idea would be to start with a 35 year mortgage but effectively reduce it to 30 or 25 years as personal financial circumstances improve over time and you can afford to knock more off the capital sum.

Good advice also re "threading carefully". A co-purchaser agreement that covers all scenarios is vital (if unromantic).
 
"particularly if you're buying when the market has bottomed out"

Since you can see into the future can you tell us where interest rates will be?
 
AOR said:
However, there's nothing wrong with a 35 year mortgage, particularly if you're buying when the market has bottomed out and you're in a decent job with decent salary that mitigates against defaulting on the loan in the short or long term.
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tyoung said:
"particularly if you're buying when the market has bottomed out"

Since you can see into the future can you tell us where interest rates will be?
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AOR never claimed that the market has bottomed out. She merely stated that there's nothing wrong with purchasing when the above conditions are present.

For what it's worth, I'd be perfectly happy to buy my family home in the present market. That's not a prediction, merely my own view.
 
Marietta said:
No they didn't cause the financial crisis but they contributed to it.
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I don't agree. There's absolutely nothing wrong with a 35 year mortgage.

How exactly did 35 year mortgages contribute to the financial crisis?
 
This is all getting a little silly guys. The OP wants advice, not bickering.

OP, personally I think needing a mortgage of 450k is too much. My partner and I have been daily checking out newly advertised propery for sale and (in Cork) an average 3-bed semi in a nice area is approx 200k - 250k. My advise would be to possibly find one of these as a start-off home and in 5-10 years look for your HOME home.

While I fully understand wanting to find your dream home first time round (believe me I do!) no-one knows how things may go in the future. we can speculate of course but it could go the other way. A monthly mortgage of 2,400 approx is a lot of money should one of you end up out of a job (it can happen to anyone) and you must remember they may not get 1200 per month rent for the apartment, so your boyfriend may need to contribute to that mortgage as well. Not to mention that it may go un-rented for periods of time, and also if there are any issues (washing maching broken, electricians, plumbers, etc. ).

So my advice - suss out a smaller place. Do some work over the years, improvements, possible extensions, etc. and sell eventually to get your dream home. It will ease the pressure on you both financially and allow you to still enjoy yourselves. I also think the bank would be more open to a second mortgage for your boyfriend if the amount is lower.
 
Pat Bateman said:
I don't agree. There's absolutely nothing wrong with a 35 year mortgage.

How exactly did 35 year mortgages contribute to the financial crisis?
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35 and 40 year term mortgages were first introduced into Ireland during the boom years to help first time buyers get on the property ladder.
Sure for the property developers, the availability of longer mortgage terms along with 100 and 110% mortgage finance were great news for all and their availability did contribute somewhat to the never ending rise in house prices and subsequent crash.
 
I dont see the problem with 35 year mortgages. For some people its the only solution and it is affordable. I know personally when I apply I will be looking for a 35 year mortgage with the view to paying off lump sums and decreasing the length as time goes on.

I would agree with the sentiment that 100% mortgages were a joke.
 
On any given income, stretching repayments out over 35 years allows the borrower to have lower monthly repayments, although paying more interest overall.

This means the borrower can take on more debt, which means house prices are bid up. 100% mortgages, and 30-40 year mortgages contributed to the excessive rise in house prices by facilitating people to take on more and more debt.

If mortgages were restricted to 25 years max, the max amount people could borrow would fall. In this scenario, house prices would have to fall to what people could borrow over 20-25 years.

We would be better off, as we would owe less in debt, and pay less interest.
 
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