going for a mortgage..

zuroph

hi,
So my Father has been on my back to go for a mortgage for a while now, and since im paying a large amount in rent each month i finally gave in. He's arranged a meeting with the bank on friday, and im bricking it.

I've been turned down for a loan recently, so i know my credit rating isnt great. MBNA never set up a direct debit when i was sure it was set up, and, as I was away for the summer, I never knew the bill was sitting there unpaid. they told me by letter they've reported this to the credit bureau and im sure this is whats done it.

What do I have to declare to a bank, and what can i not mention? I have 2 credit cards, and have about 8k run up on them ( i know, stupid me) i also have a loan that im paying off at €260 a month, but its almost cleared.

I just know they're going to refuse me, and then my da is gonna go crazy at me for having my financial stuff in such a mess. The only good point for me is he has very good standing in the bank, and will probably sign as a guarantor.

What can I do to sort this out?! Im terrified.

jhegarty

How much have you saved , or are you going for a 100% mortgage ?

horgan_p

1st : clear the credit cards. most important. top up your loan if you must.than chop them up, it will hurt.

2nd : clear the loan you have outstanding.

3rd : after all this use the 260 euro you will have left over to setup a direct debit to a savings account.


This is basic stuff , but take your time and do it. it can make the difference between being insulted by a mortgage offer of 100k and something reasonable.

think of it as a project for 2008. sorry but there isnt any quick fixes for this one.
just bite down hard and accept the short term pain.

horgan_p

P.S. - dont try to hide anything , they WILL find it.then you will look like a liar as well as someone who cant handle their money. a tribe of people banks are notorious for turning down for mortgages.

zuroph

well the savings are null, that side is coming from my father , to be paid back. ( I know, I know)

Can A loan be topped up easier than get a new loan? cos at the moment, they turn me down.

stepbar

zuroph wrote: »

hi,
So my Father has been on my back to go for a mortgage for a while now, and since im paying a large amount in rent each month i finally gave in. He's arranged a meeting with the bank on friday, and im bricking it.

I've been turned down for a loan recently, so i know my credit rating isnt great. MBNA never set up a direct debit when i was sure it was set up, and, as I was away for the summer, I never knew the bill was sitting there unpaid. they told me by letter they've reported this to the credit bureau and im sure this is whats done it.

What do I have to declare to a bank, and what can i not mention? I have 2 credit cards, and have about 8k run up on them ( i know, stupid me) i also have a loan that im paying off at €260 a month, but its almost cleared.

I just know they're going to refuse me, and then my da is gonna go crazy at me for having my financial stuff in such a mess. The only good point for me is he has very good standing in the bank, and will probably sign as a guarantor.

What can I do to sort this out?! Im terrified.

I would get the credit cards sorted out before you even consider applying for a mortgage. Roll all your debt into one loan. At the moment (assuming you are making minimum repayments on both your cards), you are paying out 480 in repayments. You could probably get that down to 300eur p.m for 3 years or so.

Then in a few months go back to the bank and apply for the mortgage. You might want to work on MBNA and see if they will make an application to remove the black mark on your credit rating. Actually I would look into this immediatly and ask for advise from the Financial Regulator.

Finally, its your money and your da should not be sticking his nose in. You're a big boy now. I'm sure he'd appreciate you telling him how to handle his finances. You need to tell him that you don't think now is the time to be applying for a mortgage and be straight about the debt.

horgan_p

no offence but imho a mortgage is the last thing you need.
some sound financial advice to cope with what you have would be far better in the long run

zuroph

but if i've been refused for loans, where can i go to roll this together?! I've had this idea already, and really want to clear them, I've even tried to get halifax card to even get the 0% for a few months to take the pressure off so i can start clearing. but no reply. And I'm quite wary of all these "finance" companies setting up for people with bad credit. and I'd only get refused by them cos I dont have something to insure it on.

zuroph

i guess, but with me paying €750 a month on rent, id sooner have it going into something I can lay claim to.

broker2008

You gotta pay the credit cards off before you go to the bank.

zuroph

how??

stepbar

Go back to your bank and get someone to put up a better application!!! Seriously, sometimes you really need to spell it out. At the moment you are paying 480 odda month. Tell them that it's unrealistic. Involve your da / tell them you want to get a mortgage in 6 months time and that you'll give them the business. You've been a good customer yada yada.

Sometimes you have to spell it out.

zuroph

ok, thanks, i'll call to my bank tomorrow. who do I ask to talk to or do I just go to customer service counter?

stepbar

How "good" of a customer is your da? Is he Business managed?

zuroph

He's a very good customer. He recently moved some private funds from the bank and they've written to him asking him what they need to do to get his business back.

stepbar

There you go. There lies the answer. Arrange to meet his manager asap and put forward your / his proposal - "Might" move back funds if you give son loan. "Might" give mortgage business too. Lot of business there

Zaph

The other thing to bear in mind is that house prices are falling. Waiting 6 months or a year could mean you need a substantially lower mortgage.

zuroph

well this is the first tester, I plan to buy in say 3 months or so. and I've already seen some incredibly well priced houses.

zuroph

called to the bank today to see what can be done, they're putting through an application for a loan extension for me tomorrow. she says it might not go through because a payment was missed in April of last year. I remember this payment, and had talked to someone on the phone and had was told it was cleared. I never heard any more on this.

dotsman

no offence mate, but dad's connections or not, no bank will give you a mortgage for some time. Here is what a lender will determine from the 4 points you have made regarding your current finances.

