Advice on moving home

GrainneOToole

Registered User
Messages
20
Hi All,
I'm new to AAM and have a question:
Detail:
1. Myself and my other half are thinking about buying a second house for around €560k and selling our own from which we should make around €60k after clearing the current mortgage.
2. The €60k will pay for renovations of the house we're thinking of buying. Renovations will be painting, carpets and new kitchen and bathroom.
3. Our current house is very tight in terms of space (two kids) for our needs. We also want to be nearer to public transport.
4. We have €85k deposit and have approval for a mortgage amount of €475k with an exception to the 20% rule for deposit.
5. Th oldest of us is 49 and will get a mortgage until age 68 on a tern of 19 years.
6. Our net income per month is €7400 and childcare for our girl and boy who are in primary school is €800 per month for both.
7. We work in the County Council (Husband earns €4250 per month) and private sector construction company (me earning €3150 per month). Company is busy and pretty solid despite covid but you never know how things might be in a year.
8. The mortgage repayment will be in the region of €2700 per month leaving €3900 spending money after childcare for food, running the car, health insurance and we'll save around €500 per month to cover an annual holiday.
9. The mortgage payment is 36% of our net income.


We are both very eager to buy a new house but given that the economy might hit the rocks we are a bit anxious.

My question is:
Does anyone think this amount of a monthly mortgage is a bad idea or if it is particularly unusual?

Thanks for reading and all opinions would be appreciated.

G.
 
Thanks Mark McK and Sarenco in the other forum and I've been advised to stick with this post.

I phoned the bank today and they said they weren't doing any exceptions. This is no surprise. Does anyone thing they'll open the exceptions up again?
 
I see some other poster has said that 36% of your income on a mortgage isn't excessive, well of course its a matter of opinion, but I think it is very high.

€2,700 a month until you are 68 is a huge commitment. Look around your own office, how many people in their 60s earning good money do you see.

Your primary school kids will be college age kids while you are still paying the mortgage, the costs then will make €800 a month childcare look small, believe me.

My opinion, you can't afford this.
 
Thanks cremegg - it's really clear. I also think €2700/36% is very high. In relation to the item of being in my mid-60's earning money - I'll be 58 years old when the mortgage is paid off and OH will be retired so our idea is that we have a home four our retirement and kids if they want to live with us for any reason. We have a €120k fund (is it enough? )for their education btw and his pension lump sun will be in the region of €130k in today's money. I think we'll be okay when, and if, the mortgage is paid - it's the day to day for the next ten years I'm concerned about.

Do you think that sheds a different light on it for you and would the college fund we have for kids change your mind?
 
Yes, like a lot of people your overall position is good but your cashflow would be stretched. I do still think that is a different thing in your 50s than in your 30s.

With a €130k lump sum presumably your husband will have a decent ongoing pension as well.

€120k should more than pay for two children through college, at least for a 4 year undergraduate course.

Why is this an education fund, can you use it now as a deposit for the house. The guaranteed after tax return on a smaller mortgage is certainly less risky than any other investment and likely to provide as good a return.
 
Thanks again cremegg.
Yes I think the way you put it in terms of cashflow is interesting and very true. The education fund is a piece of inherited farmland - circa ten acres in the South so it's not immediately translatable into cash and is something that I'd like to sell slowly over two years maybe so I get the best price for it and well in time for the need - it's also appreciating - hopefully!. It would also be a rainy day fund in case something awful happens with health or otherwise - touchwood.

I am loathe to transfer all of the land into a mortgage only just in case I need fast access - I can't sell a bit off my house and retrieve €120k! And I don't mean to be smart.

I will have another inheritance of around €120k sometime and I hate to predict life expectancy of a loved one. Ongoing pension of OH will be circa €50k 60k per annum.

Any other thoughts from you or others welcome and thanks again.
 
Hi Sarenco - see above. If you were me would you sell the land and make the mortgage less after a year maybe and then with a lesser mortgage amount try to save €120k for an education fund?
 
If you were me would you sell the land and make the mortgage less after a year maybe and then with a lesser mortgage amount try to save €120k for an education fund?
I would indeed.

With the removal of the exceptions from the 20% deposit requirement, it looks like you are going to have to sell the land if you want to move house.
 
Thanks Sarenco - the land sale might take a couple of years (rented for a small amount at the moment) and I was thinking I'd just beg borrow or steal the extra 26k or so to make up the shortfall for the deposit - OR - tell the vendor they'll have to wait until I sell my current house. If they don't accept then so be it.
 
OR - tell the vendor they'll have to wait until I sell my current house.

The likelihood of success there will depend very much on how busy the market is where you intend to buy. I can't speak for other areas but most agents in Dublin won't even accept a bid if you need to sell your current house before closing the deal.
 
Thanks Leo it’s a fair point but I can borrow more cash for deposit from family but am most concerned about long term mortgage repayment amount most of all
 
Thanks Leo it’s a fair point but I can borrow more cash for deposit from family but am most concerned about long term mortgage repayment amount most of all

Having the cash for the deposit isn't the issue. If the market is moving well, agents won't want to consider anyone in a chain. Far too many of them break down due to planning irregularities or other issues for their liking.
 
Thanks Leo - I should have said that I can borrow more cash to bring my deposit up to the 20% C Bank limit so as to avoid being in a chain. But yes I think if the market is going well the Estate Agents won't want anyone in a chain
 
But yes I think if the market is going well the Estate Agents won't want anyone in a chain

Make sure you get mortgage approval on the basis of holding on to existing property so. They'll give you some allowance for rental income, but keep in mind the existing mortgage will restrict what the banks are willing to lend you. The default position for a mover mortgage is that they assume you will sell the current house, which generally results in a chain.
 
HI Leo - Yes I've done that and I was surprised by how little less they'll give if I hold on to the existing property. But my borrowings get to be circa 700k and that figure is slightly daunting to put it mildly - or am I out of touch with debt levels and what are common or normal debt levels? Thanks.
 
Yes I've done that and I was surprised by how little less they'll give if I hold on to the existing property.

Yeah, same here. They give a % allowance for rental income but the numbers can become daunting.

Once you close on the new property, you can sell the existing one to reduce overall debt, but ensure you have sufficient cash reserves to fund both mortgages for 6+ months in case the existing one takes time to sell. Prepare the existing house for sale as much as you can before you get your hands on the new one, once you have keys to the new house, you probably won't want to spend too long on the old one. Pick a selling agent and be ready to go, if the weather picks up, take the opportunity to get some photos done to show it in the best possible light.
 
Back
Top