Mortgage with extra to repay loans - Can this still be got?

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jimmyd

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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.
 
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Brendan
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So they will have 40k credit union debt + 40k parent debt and want to get a mortgage for 80k more than the value of the property they are buying?

If they get a mortgage, can you let us know the name of their bank, as there will be a que of askaboutmoneyers waiting outside it the following morning!

They would be better off to work hard at paying off their credit union debt first, then get some savings together before applying for a mortgage.

Banks are giving out very few mortgages these days, especially for apartments. They will do well to find a bank to give them 90% of the value of the apartment, not to mind 125%
 
jimmyd said:
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.
Click to expand...

Mortgages like this don't really exist anymore. The most they will get is 92% of the purchase price of the property.
 
That they even think this is a possibility shows to me how little people have learned from the current economic mess we are in. This really beggars belief.
 
jimmyd said:
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.
Click to expand...
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?

The deposit comes off the apt price leaving a mortgage of 260K required to complete the purchase + 40K to repay parents + 40K to roll up debts = 340K.
 
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.
 
Thanks for the replys - I was thinking along the same lines myself as I had heard 100% mortgages were now stopped and rightly so.
 
fizzelina said:
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.
Click to expand...

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.
 
Mad Bad Babs said:
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.
Click to expand...

So goes to show I guess that there is no standard anymore and you really have to approach the banks to find out what you could get.
 
I agree fizzelina..every case seems to be looked at differently depending on a number of circumstances: whether applicants are working in public/private sector, other loans, record of savings ect.
I don't think there would be any harm in jimmyd's friends sitting down with their bank and explaining their circumstances, be upfront and honest about their circumstances and see what they come back with. Maybe they will help them put a plan together to clear off debts and get savings together to make their mortgage application stronger.
 
They should also ask their landlord to review their rent. If they have been paying the same €1000 for the past few years, chances are they should only be paying €700 these days! That would be an extra 300 a month to pay off their other debts.
 
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