Loan affecting amount can borrow

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pipedreamer

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Hi All

Just wanted to get some opinions guys - I have a salary of 65k (net 3500+ pm) and am repaying a loan of 500 pm - this loan is really affecting the amount I qualify for mortgage wise and I am at a total dead end with this - apparently I qualify for about 200k with the loan and 300k+ without it - I am completely capable of repaying a mortgage of 1200 or so a month (even with the loan) and am really finding this frustrating.

At the moment the balance on the loan is 25k and I have 10k in savings - I know its not ideal but would a way around this be to take a credit union loan against the 10k to repay the bank loan and then apply for the mortgage but not declare the credit union loan - I know some friends have done this in the past and I have always wondered why, I guess now I know - and I know some of the credit unions were changing so that they would still come up on a credit check so this might not even be an option... any opinions? any other way around the loan?
 
Here's three options: -
  • Negotiate with your lender to restructure your loan over 7 years from now. They'll probably tell you that 5 years is their maximum but most banks when pushed will stretch to 7. You could also pay off some of the loan from savings. Both of these will reduce the monthly repayment on your loan. Once you have the mortgage, bring the loan repayment back up to it's previous level.
  • Get a friend or family member to pay off your loan for you.
  • If you're prepared to fix for 3 to 5 years, you should qualify for €290,000 - €300,000 even with the €500 per month loan repayment.
Liam D. Ferguson
www.ferga.com
 
Thanks Liam...

To be honest at this stage I'm prepared to try anything, I am about to move back to Cork after living away for 4 years and really want to get on the propery ladder...
 
I know it's frustrating that you feel you can afford a monthly mortgage repayment of €1200 along with a loan of €500, but have you factored in a 2% increase in interest rates? Banks have to be responsible in their lending and to lend money on the basis that the applicant feels they can afford the repayments would be irresponsible.

As LDFerguson advised you can use your savings to pay off some of your loan and extend the term. As you don't seem to be in a position to clear the loan fully you should aim to get the monthy repayments reduced by as much as possible. The credit union may be your best option for this. You mentioned that you were considering taking out a credit union loan but not declaring it to the lender - this wouldn't be recommended. Many credit unions are now part of the ICB and some lenders will decline mortgage applications if an undisclosed loan shows up.
 
Thanks for the reply as well hel n - I do see your point.

Spoke to my bank manager and if I pay savings off the loan and re-structure over same time period it reduces to 325 - will that make much of a difference?
 
I don't know what term your mortgage has been approved for and who the approval is with, but as a rough guideline, the extra €175 pm should allow you to borrow an additional €30k - €35k.
 
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