Looking at new 2nd mortgage

M

Martin14

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Hi

I'm considering upgrading my house, which is currently on a low tracker mortgage.

Ideally I'd like to keep my current property, together with its low tracker mortgage. If I look for a completely new morgage on a new house is it possible to keep my old house on its current mortgage?

Also, when I apply for a new mortgage, under the new rules I will need 20% deposit and 3.5 times our income, I may be able to swing this, however, with regards the 3.5 times our income, I will be able to cover my new mortgage, but not the two mortgages combined, current mortgage plus new mortgage will exceed 3.5 times income. Will this matter, I hoping they only consider the one new mortgage when it comes to 3.5 times income?

I was planning on renting my current house, which will far exceed mortgage repayments

Any advice appreciated
 
You'll be paying tax and maybe for an agent. You'll have to take that into account when you say renting your current house will far exceed your mortgage repayments.
 
Yes I'm aware of associated cost with renting. Current mortgage repayments is €440, and should be able to rent for approx €650. This is ok, however, if my tracker mortgage is changed because I no longer live in the house and I have another mortgage then I'm not so sure about renting.

I won't be relying on any rent money but I would like it to cover my current mortgage.
 
Which lender are you with?

Most lenders now allow people to move their trackers to a new house, although they charge an additional 1% on the tracker bit and the normal rate on the additional mortgage.

This seems like a much better and simpler option for you.

From your brief account of the numbers, it's unlikely that you would qualify for a second mortgage to buy a new house as they would take into account your other borrowings.
 
Im with ulster bank.

Really don't like the idea of selling. It's just too much hassle for me and my family.. Selling current home, moving out, waiting till I find new home, no thanks

From your post, you imply that I will actually need all my borrowings (old plus new mortgage) to be covered by 3.5 times me and my wife's wages. If that is the case I think Il have to wait alittle while longer for me to be able to move to the type of property I want
 
I'm not sure how the banks underwrite new mortgages where there is an existing one these days but the way it was done by UB was to add both the income and the debt on to the proposed new mortgage but not the simple straightforward figures.

For example added to your proposed new debt at stress tested rate would be the repayment on the existing mortgage probably also at stress tested these days rather than the actual repayment. Then on the income side they would add on a percentage of the rental income, maybe 50/70% depends what they are using these days, never the full rent anyway as it allows for vacant periods and costs/tax etc of renting.

This would then give a net monthly income figure after all debt is paid and that had to be within certain guidelines which I am sure still operate, however there is now also the upper multiple of income cap so not sure how that is applied to buy to let situations which is what yours will become when your existing property is rented, I can't see that it would really work for those scenarios because someone could have a few BTLs and certainly wouldn't have the multiple of income needed, it's more business underwriting really than straight forward home loan rules.
 
Thanks monbretia

Iv also just read that there can be exceptions(1 in 5 applications) to both the deposit and the 3.5 times income, with the 3.5 times your income being extended to up to 5 times. With this I would be fine, our wages would cover both the mortgages with x5 times our combined wages. That's without taking any rent into consideration.

I think I might go visit a financial adviser before I go any further, see what they say.

I'm a director of my own company also, so my company accounts will also come into play. In fact this may be more important than my wages. I can afford to pay myself more but holding off alittle yet till my company is in a very solid position, but last few years of accounts have been good and I'm hoping this will be to my advantage.
 
FYI we recently applied, and after much pain, received a small top up mortgage to our primary house for an extension. We have a second house that we rent. The bank, AIB, as part of its stress test, reduced the rent by 50% and increased repayments by 50%.
 
There is only one way to find out for sure.....make the application.

We have approval in principle from KBC and BOI.

Both allow us to keep 2 existing properties, rent them out and buy a 3rd.

The outstanding mortgage on all three properties would exceed 3.5 times our salaries at 4.5 times our salaries.

We have a several year history of regular savings (excluding rental income) that can service all three repayments. PAYE employees.
 
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