I don’t think a borrowed deposit is going to cut it going forward. The banks will see straight through it. You’ll need proof that you personally have saved the money over a period of time and that the level of savings would be enough to support the repayments on your mortgage where they to approve you. Ulster Bank have a sizeable rump of quarantined Irish mortgage debt, so I can’t see them lending here in the medium term. Even banks who are lending are not going to look at anything less than 10% deposit until the market bottoms out because your equity is going to be wiped out straight away. Personally if I were a banker in the current environment and I thought there were a risk that prices were set to fall another 50% then I would not accept less than a 50% deposit. It would be reckless to do otherwise.
Are you dreaming? Maybe not, maybe you won’t need EUR 350,000 in two years time. Maybe the risk of further price falls will have diminished and the banks will be confident enough to relax their lending policies.
The question you should be asking is how much do you need to be earning to **afford **a 350k mortgage. The banks will happily and cheerfully sign you up for more than you can afford if it suits their purposes.
Assuming you mean a 350k mortgage with your deposit on top of that then the repayments would be €1,523 a month over 30 years at 3.3% which is BOI’s 5 year fixed rate. Needless to say you’ll need quite a high income to support repayments like that.
It’s quite likely that interest rates will increase this year and it’s also quite likely the banks will increase their margins as TSB have done. In a couple of years time interest rates like 2 or 3 percent will seem like some sort of impossible dream. The expected ECB average is about 4.5% with the banks adding a couple of percent on top of that. In that scenario your repayments would increase to €2,169 per month
You can also count on your cost of home ownership increasing. Property taxes and water rates both seem quite likely.
As already mentioned by DSE3Br borrowed deposits are a terrible idea. If you can’t save the deposit you can’t afford the house. You should be looking to save as much of a deposit as possible to avoid paying interest on borrowed money.
when i bought my house (UK so probably different rules ) i was only allowed 3.5 times my salary as a rule. Once I applied they then took all outgoings, I had just bought a car 6 months prior so that was taken off my gross and then 3.5 times that. At the time I thought it was unfair but looking back it was a good rule, it meant I could afford my house, may not of been as big as i would of liked , but was not spending beyond my means.
Since then I have seen my take home pay rise and mortgage is not an issue.
I was shocked when I went back home and met some friends and the figures that were being talked about as a mortgage shocked me. God knows how they were allowed to take out such big mortgages. I know they needed to as prices were high, but I blame the regulator and the banks for this ungodly mess in part. Of course people have free choice to take out a massive loan.
In years to come future generations will look back and ask why were the bankers allowed to do this, and not only that they got massive salaries, bigger than European counterparts who ran bigger banks. The developers, bankers and government have ruined it for years to come
You will need an income of between 70k and 100k depending on your personal circumstances i.e. are you married does your spouse work do you have children etc?
Your Deposit min should be around 28k but 35k (10%) would give you more options re banks. Also you need to factor in legal fees of a couple of grand min and you need to show proof of savings as in the history of the savings building up not a 30K appearance on your current account overnight. Also having no debt is not necessarily a good thing as servicing debt is a plus point for a bank as it shows you honour your bills.
Some people recieve gifts of a deposit from parents but have to still show ability to service debt and not all banks like it in the current climate.
Oh by the way a lot of credit unions subscribe to the ICB which the bank will run a check on you and as a result if you borrow the deposit from the CU it may show on the banks check and you are fubarred, lastly if you cant save the deposit for a 350k house how can you pay for it?
Are we sure that banks are lending 3x-5x household income? Or is it the case that the income multiple in itself is secondary and merely a “back-calculation” from the repayments themselves: so a €100k income = €4.9k pm net*, meaning monthly payments of €1.5k - €2.5k are affordable and hence the income multiple = 3x €100k? Is that the way it’s working now?
350K @ 6.5% over 30 years = monthly repayments of €2,214, so you’d need a net monthly income of around €5,500 for that to be serviceable under the main bank’s guidelines of 40%. That’s an annual gross of around €110K I think.
Of course, you’d be nuts to spend 40% of your net income every month to service a 30-year loan (in my opinioin)
Also bear in mind that creche for baby will cost about 1K per month (after tax), so a big chunk out of her 25K salary (and double it if number 2 comes within 3 years). Either way kid(s) take a huge slice off your (current) disposable income. You need to factor this into your affordability calculation
(best of luck with the new arrival!)