Will I qualify for a mortgage?

MaryMcK

Registered User
I’d be very grateful if someone could look over the following and advise if I have any hope of getting a second mortgage? I cannot live in my current mortgaged house due to location

Age: 44
Marital status: single/separated
Employment: Full time, pensionable, HSE since October 2018 (newly qualified midwife)
Dependant: 1 child, 6 years

Income
*Salary: €29000 + €2000 location allowance + overtime/unsocial hours approx €4000 - approx €2600 per month with increased tax credit for resident parent
Salary will increase by annual increments

*If the new pay agreement goes through (which I strongly suspect it will), current salary will increase to €34000 (inc location allowance) and rise again in February 2020 to €38000 (including location allowance). Due to nature of my job, Overtime/unsociable payment premiums are expected/unavoidable and will be paid at an average of 15% of basic salary per year.

Children’s allowance: €140

I own a property which is rented. Mortgage is 500 per month, received rent is 600 rented through HAP. I have 20 Years left on mortgage and approx €40k equity.

Outgoings
Due to my ambition of buying a home, I’m still living like a student, ie frugally!

Rent €550 Per month

Bills: €220 per month

Diesel: €120 per month

Food/clothing/social etc: €250 per month

No debts

Current savings: €15000


I currently save €600 Per month.
I intend to save €1000 per month from this month onwards.

So, have I any hope of getting a mortgage?! Age, salary etc I feel are against me.

I live in a cheaper part of the country so would hope to buy a small 3 bed for approx €160,000 at today’s prices. This prices are rising however...

Many thanks for your time
 

RedOnion

Frequent Poster
Hi,

Do you receive any maintenance, or are you covering all the costs of raising your child?

The current mortgage will count against you.

Would you consider selling it, take the 40k equity together with your savings, and take on an affordable mortgage?

You'd be assessed as having c. 800 per month available to fund a mortgage, over 22 years would cover c 140k mortgage (after pay rise).

You'll need to work out your guaranteed and bonus take home pay to get an exact answer.
 

MaryMcK

Registered User
Thank you for your post, RedOnion. No, I do not receive maintenance. We essentially share care due to my working hours.

I have considered selling, but I feel there is little benefit at present and would rather wait until it has earned more equity. It presently pays for itself, although I accept that is not how the banks see it...

In your experience, do you think the banks would allow me to proceed without selling my rented property?

I think I might approach a broker to see what/where I need to get to in the next year. I need this time to get 20% deposit together. Failing that I need to find a rich second husband!
 

MaryMcK

Registered User
Also, can anyone tell me if location allowance and premium pay hours are taken into account when calculating means?
 

RedOnion

Frequent Poster
would rather wait until it has earned more equity
The problem is if you have to wait, the price of the house you want to buy will rise / fall similar to this house.

Location allowance is generally allowed 100%, and overtime /shift allowed at 50%. But they can be treated case by case in some circumstances.
 

NoRegretsCoyote

Frequent Poster
Is your mortgage on a tracker rate?

A few things to bear in mind:
  • You are on an incremental scale. In five years you will almost certainly paid more which will boost what you can borrow, but in five years the mortgage term available to you will be much lower, reducing what you can borrow. At 3.0% interest rate 3.5*(€35k) is €122.5k which will see repayments of €675 a month over 20 years. Assume you are on €45k in five years: 3.5*€45k is €157.5k which will see repayments of €845 a month over 15 years. Who knows what interest rates and house prices will be like then.
  • You are admirable if you can feed and clothe yourself and half a child on €250pcm, but I am not sure how sustainable it is.
  • Do you really need a three-bedroom house?
 

MaryMcK

Registered User
Thank you for your reply. My current mortgage is fixed rate, 4.3% and bank is aware it is a let property.

After taking @RedOnion advice and mulling it over in the wee small hours, I’m seriously considering selling my current property and putting as much capital into a new house as possible.

As you said, living on a budget is fine for a finite amount of time not sustainable long term. As a means to an end is how I view it! The ends translates as a secure roof over my and my daughter’s heads and I’d rather do that now than wait another x amount of years.

Assuming I clear €30k after CGT, EA and solicitors fees and assuming I’ll have another €30k saved by next year, I would only require €100/120k mortgage...

I now need to find out if there is an option to sell house with sitting tenants (guilt talk). Also outside work is needed to the deck in garden, which again I need advice as to whether this is financially worthwhile.

Lots to think about. Thanks for your input, it’s very appreciated
 

NoRegretsCoyote

Frequent Poster
@MaryMcK If you had been on a tracker it might have been worth trying to hold on to it, or 'transfer' the tracker +1%, which some banks allow.

As it stands you are paying BTL rates and soon to be taxed at the higher rate on the rental income. This just isn't worth it given all the pitfalls of being a landlord.

Sell the house, buy another - and best of luck!
 

RedOnion

Frequent Poster
I now need to find out if there is an option to sell house with sitting tenants (guilt talk). Also outside work is needed to the deck in garden, which again I need advice as to whether this is financially worthwhile.
Talk to a few estate agents initially to get a feel for it, and see what their advice is. Depending on the rental income you might get an investor that's happy to buy with tenants in place but you're limiting yourself immediately.

Just on the shift allowance, a friend suggested that PTSB will consider shift allowance as income where it's regular.
 

MaryMcK

Registered User
You have all been very informative so thanks a million for taking time to reply to me!

I’ve spoken to an estate agent this morning. He’s going to do a drive by tomorrow and I’ve sent pictures of interior. As you basically said @RedOnion, sitting tenants may be a downside, even for investors, as the rent has already been negotiated. Luckily current tenants have only been in situ since October so as per PRTB, eviction should be easy enough. I still feel bad about it though...

Interesting that interest rates are rising @NoRegretsCoyote. I think that’s the final nail in the coffin for me. I’ve alwa been a landlord out of circumstance only and it would be a relief to see the back of it to be honest.

Also good to know about PTSB @RedOnion, I’ll certainly keep that in mind.
 
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