How much do we need to be earning to get a 350K mortgage?


#1

Credit rate is good
0 loans
15K saved.

We can borrow from the credit union to get the rest of our “deposit”
How much of a deposit do we need to have for a 350 mortgage?

Im self employed with three years books - will the bank ever look at us?
Im with the Ulster bank 10 years and have a good relationship with them.

I would like to buy next year and just want to know if Im dreaming. The folks are saying to get ready in the next two years and I want a sanity check.


#2

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.


#3

Assuming that’s a standard 92% mortgage, it will buy you a 380.5k house and you will need a deposit of 30.5k.


#4

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.


#5

when i bought my house (UK so probably different rules :neutral_face: ) 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

rant over!!


#6

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?


#7

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?


#8

I’m sure I was told recently by someone that it’s 40% of net monthly take home after other debts are serviced, stress tested to 6.5%.

(As in, repayments at 6.5% can’t exceed 40% of your in the pocket earnings in a month)

Actually looking a BoI’s website mortgage calculator, it appears as straightforward as:

Single FTB - 5x Gross Salary
Single Trader Upper - 4.25x Gross Salary

Married 1 Income FTB - 4.5x Gross Salary
Married 2 Income FTB - 4.5x 1st + 4.5x 2nd Gross Salaries

Married 1 Income Trader Upper - 4x Gross Salary
Married 2 Income Trader Upper - 4.25x 1st + 4.25x 2nd Gross Salaries

bankofireland.ie/personal/bo … wmuch.html


#9

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)


#10

Thanks for all the replies everyone.

Are we dreaming? - I hope not, would love to own a home we can afford. We dont drink or smoke and have a frugal life style.

Have paid off a few small loans.

Im not going to be a slave to a bank and if it means renting forever so be it. But I hope not.

We our first baby on the way in two days :slight_smile:

Partner will take approx 9 months off and return to full employment.

Me wages after tax - self employed 30K
She wages 25 PA before tax
We wont be looking for a mortgage til she returns to work naturally.

Will we ever get one?
Deposit saved 16 K so far.


#11

You’re talking about a mortgage 12 times your primary income or more than 6 times your full joint incomes. That’s madness.

30+ years is a long time to pay off your mortgage. Consider that your baby will be 30 or more by the time you pay off this debt. A lot of things can happen in the time including more kids.

On your salary you really need to be thinking more along the lines of 150-200k maximum and ideally less than that.


#12

What if we took a 300K mortgage, what the maths like on that?


#13

There are plenty of mortgage payment calculators on the web e.g. itsyourmoney.ie/index.jsp?n=298&p=118

300k is still 10 times your salary and a 90% mortgage is still going to need over 30k just for a deposit.


#14

Ok will have a look at that calcualtor thanks, and start saving more.


#15

Well then if you don’t get the house you can console yourselves with a nice glass of wine and fag while picking out a nice 2 week holiday in the Maldives.


#16

Im 42 years old. What the max in years a bank will give me on a mortgage?


#17

We have no problem paying 1200 PM in rent.

300K over 25 years at 4.5 interest is 1600 approx.
We can manage that no problem.

Also is it not the case that 1600pm in 10 years time will be worth way less than that due to inflation?
So its just a matter of getting over the first few years?


#18

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!)


#19

This is nuts, 30k a year and a baby on way and 1200 a month is no bother, and neither would 1600 a month!

Your take home is about 2500 a month, 1200 gone straight away on rent! And you won’t mind paying 1600!! What the fuck!

900 a month disposable income a month for a family of 3!!!

And unless we get a bout of hyper inflation no 1600pm won’t be way less…infact we’re straing a prolonged spell of wage stagation, possibly deflation, in the face!

and another thing!!! 4.5 interest is by no means a matter of fact!!

850 at the most should be your outgoings on rent/mortgage.


#20

The new baby will be a spanner in the financial works but we will have loads of time for maths in the next few months