second home - which banks accept rental income on investment

L

lougre

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Hi,

I wish to buy a second home, have an investment abroad and rented out the past 5 years - net income is about E500 per year. The loan is interest only (as it is an investment which is common there)
BOI have said it makes my application for a house here unaffordable, otherwise I fit the affordability criteria no problem.
My logic is they either wont accept the rental income or the fact its an interest only loan (and are working out the repayments including capital which would mean a slight loss per year)
Which banks accept rental income against repayments on investment property?
Would the banks work out the repayments ONLY as an interest and capital loan instead of an interest only investment loan?
 
but how long is it 'interest only'? the day will come when you will have to pay principal and interest. That is what they are factoring in.
 
The fact that the bank didn't fully explain why they wouldn't approve your application is disappointing at best. Depending on where (country and specific location) the rental property is, many banks will not take any rental income into account. Regarding the interest-only aspect, the banks here will only calculate existing mortgages on a capital plus interest basis, regardless of whether the contract is for interest-only for the full term, and irrespective of the value of the property. They will also stress the mortgage on a higher rate, which further adds to the monthly deficit in their calculations. This varies greatly between banks - some add 2% to your actual rate for the stress test, and others add 2% to their own investment variable rate, which could produce an assessment rate of more than 7% (I think BoI's assessment rate could be 7.65% - this kills the application). Depending on the location, the term remaining and the current interest rate, you could get a very different response from another lender.

Best Regards,
Dave Curry, Irish Mortgage Corporation
 
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