Moving house

[whattodo85]

Hi All,

Looking to move house but have a concern with my ICB, approx 6 years ago I had an issue with a credit card. It was to do with a business (sole trader), I eventually paid this off however it has gone down against me on my ICB report. The sum was €2000 and is due to come off my ICB in June. I am now looking to move however my current mortgage provider wont allow this due to my ICB report.


Age: 31
Spouse’s/Partner's age: 31

Annual gross income from employment or profession: 60k
Annual gross income of spouse: 50k

Monthly take-home pay: €5380

Type of employment: Employed & civil servant

In general are you:
(a) spending more than you earn, or
(b) saving? I am saving (can prove that I can afford €2000 per month, been doing this since last Jan)

Rough estimate of value of home: €220000
Amount outstanding on your mortgage: €220000
What interest rate are you paying? 2%

Other borrowings – car loans/personal loans etc: PCP on a car €360pm

Do you pay off your full credit card balance each month? Pay in full
If not, what is the balance on your credit card? N/A

Savings and investments:€110k

Do you have a pension scheme? No

Do you own any investment or other property? No

Ages of children: 1

Life insurance: Yes


What specific question do you have or what issues are of concern to you? I am wondering if a bank will touch me due to the cc issue or would I be better off waiting until this clears from my ICB report. My savings record is excellent, I have a deposit and good income.

 

[whattodo85]

Forgot to mention that I'm currently on a tracker mortgage.

 

[gnf_ireland]

Does your current provider allow you to move your tracker mortgage to a new property? If so, I think you would be better off waiting until the ICB report is clear and discuss it with them again. Being able to avail of a tracker in the new property is very valuable

If your current provider does not allow a tracker move, then its a different story. Personally I would wait until June and make sure the ICB report is clear and then go talk to other banks. Any simple credit check will show it up, and therefore you will be prone to questions on it. If you wait until its gone it will save you that hassle

Is there any particular reason you want the mortgage now? Is there a house you really want to bid on available currently? What is the timing issue here?

 

[Gordon Gekko]

You could get a mortgage from Pepper, but they'd charge you a premium for the privilege.

Far better to wait until June when you'll have a myriad of options.

What rate is your PCP at? That is likely to be a drag on your ability to borrow. How much is it?

And what level of property are you looking at?

Are you funding a private pension?

And what rental income would your current home generate?

 

[gnf_ireland]

Are you funding a private pension?

I believe the answer here is no based on the original post

And what rental income would your current home generate?

I did not read that the OP wishes to keep their current home and buy a second one. I was assuming the OP wants to upgrade the house and sell the original one. However I could be wrong here. I would not recommend the OP buy a second house and increase that level of debt, especially if they can move their tracker.

 

[Gordon Gekko]

Hi gnf_ireland,

With the greatest respect, my queries weren't addressed to you.

I'm seeking further material facts;you're just speculating.

Gordon

 

[whattodo85]

Hi Guys,

Thanks for the feedback, want to sell my current house and upgrade. My current provider has granted me loan approval to carry my tracker plus 1.5% to the new house however wont lend me anymore based on the credit card issue and won't tell me if they will approve me in June. If I wait until June, can they still hold this against me as they are already aware of it?

I am looking to borrow approx €350k (80% value of property), put approx €85k down and have my eye on a place thats why I am keen to move with an application.

I am not too sure of what rate the PCP is at, but will find out and post. Other than that we have no other debts.

My current property would generate approx €1500 rental income per month but I do not want to hold onto this. I think if the bank stress test me they wont lend the amount I am after.

 

[Blackrock1]

PCP is 360 p/m the rate is irrelevant surely?

 

[gnf_ireland]

With the greatest respect, my queries weren't addressed to you.
I'm seeking further material facts;you're just speculating.

Are you funding a private pension?

Do you have a pension scheme? No

@Gordon Gekko I accept the queries were not addressed to me, but I do not believe I am speculating
The above extract from the original post states that they do not have a pension scheme.

And what rental income would your current home generate?

I did not read that the OP wishes to keep their current home and buy a second one. I was assuming the OP wants to upgrade the house and sell the original one. However I could be wrong here. I would not recommend the OP buy a second house and increase that level of debt, especially if they can move their tracker.

I fully accept I was speculating on my response here, based on the exact question the OP asked, and in my defence they did back this up in their response to you. This is what I clearly read from the original post, so just restated it - using the word 'assume'

My current property would generate approx €1500 rental income per month but I do not want to hold onto this

That said, I have no interest in getting into a 'war of words' on this. However, I felt that I should answer you to validate the reasons why I responded in the first instance. Sometimes we all misread a post or response and I always feel its no harm when others bring infomation to the fore

I also want to state that I do value any contribution you have made to any of my posts in the past

 

[Gordon Gekko]

That's a gross yield north of 8%, financed at a rate that is no longer obtainable (2%), probably with a capital gains tax shelter, no money coming off the table in the event of a sale, and plenty of cash/assets on the side.

The OP should think long and hard before deciding to sell it.

 

[gnf_ireland]

@whattodo85 Just so everyone is 100% clear on this. You currently have a tracker mortgage on 2% over ECB. The bank has said if you move your mortgage to a new property, you would go onto a tracker mortgage again - 3.5% above ECB. This would be for <80% LTV.

Currently you can get ~3.1% variable on the open market - KBC & Ulster Bank as examples.

You need to consider how valuable the tracker move product is to you, and if you believe variable rates will rise faster/slower than ECB increases. If ECB increase their rate to 2.5%, you would be on 6% with the tracker move product. Would the SVR's rise that quickly - who knows, but most would hope not!!!

In that case, it is probably worth either going with Pepper in the short term and planning to switch shortly afterwards or waiting until June and applying again once the ICB is clear (obviously checking first)


Whether you decide to keep the existing property as a rental or sell it is another independent question. @Gordon Gekko makes a very valuable argument as to what you should keep it - especially since there is no equity to release from it and the mortgage move rate is not that attractive (in my view). The downside is not everyone wants to be a landlord !


Note: Gordon's answer is one of the main benefits of AAM - you get people thinking about your scenario in a totally different way than you do or asked about and they can see things you (or I) don't - and you get this for free !

 

[whattodo85]

Hi Guys,

Thanks for the advice, appreciate it. My rate is currently 1.1%, really low I know. If I chose to keep the current property and buy a new one do the banks not stress test me? The new mortgage would be 3.5 times of our income therefore we would probably not qualify for a second mortgage?

Finance isn't my field so apologies if I'm well off the mark!