ICB Black Mark - as long as it is only 1, it's not the end of the world, but still something very worrying for a lender given today's Credit Crunch.
8K CC Bill - this just makes a lender laugh. Credit card bills should be repaid in full every month. From time to time, perhaps the next month - but 8K? unless this is what you earn in a month after tax, it just screams of financial irresponsibility and a lifestyle far beyond what you can actually afford.
Loan Repayment - Lowers your DSR (Debt Service Ratio). Depending on the bank and their current policy, they might say 40% DSR - that means that, at most, 40% of your income can be used to service all repayments (mortgage/loan/cc).
No savings - No padding for unforeseen events ie unemployment/sickness/personal issues (and they do happen!). No padding for possible negative equity. No financial planning

Overall, it is clear that you have zero financial control and in all likelihood, you would run into serious problems with a mortgage within a few months/years. Lender's response - hell no!

Now, don't get all depressed, turning all this around could be the silver lining.

Firstly, clear those cards and cut them up. You need to accept that you cannot control your urges to spend, and they will only get you into trouble. If you can't get a loan from a bank, try a credit union or your dad. This is essential! Regardless of going for a mortgage, you should not have these kind of credit card debts. Wherever you get the funds to clear the CC bills, put in place a structured repayment plan over the next 6 months - year, depending on your income to repay this loan!
From the sounds of things, you should have the existing loan cleared by the time you clear this new loan. Now, pour all the money you were using to clear these debts into a savings plan.

If you manage to turn this around, and within a year, have all debts cleared and a decent savings balance, it will show any lender that you have the ability to control your finances (P.S. a lump sum from daddy might get you out of debt, but it will only go to show that you were incapable of doing it yourself and thus have no financial control)

Lastly see my similar post to BlueIsland about doing a budget for yourself.

Christ, I'm beginning to feel like Eddie Hobbs:eek:

zuroph

thanks for that, yeah, I've pretty much worked out that if I mve home and get to work on this, I can have it all cleared in 10-12 months. So i bit the bullet and rang my dad and told him everything. He seemed remarkably calm about it, i guess he knew all along it was like this. So I've to meet him tomorrow for a coffee, then we're going to the bank together, nd see what can be done. feeling a bit better about it now, today was the most depressed i've been in a long time, but i know it can be turned around and have heard much worse horror stories from friends. a 1 year turn around on this isnt too long a time at all, so hopefully it can be sorted. I'm also going to see what else I can do to get some extra money coming in.

I'll see what happens tomorrow anyway. Thanks for all the advice.

stepbar

dotsman wrote: »

no offence mate, but dad's connections or not, no bank will give you a mortgage for some time. Here is what a lender will determine from the 4 points you have made regarding your current finances.

......

Christ, I'm beginning to feel like Eddie Hobbs:eek:

Do you work for a Financial Institution?

dotsman

stepbar wrote: »

Do you work for a Financial Institution?

Yes.

From a business background and qualified Lender (IBI), but currently working in IT for one of the main banks. I've also spent the last year dealing with banks as a FTB trying to buy a property way above my means by standard lending policies. Moving in next week!

Clytus

OP...its basically all about affordability. The banks just wanna make money!!

As far as your credit cards go..I think its bit of a misnomer to think that banks are happy with you paying off your balance every month....think about it...why would they. While your paying off the min amount every month (2.5-5%)and with rates of anything up to 1.75% per month theyre making a fortune off you. in some cases Iv heard of banks rejecting limit increases based on the applicants history of paying the balance every month.

As far as i can remember banks would like to see a mortgage repayment number somewherein the region of 35-40% of your net monthly income LESS your outstanding financial commitments.

As far as your credit rating is concerned,The ICB monitors your payment patterns...so unless youve had a judgement served against you,failed to pay a loan back,missed alot of payments,or you settled for less than you owed,you should be more or less ok.

As far as your Fathers influence goes with the Bank,Im not sure how much difference it would make. I think we are back to the days of "Responsible Lending" and with the current credit problems in the banking sector,F.Is are gonna be looking a little harder at clients in order to reduce thier exposure to bad debts.

As far as the "non-standard mortgages" go...Id try and steer well clear. The likes of GE and Start dont HAVE to follow the Regulators rules on these loans....so lets say you have a mortgage with GE while the rest of us take a .25% hit every time the ECB lifts rates....these guys CAN raise rates by whatever they like. Your loan is bundled together with a heap of others and then sold...probably to a Wall Street Trader...who then chops the whole lot up and sells them on again as bonds....horrible business!!

anyway...as others have said....clear the cards,get some savings under your belt( which by the way your gonna need big time Deposit,Stamp Duty,Furniture,Surveyors,Legal,Land registry).

By the way OP...you sound like your only considering this based on your fathers opinion...are you sure its what YOU want?

I would say TBH its a buyers market now...so get your skates on.
Best of luck.

zuroph

thanks for that. Ya, I'm agreeing with him that its probably time to start stressing about it, and its the kick up the hole i needed! I'm gona get it sorted, thats this years resolution!

stepbar

Clytus wrote: »

As far as your Fathers influence goes with the Bank,Im not sure how much difference it would make. I think we are back to the days of "Responsible Lending" and with the current credit problems in the banking sector,F.Is are gonna be looking a little harder at clients in order to reduce thier exposure to bad debts.

Believe me, it does help.