Whats a good ball park figure to be at for going for a mortgage , how far off am I at the moment

[gonick]

My own situation:
Area : Near Waterford city ( within 20 mins of the city) currently renting a room .
Age : 26
Current income: 45k (not including overtime)
Savings : 13k , about 1k current value in investments
Debt: car loan , 14k paying off as a priority.
Overtime: currently being used to pay off car quicker
Rate of savings : currently at 400 a month due to car loan taking more of the money.

Partners situation:
Current income : 35k not including overtime
Age:27
Savings: 12k plus 3 k tied up in bonds
Debt: none
Overtime: frequent
Rate of savings: 600
- living at home with parents due to a job move last year .

I know the debt will need to be cleared first . Ideally id like to be able to get a mortgage on one income( dreaming) since its better in the case of the worst case . I just really dont want to be renting when im 30 given how difficult it’s becoming to find places and not fall into a rent trap

 

[marcelino99conrad]

@gonick I’d get rid of the debt asap. Save another few grand on top of your 13k and use it to payoff the 14k completely. Keep the remainder as a basic emergency fund. Top that up, then start saving for the deposit. Otherwise it’s a bit of a false economy as you’re literally paying interest just to hang on to your savings. It’s hard but I’d try not be emotionally attached to those savings.

Don’t see a problem in getting a mortgage on one salary if you can get what you want in your area for 180k and have the deposit/track record of saving.

By the sounds of it you’re not far off at all just have to tidy things up a bit and save more.

 

[gonick]

@marcelino99conrad Thats very fair point , ill save a bit more so it doesn’t feel like im cleaning out the account . But i do get the attachment which will be difficult to let go of

 

[christopherus]

@gonick Would you consider selling your car and downgrading it? With the second hand market you might get more for your car than you paid for it !

 

[gonick]

@christopherus I would sell the car only it is one of the few possessions i value . Its something I planned on owning for about 3 years before pulling the trigger and buying it and plan on owning it 10 years + . Its the daily for the time to come. Its one of the few things i wouldnt sell , id give up drink first

 

[marcelino99conrad]

@christopherus Yeah I was thinking this is an option too. This way OP can hang on to savings and possibly even increase them with the difference.

 

[marcelino99conrad]

@gonick Yeah exactly. It’s not easy but it’ll be a huge weight of your shoulders. And then moving forward you’ll have those monthly car payments to save for yourself instead. If you save til you have around 6 months living expenses then you can go full steam on the house deposit. I sounds like you’re in a good position to save. Good luck!

 

[gonick]

@marcelino99conrad Thank you , I will get to stage one where i am at the choice of paying it off entirely and work from there . Thank you. Mostly good position due to renting a fairly crappy room in a house for 360 a month . Would it be better to hold out there rather than take a hit of 600+ rent

 

[marcelino99conrad]

@gonick It’s hard to say I think it’s largely a personal decision. It sounds like it would still be affordable. If it means you could rent with your partner and have your own space then it’s probably worthwhile. But only ye can work that out together.

 

[gonick]

@marcelino99conrad Ideally we are looking for a place just scarcity at the moment

 

[singdong]

@gonick Definitely went that overdraft and car loan gone asap. Don’t bother applying with these active. Then start building your savings (deposit) back up again.

 

[gonick]

@singdong No overdraft , but will have the car loan gone asap . Ideally putting extra 200 over payment starting in the new year. I figured it will need to be gone to avoid hassle .

 

[singdong]

@gonick Ah my apologies, misread overtime for overdraft lol. Yep good call! I’d say once you have a bit more than 14k in savings like the other replier said, clear the loan fully.

If you really wanted to you could see what equity you have in the car and consider selling and buying a cheap runaround till you’ve got a home sorted, then can upgrade when you see fit. That’s what I did personally

 

[gonick]

@singdong I would sell the car only it is one of the few possessions i value . Its something I planned on owning for about 3 years before pulling the trigger and buying it and plan on owning it 10 years + . Its the daily for the time to come

 

[riverwolf1975]

@gonick You have 25k between you. Use your savings to clear the debt.

 

[sarahlol]

@riverwolf1975 If you are getting money from your partner (to pay them back soon after) keep it to 3000 or less to avoid tax.

 

[faithoverfear]

@sarahlol Not true. Technically the value of a loan itself isn’t taxable, it’s the market value of the interest that would have been on the loan is taxable. Ie. Loan of 100k at a market interest rate of 3% would not be subject to CAT as the “interest” would be covered by the small gift exemption

 

[gonick]

@faithoverfear I think at the moment , we are still split finances so ill see if i can clear it on my own before getting gifted .

 

[sarahlol]

@faithoverfear Thanks for reply. I know very little about tax so always happy to learn something new.

 

[sola1517]

@gonick Get rid of the car loan asap as you’re losing money there with the interest. And with the way the economy is at the moment, it’s important to have savings, just in case something was to happen out of the blue eg layoffs.
I know it may be tough but take some of your savings and put it towards the loan.
Keep 5k in savings and put 8k towards the car loan.
That will bring the car loan down to 6k.
Continue to throw your overtime towards paying off the car loan.
Then your savings that’s €400 per month, split it in half. So half is savings and half goes towards the car too. You’ll quicker pay off the car loan and still be able to see your savings grow (Happy medium)

You’ll look more attractive to a bank without the loan but some banks will still give a mortgage to people who have them. Again, economy is playing a bigger part in banks decisions these days and what you’ve told us from your comment. I’d hold off on applying for a mortgage until your finances are healthier