Mortgage options on a 1 bed with (probable) 20%

L

lff12

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Hello all
My landlady has expressed an interest in selling the apartment I rent to me and I am waiting for it to be valued. Its in Swords village. The ultimate decision will be if the valuation comes up with a realistic value I can afford but the figure I would ideally buy at would give me exactly 20% deposit, with a few thousand to spare to cover the legal costs, stamp duty and other mortgage related costs. I've noticed on many brokers websites that many lenders are extremely averse to 1 bed units. I bank with PTSB (having previously moved there from Danske).
So my question is - should I expect a brick wall when it comes to borrowing for such a unit from mainstream lenders? How hard will it be? (The mortgage I'd be targeting is 2.1x my annual income over 20 years).
Part of the logic of this is that I've lived there 9 years, its a lovely little development, and it does meet my needs. My rent has been very cheap because of the RPZ and various other rent capping schemes so the reason I didn't move until now was that buying even the cheaper local 2 beds would have cost perhaps 450 a month more than my current rent. But I'd love to stay where I am if I could, and buying the place would give me security of tenure I don't currently have.
 
lff12 said:
I've noticed on many brokers websites
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The best approach is to contact a mortgage broker.

They would know which lender was most likely to oblige.

Have any of the one beds been sold recently? You could ask them which lender they used.

If you have 20% and if you are borrowing just over twice your income, it should be doable.

Brendan
 
Brendan Burgess said:
The best approach is to contact a mortgage broker.

They would know which lender was most likely to oblige.

Have any of the one beds been sold recently? You could ask them which lender they used.

If you have 20% and if you are borrowing just over twice your income, it should be doable.

Brendan
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There are just a small few 1 beds, and they rarely go on the market (its a tiny development of just 24 homes in a converted period house with 14 of them newer builds, including the one I live in. The last sale of a 1 bed has not been in many years. I'm just curious as I bank with PTSB and saw from reading here that they don't lend for 1 bed apartments full stop. I have an appointment with them next week but would be wasting my time if they have a no 1 bed apartments policy. It would be better spent talking to a broker in that case.
 
You should factor in the impact of the reduced rent on any potential buyer - a "landlord" buying wouldn't be able to increase the rent above the 4% threshold and this would obviously impact the price they would pay for the apartment.
 
dereko1969 said:
buying wouldn't be able to increase the rent above the 4% threshold and this would obviously impact the price they would pay for the apartment.
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Correct, but if you push this line too hard the offer might be off the table.

Ultimately it has to be a price both within your ability to pay and their willingness to accept.

Valuations are just a tool in getting you both there.
 
Yes, it's definitely a balancing act, could annoy the landlord who seems to have been very decent to you.
 
dereko1969 said:
Yes, it's definitely a balancing act, could annoy the landlord who seems to have been very decent to you.
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Landlord actually inherited the property and immediate put up the rent, it had been owned by a family member who was too busy dying to be concerned about their rental properties! So lucky for myself and the tenant in another property they own in same development. But yes - they - according to the law anyway - cannot let to another tenant at more than 4% more than my current rent (which is already about 65% of local market rent), but of course, same goes - I understand - to a subsequent investment purchaser, who would be constrained by the same RPZ capping.
But of course that really only kicks in if the place is put on the market and they are reported for it - odds are prospective tenants wouldn't know the previous rent, and have no way to reliably find out. So technically, I'd say there's nothing to stop a new investor from chancing their arm. The only way around it would be to sit on the property until its considered a new tenancy, and start again. The current rent is low enough to make this feasible.
But that said, landlord very decent - our families actually go back a long way, so very warm feelings abound.
 
RedOnion said:
Hi, what's the value of the apartment?
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I'd put it at 200k based on size and needs about 10-15k of work (mould in bathroom needs treatment, and then some modernising prob 6-7k for that, fixes to plumbing and removal of a fixed gas fire that never worked). 1 beds round here go from anything from 180-230k. They are slow to sell as clearly there is very little market for owner occupiers (why would you save 40k to buy a 1 bed when you can buy a 2 bed locally for 20-50k extra but only need a 22-25k deposit?) Its not an investor hotspot - literally everything I've previously looked at (2 bed apartments) was investors fleeing the local market.
 
Leo said:
Note that the 4% limit is per annum and since the last rent review. The RTB calculator will confirm the max allowed.
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You are correct, applying the RTB formula would put it closer to 75% of the market rent for the area. So it probably would be more attractive a sale to investors after 2 more rent increase cycles, assuming that the market rents stay level.
 
Dilosk would be your best option if you are looking to buy a one one bed.

Finance Ireland most likely won't do it given it's outside the canals.

I'm pretty sure KBC was lending one beds - subject to location - up until recently but given the recent announcement, that may no longer be the case.

I hope this helps!


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Well spoke to PTSB and seems the location is actually covered not just for 1 beds in general but for 90%. Obviously I'm not doing that. Seems generally they want 25% on one beds otherwise and a very standard application (i.e. no exceptions). So no issues at all. Only thing is that their interest rates are a bit high, so will probably talk to a broker. Thanks @Fahrenheit for the tip on Dilosk.

So moral of story is that the LTV for apartments (or whether they will lend for them at all) depends entirely on location. They will accept 10% on certain Dublin locations and not others. Either way I already had 20% of the price I was wiling to pay (and can afford to spend more on a bigger property also, so able to put this accross.)
 
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Just to update that my offer was accepted (seller wanted 10k higher than I ideally was willing to pay but I could afford to go 5k above which she accepted). Had mortgage approval in principle last week, valuation done and now working through the rest. Thanks to everyone for all your help.

So - it turns out PTSB DO loan for 1 bed apartments (but only in certain areas like Dublin city and high demand suburbs), and the minimum deposit in those cases is 10% for FTBs.
 
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