Query re buying a house next year and our situation

A

Advicepls

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Wife basic: 32000

Wife ot/bonus: 1500

Husband basic: 107000

Husband bonus: 13000

Both in permanent jobs with the same companies for years.
We are currently saving circa 2k per month.
One property rented out. All above board taxes paid etc. In about 10k negative equity.
One PPR with approx. 130k equity.
No other loans (apart from mortgage)
Childcare of 850 a month.
3 x children.
Wife is 35 and husband is 34.

We are hoping to move next year. We should have 40k (we had more but we cleared some loans) saved ourselves.
My query is, based on the above and keeping the rental house, what sort of mortgage would we qualify for?
Also, would we be better off to try and offload the rental. We have a lot of equity in our current home which we will need towards the deposit. Is it possible to coincide the sale of this house and the purchase of a new one. Ideally I don't want to have to sell PPR and then start looking.

TIA
 
What type of house do you want to buy. Why are you moving.

Why did you have debts, recently cleared, if the incomes were so good? Is there a spending issue?

Great income. Subject to bank lending rules you're able to afford a mortgage of 2K plus your current mortgage amount, whatever that will give you. I sincerly advise you to get a 25 year mortgage max.
 
We hope to buy a bigger house as our family has grown. We considered extending but would rather buy something bigger.

The loan was for a car which was paid in full in 1 year. We did not have the full amount to buy it at the time. Our current mortgage costs us 1400 per month. There is no spending issue whatsoever, 0 balance on credit card. Live well within our means. I hope to up the savings to 2.5k per month. I consider myself a good money manager.
 
150k per annum...7k+ net per month and your just saving 2k per month with only 1 kid costing you for childcare.
Have you a really big mortgage at present?
 
Sorry that is what our childcare will be from September and when we hope to buy next year. It is currently 1400 and we were up until recently paying off the loan also.
So 1400 childcare
From this month saving 2500
Mortgage 1400
Approx 1200 goes on food/travel/utilities/activities for the 5 of us (any thing left over from this goes into savings but the 2500 is a set amount that is saved minimum)
And the remainder goes in an account to cover holidays and large annual payments like holidays and car insurance and towards the tax bill for the rental property.
Trust me, any surplus goes in savings. Its expensive running a household. We had to service the two cars in Jan and issues arose costing us 1k.
 
Advicepls said:
Is it possible to coincide the sale of this house and the purchase of a new one. Ideally I don't want to have to sell PPR and then start looking.
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Realistically no. No bank will grant a new mortgage until the existing one is cleared on your PPR. You can start looking before you sell your PPR but will not be able to complete any new purchase until PPR is sold.
 
So about 120K for a deposit.

You should ideally have six months rainy day fund - just saying.

Dangerous situation with both of you working for the same company - just saying

What price property do you want to buy?

What is the story with the rental. Is it worthwhile seeing as you mentioned a large tax bill.
 
Advicepls said:
We hope to buy a bigger house as our family has grown. We considered extending but would rather buy something bigger.

The loan was for a car which was paid in full in 1 year. We did not have the full amount to buy it at the time. Our current mortgage costs us 1400 per month. There is no spending issue whatsoever, 0 balance on credit card. Live well within our means. I hope to up the savings to 2.5k per month. I consider myself a good money manager.
Click to expand...

Surprised on such salaries you didn't have the cash to buy the car. Unless it was an exceedingly expensive car. Our job is to help you, just trying to suss out the real situation.

If you save 2500 from now that is 16 months to get to 40K, you mentioned about a years time. So I'm seeing a spending issue even if you don't think there is. Nothing wrong with you having any kind of lifestyle. If I knock off 4 months at 2.5 K you seem then to have precisely 10K !
 
Bronte said:
Surprised on such salaries you didn't have the cash to buy the car. Unless it was an exceedingly expensive car. Our job is to help you, just trying to suss out the real situation.

If you save 2500 from now that is 16 months to get to 40K, you mentioned about a years time. So I'm seeing a spending issue even if you don't think there is. Nothing wrong with you having any kind of lifestyle.
Click to expand...

Thanks for your response. We currently have 10k saved so far this year, bonus was in Jan. Then 2.5k per month should give us hopefully in excess of 40k this time next year.

We don't work for the same company. We are with our respective "companies" for years. My husbands salary has jumped quite a bit in the last three years. I had two babies quite close together so wanted to keep a buffer for my maternity leave when I had only mat benefit and then unpaid leave. We are only in the current house a few years. We put every penny into buying our current house. Literally every penny we saved for deposit, solr fees and upgrading it when we got in. Then we needed a second car so we borrowed 8k and paid it off as quick as we could. We needed to move location but didn't want to borrow much on account of not being able to sell the other property. I was anxious about having two mortgages. 2 extra babies later, a salary bump, fair bit of equity and were looking to move. Hope this all makes sense. I would love to sell the other house but not while its still in neg eq. We have fantastic tenants at the mo. However if it turns out to be an issue for buying a new place then we will strongly consider it. I hope to have it sold in next 5 years. I like to think we have a good balance between having a life and saving over the past few years. There have been other things that have cost us over the past few years but I don't want to go off on a tangent. Personal things that are really of no concern on here but that cost a few quid. One 8k loan is not alarming imo. We can't always have buckets of money in the bank.

We were hoping to borrow circa 450k.
 
Based on your salaries a mortgage of 450K should not be a problem. taking a 30 year term to retirement the monthly payment should be c€2,020 at 3.5% int rate. This is only €600pm on top of your existing mortgage and should be affordable.
Sale of investment property is really up to you. If you want advice on this you would need to input all relevant figures such as mortgage amount, int rate, net rental income etc!
 
It's well affordable on their salaries. And even stress tested they have a great buffer. They have 20% deposit from the equity of 120K. And will still have 40K or so as a cushion. Might need that to sell, rent, buy.
 
As 44brendan said, it's essential to know the mortgage balance, interest rate, term remaining and rental income for your rental property.
 
Thanks all for your replies.

The details of the investment property are:
Mortgage Balance: 300k (it is currently about 10k in negative equity)
28 years remaining
Rate is ECB +0.8%
Rental income is 1250 and the EA gets a cut of this. The going rate for the area would be about 1450 a month but we have really good tenants so we are reluctant to put it up at present. If we decide to sell in a year it is better to keep them there than have the hassle of finding new tenants.
 
The rental property is hugely profitable.

In money terms maybe €8k before tax. And dont forget that is your return on the banks money :):):)
 
Prospective gross yield of 6% (around 4.25% net), financed at 0.8% - I'd try and hang on to the rental based on those numbers.
 
At the moment it is a bit of a burden. The tax bill last year was 3800 and we are not making a penny on it, mortgage costs 1100 per month and the rent covers that and the EA fee. Then there is the maintenance of the place and house insurance etc. I guess I don't really understand when I will actually see any sort of profit from it?
 
Of the €1,100 a month you are paying on the mortgage €900 is capital repayment and not a cost.

You are making a profit of €1,250 less interest €200 less tax €316 less sundry costs €200 (thats a generous estimate). Thats over €500 a month for nothing!

Obviously it does not suit that you have to make the capital repayments at this stage, but when you say "mortgage costs 1100 per month" I worry that you don't understand what a good investment this is.
 
I don't understand too much about it at all to be honest! We kept it at the time because there was over 100k neg eq and we couldn't afford to pay it off. So the plan was to cross the t's and dot the i's with it until such a time as it was out of neg eq and we could sell it on. Sure if we all were in the know then there'd be no need for this great website ;)
 
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