38 and don't know what to do

D

Detoxkid

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I'm 38, married and have 2 small kids, I've just found out I'm pregnant with my third. I work public sector, permanent job, 74k a year. I've been in the job over 11 years. I bought a house on my own in 2007. I'm possibly out of negative equity but would barely scrape even if I sold. We have no car loans and for the last 7 months I've saved 1000 into a savings account every month. Also continually save the children's allowance (280/month). My husband went back to college and graduated a year ago but has struggled to find steady work. He has just found out he is not being kept on after his probation. He will likely get another job easily but it may take a while before he finds his permanent niche as he is still learning his trade. He earned 39k in his last job, I expect he will get a new job for around 30k but will need to complete another probation which will take over 6 months.

6 years ago I got a promotion at work which meant moving offices to a county we both wanted to move to, so we have been renting out the house. We have great tenants and I'm reluctant to put the house on the market until it builds up more equity plus I'd have to pump what I current save into the mortgage if they moved out while I'm selling it. The house is not in Dublin and may not sell quickly.

We pay 900 in creche fees a month currently (eldest is 3 and in ecce).

We pay rent of 1000 a month and this comes out of my husband's account. My husband pays for the rent so I'll cover that etc now he is out of work for as long as that lasts, but I have a few grand in my current account which should mean I can still keep the 1k a month savings record going for a while

We have savings of around 55k including the children's allowance. (All saved over the years, none of it gifted and I have a decent savings history bar when I went on maternity leave and took 4 months unpaid leave on both kids)

I really want to buy a house locally and would appreciate some advice on what to do, as I feel like we are caught in a renters cycle. My eldest will be starting school is a year and a half and I'd love to be settled in a house by then. This pregnancy is a (lovely) surprise but turned our house buying plans upside down. I'll be paid for 6 months but then will take the extra 16 weeks unpaid which means my savings history will take a serious hit. Im not willing to negotiate on this although i know it makes little financial sense.

Plus a third child may mean that we do not quality for a mortgage even if my husband had a permanent job? And we will also have to pay more on childcare as I will have to go back to work as I have the better permanent job at the moment.

On 74k with two kids and my husband out of work would I be wise to act now and try to get a mortgage on the strength of my salary alone, before we have had the third child? If we did this based on my salary we could afford a grand house that would do us for 10 years, during which time we could sell the other house as there won't be as much pressure to save money on paper? Or do we wait for say 3 years until hopefully my husband has a decent steady job. But at that stage we will have wasted 36k min on rent and be living with the uncertainty that renting brings?

Apologies for the essay but I'd really appreciate some savy advice
 
I don't say this lightly. After what we went through over the years we should be asking you for financial advice. It appears you have more financial savvy than anybody I know.

Advice from a financial leper (at the other end of the scale whose investments turned to lead):- (i) Don't change a thing. (ii) Set up your own website offering doable financial/living advice to the likes of me.
 
Detoxkid said:
On 74k with two kids and my husband out of work would I be wise to act now and try to get a mortgage on the strength of my salary alone
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I would apply for a joint mortgage (but based on your salary). Ideally secure a mortgage offer that's good for 6 months (I'm not sure which of the banks do this). I would tell that bank that unless your husband secured a job soon that he would be minding the children thus eliminating the childcare costs. At no point would I mention the pregnancy and if it was obvious then, if at all possible, don't meet with the bank and get your husband to handle the application and any meetings. If you secure an mortgage it will give you options, and you can just let it lapse if you decide to keep things as is. I wouldn't view the rent money as wasted although the uncertainty surrounding renting is a pain, especially when you have kids.
 
A few questions:
- Can you provide details of mortgage (balance & term remaining, monthly payment & interest rate).
- Current rent receipt for property
- Confirm total household savings is €1280/month?
- Likely cost of house in the area that would be suitable


Just a comment before seeing above information - with your husbands situation and your current savings rate, I think the bank would be highly concerned that between you you're saving less than your husbands salary - i.e. if he is out of work, you will end up saving nothing each month and possibly eat up savings if it's a lasting situation.

Just my gut but I think your husband's job situation will affect you far more than a third child and your strongest position for a suitable mortgage will be once he has permanent employment.
 
In 3 years house prices will also have risen and you will have spent 36K in additional rent. If it was me I would go with MichaelM's suggestions.
 
If I were you I'd get a mortgage of your own salary and be prepared to use your 55k ..were do you want to live ? Can you get a decent house for 3.5 times your salary plus hide your pregnancy so get mortgage in 1st trimester if u can
 
Thanks everyone for the replies, I really appreciate it. @michaelm that sounds like it is def worth a shot and I will give it a go. Thank you!


@blacklines
- Balance on mortgage is 141000 and I paid 240000. I've seen a similar house sell for 175,000 in June but the property market is saturated where it is located and it might not sell easily. A few years back a similar house was sold for 130k so no idea what it would get - possibly somewhere in the middle. The rate is 1.1% tracker with Boi, monthly repayments 671.00 . term remaining is 20 years. Currently get 650 rent - could probably get more but tenants are good and reliable. Between the tax on the rental income and insurance etc it costs me money and was a costly mistake but to sell it now and potentially just break even on the mortgage costs seems like a waste.

Total household savings of 1240 per month plus we pay rent of 1000 which I presume counts? We prob save at least another 250 a month in our current accounts but that doesn't go into a direct savings account

We would get a fine 4 bed semi where we live for 250k which would be within 3.5 x of my salary. I had my eye on a much nicer 4 bed area in a nicer area for 330k before any of this happened which obviously is not a runner now
 
Hi,
The rent you pay will count towards showing affordability.
The fact that your existing house is costing you money to keep will count against you though.
If it was me, I'd apply to see what the bank says. Be prepared to have to sell your existing house to get the house you want though. BoI tracker mover product might be your easier underwriting to pass.

Edit: if buying for c. 250k, less your savings, would leave you with a Mortgage of c. 200k, over say 27 years. That's less than 1k a month so you should meet any banks criteria as you'd be left with over 3k per month from just your salary even with repayments stressed by 2%. Your husband's salary needs to cover crèche fees.
 
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Hi there,

Absolutely your rent will count towards your affordability, however banks also consider financial performance over the previous 6 months (savings & rent). You are in a situation where your savings history is based on your husband having an income also therefore bank are likely to make adjustments to take into account your husband not having a job. From my experience and assuming you disclose your husbands current situation, you will struggle to get mortgage approval on your own considering your current outgoings - your best hope is a very good broker.

Your current property will also affect your mortgage affordability as it does not cover itself. The good news however is that your rent (after tax and costs) will be covering your current interest portion of your mortgage, so effectively you are building equity each year. Considering you have a tracker on this property, as Detoxkid says, you have the potential to move your remaining balance when you sell @ 2.1% for 5 years which will help with affordability when you sell.

There is definitely a benefit to meeting with a bank/broker now to ascertain your current standing (and you might end up with mortgage approval :) ) but overall I think your best plan of action would be to wait 6-9 months until your husband hopefully is in a permanent job, get mortgage approval with you both in work, sell your existing property and buy your forever home.
 
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