Getting a mortgage for 2nd property

S

Stargazer

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Hi everyone. Hoping to seek your advice regarding purchasing a second property.

I currently have a house with approximate value of €400k- €100k outstanding mortgage remaining, with 18 years remaining on mortgage

Living away from home for work reasons so I am renting out my house, rental income is roughly 30k per year. I'm renting a property where I work for 9k a year.

What would the likelihood be of getting a second mortgage as a single applicant-no dependants, to purchase another property close to my job. And if so how much could I potentially borrow? I would likely need a mortgage of 375-400k to buy a decent house in my current location. I would ideally like to hold onto my current property for other reasons. Is there anything else I should be considering?

Income: Salary 50k, rental income 30k

Savings 60k

Expenses: Mortgage: 6k, rent 9k.

Any advice would be very welcomed..many thanks in advance.
 
Hello Stargazer.

Let’s look at the options…

Under the Central Bank rules, you can borrow up to 3.5 times your income to buy a primary residence, with exemptions potentially available to push that up towards 4.5 times. Exemptions aren’t guaranteed. But let’s say you got one. That’s 4.5 times €50k, so €225k, which isn’t much good.

On the rental, the rules allow you to top that up to 70%, so €280k, which could generate another €180k for the ‘pot’.

So on the surface, €180k plus €225k and your €60k savings would cover you.

But €9,000 rental income on a €400k property is a terrible yield. The right approach might be to sell the rental and buy for cash, making you almost mortgage free.

€50k is also a salary level where affordability issues might kick in.
 
Hi Gordon, thanks for the reply. So my understanding of this is I can put the equity from my current property towards a second mortgage? I'm assuming this would mean using it as collateral? Im not sure if banks still allow this in Ireland?

Just to clarify the rental income from my property is 30k, and I am paying rent at different property for 9k a year.
 
Stargazer said:
Hi Gordon, thanks for the reply. So my understanding of this is I can put the equity from my current property towards a second mortgage? I'm assuming this would mean using it as collateral? Im not sure if banks still allow this in Ireland?

Just to clarify the rental income from my property is 30k, and I am paying rent at different property for 9k a year.
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Okay, that’s a lot better and mea culpa for missing that.

Yes, you can top-up the mortgage to 70% and then use the money for something else.

I just worry about that level of debt on a €50k salary.
 
Sounds like you need to look at that first. Are you covered in other areas such as insurance and registering the tenancy?
 
Gordon Gekko said:
Okay, that’s a lot better and mea culpa for missing that.

Yes, you can top-up the mortgage to 70% and then use the money for something else.

I just worry about that level of debt on a €50k salary.
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Thanks for clarifying. I guess I would be relying on the 30k rental income to help with repayments
time to plan said:
Sounds like you need to look at that first. Are you covered in other areas such as insurance and registering the tenancy?
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Yes I am
 
The rental yield is currently >10%. Does it not make sense to hold onto the property if possible, and eventually have towards a pension?
 
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