A friend of mine and his partner are living in Dublin and renting for the last 2 years, they both work in the city and earn about 70K between the 2 of them.
Their rent is €500 each per month and they both are repaying credit union loans of 20K each at €500 each per month. So a total of €2000 per month between them both goes on loans and there rent.
They currently have no savings but want to get a mortgage for an apartment in Dublin, the mortgage would be for between €250K to €300K depending on the apartment, they have said they would like to get extra to pay off their credit union loans.
To get the mortgage they intend in borrowing 40K off their parents for a deposit.
so they want to get a loan of €380K, €300K for the mortgage, 40K to repay the parents, 40K for the credit union loans.
They said looking up online that a €380K mortgage would cost them about €1300 per month so this would be €700 cheaper than they pay per month at the moment.
When they approach the banks for a mortgage how should they explain their need?
Should they explain why they need the extra payment?
a) To clear loans and do up the apartment
b) Or just said the extra is to do up the apartment?
Or should they clearly show the bank that they currently pay €2K per month and by doing this they can reduce their monthly bill to €1300.
Just completely ignoring the rest of the post to preserve my sanity, but on this point - surely the mortgage they require is 340K on apt costing 300K?To get the mortgage they intend in borrowing 40K off their parents for a deposit.
so they want to get a loan of €380K, €300K for the mortgage, 40K to repay the parents, 40K for the credit union loans.
They said looking up online that a €380K mortgage would cost them about €1300 per month so this would be €700 cheaper than they pay per month at the moment.
From my experience recently banks gave only 90% and 2.5 times the total earnings of the couple so in your friends' case earning total 70k they could borrow 175k which at 90% LTV would mean buying an apt worth 195k or so. That's just the personal experience I had with banks recently. Clearly your friends' are not tuned in to how things currently stand. You can't just borrow as much as you need from the bank.
Not true Re: 2.5 times the total earnings from my experience. We have combined salary of approx 70K gross and we can get between €250-€266K mortgage from 2 banks we have approached so far.
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