Can I keep my existing home when trading up?

[0439932]

Hello all,

Ive read numerous posts on here re second mortgages but I'm still none the wiser for my own situation. Hoping you kind folk might help me out.

I want to trade up to a better location, new house prices for what I want are between 300-345K. I may be dreaming but here goes..

Details:

Single application.
Currently have mortgage on 3 bedroom house
Bought in 2017 as first property
Purchase price: €175000
Value of Property today: €215,000
Mortgage drawn down: €139000
Amount of Mortgage remaining: €129000
Term of Mortgage: 31yrs left
Fixed rate of 4yrs with UB @ 2.6%
Monthly repayments fixed : €515
Overpaying by 285, total repayment €800/m
Have €38K savings over 1 year (so far) - aware this needs to double for a 20% deposit
Age of Applicants: 33

Private sector employee, Fixed term contract, end date Sep 2021
In current company 8 months, in pharmaceutical private employment for 10yrs
Base salary: €52735
Salary increments/yr €2500
Shift allowance: ~€30000 (not guaranteed)
Bonus: 12% of base + shift ~€10k (not guaranteed)
Have you any children : No
Never had a loan, never use credit card, credit history perfect, never use overdraft
Savings €1500-2000/month

Ideally would like new house of ~€335k
20% deposit is €67K ( will have in a yrs time)
Need mortgage of €268K.

Assuming I could avail of LTI exception, base salary in a yrs time x 4 = 220,000.
Also hoping they would take some portion of shift/bonus into account in this LTI calc to bring me to ~€268k loan.

Options are
A) Most ideal - draw down €268k mortgage, then sell initial house and pay off big lump sum. Is this situation possible?
B) Make initial property a rental. I dont really want to be a landlady but at probably income of €1200/m this could bring up my income to get second mortgage of €268k.
C)If my only option is to sell initial house before draw down of mortgage 2, this would mean having to rent somewhere and store all furnishings etc.

What would be the most probably option available to me?

 

[Brendan Burgess]

Private sector employee, Fixed term contract, end date Sep 2021
In current company 8 months, in pharmaceutical private employment for 10yrs

Are you sure that you will get a mortgage at all?

The best thing to do is to apply for loan approval from Ulster Bank to sell your current house and trade up.

See what they say.

As you do not have a permanent job, you should definitely not be trying to keep your existing home as a buy to let.

After selling your house, you will have €123k cash.
You will need to borrow about €210k

So the loan to value will be 64% (210/330)

That is still 4 times your base salary.

I might go further and say that you should stay where you are for another few years and reduce your mortgage further.

If you do decide to stay where you are, then pay the savings off the mortgage. You will face an early repayment fee, but it will be worth it.

Brendan

 

[0439932]

Thanks for the reply Brendan, I may not get a loan at all as you say, I had no idea where I stood so I wanted to ask here first.

The employment side of it isnt bothering me as two people on my team have approval and are on fixed term contracts. As far as I'm aware both needed 6+ months remaining on the contract.

 

[RedOnion]

LTI for CBI is based on total income. Each bank will look at variable pay differently for their own underwriting.
To give you an idea, below is the link to Ulster Bank. They count 50% of overtime and shift allowance. https://www.ulsterbankintermediaries.ie/lending-criteria/acceptable-income

The fixed term contract will depend on what you do, and the industry you work in. On your total package, it shouldn't be an issue.

Rental income will not be considered as part of your income here (you still have a mortgage to service). So don't consider becoming a landlady solely to meet LTI bands.

You've got almost 100k equity in your current home. And if you will have 60k in savings next year, I'm sure banks will be interested in talking to you when the time comes.