Given too big of a mortgage?

nesf

waffleman wrote: »

I'll agree on that however it doesnt say you cant obtain the maximum.

But come on this is subprime lendiing whatever way you look at it. So you get told by the bank to get lost but you have this nice scheme from Fianna Fail only for newly built homes to bail out developers backed up by guess who? that's right the taxpayer. Look at the list of "authorised brokers". Some heavily associated with hawking subprime loans in recent years e.g. IFG. If I was a betting man I'd say you'd get the maximum if you wanted it. I just hope people arnt that stupid.

It depends, if a young doctor takes out a mortgage a bank might well offer them a 7x multiple knowing that their salary will increase drastically over the coming years. Conversely someone who is towards the top end of their potential salary might see 4-5x. It's not just about how much someone is earning right now but how much they'll probably earn 5-10 years down the line.

Diarmuid

when the ECB starts jacking up the interest rates, lots of Irish people are going to be in a world of (self-inflicted) pain.

EDIT: for instance if the OP has a 30 year mortgage and if his rate hits 5% he will have €490/month left after paying his mortgage. Crazy and unsustainable

Dickerty

Diarmuid wrote: »

when the ECB starts jacking up the interest rates, lots of Irish people are going to be in a world of (self-inflicted) pain.

That is my fear too - a lot of people are surviving because their tracker mortgage has come down by 300 or 400, so any pay cut/levy can be absorbed. But in the next two years, at least have that gap will be closed...

dny123456

Diarmuid wrote: »

when the ECB starts jacking up the interest rates, lots of Irish people are going to be in a world of (self-inflicted) pain.

Unless the government change the bankruptcy laws.

Duckjob

Gurgle wrote: »

It never crossed your mind to first determine the appropiate size of mortgage for you to take?

You knew you had never earned more than €35k in a year, but you signed for this size of a loan. To put it bluntly - what in hell were you thinking?

Couldn't agree more.

Just because the banks decided to behave recklessly that didn't absolve people of the need to exercise some prudence and access their own situations adequately.

People who presented doctored wage/salary info to take out huge mortgages are largely to blame for much of the sorry mess we are in now IMO.

Diarmuid

dny123456 wrote: »

Unless the government change the bankruptcy laws.

Imagine the drop in house prices if jingle mail would get your out of your debt in Ireland :eek: (not that I'm saying that they should implement such a scheme)

akaredtop

Personal responsibility?

Max Power1

baaaa wrote: »

Yeah it's what I'm getting at,although bankruptcy would be nice at this stage.

Just send your mortgage to NAMA

:P

Diarmuid

Diarmuid wrote: »

when the ECB starts jacking up the interest rates, lots of Irish people are going to be in a world of (self-inflicted) pain.

Bit of a paradox that to be honest, ECB increase the rates and the mortgage owners are in self inflicted pain :rolleyes:

waffleman

nesf wrote: »

It depends, if a young doctor takes out a mortgage a bank might well offer them a 7x multiple knowing that their salary will increase drastically over the coming years. Conversely someone who is towards the top end of their potential salary might see 4-5x. It's not just about how much someone is earning right now but how much they'll probably earn 5-10 years down the line.

I agree they might well - they shouldnt but they might (in the current market anyway). Personally I'll stick inside 2.5x (which I'm paying at the moment) no matter what the future holds.

Anyway what annoys me more about the web site is it's so obviously geared towards keeping the whole gravy train on the rails that got us all into this mess. I suspect the government aren't seeing much uptake but it doesnt stop them trying everything they can to keep house prices grossly inflated.

Scofflaw

RoverJames wrote: »

Bit of a paradox that to be honest, ECB increase the rates and the mortgage owners are in self inflicted pain :rolleyes:

Not really - it's a bit like saying that on a winter's day the people who've gone out in shorts and t-shirts are suffering self-inflicted discomfort.

cordially,
Scofflaw

asdasd

Unless the government change the bankruptcy laws.

That ship has sailed. The taxpayer is paying for NAMA, so we cant allow the taxpayer to default. Because it would screw up NAMA for the taxpayer.

The above scenario applies to taxpayers in the middle to low income brackets only. Developers can default as private companies.

Nate--IRL--

Indeed, this is why nutty ideas like the 60-year and multi-generational mortgages are being muted in papers and even in the Seanad, to deal with people drowning in mortgage debt..

eg http://www.independent.ie/opinion/analysis/wheres-my-bailout-how-to-break-chains-of-negative-equity-1943913.html

Very Japanese.

Nate

nesf

asdasd wrote: »

That ship has sailed. The taxpayer is paying for NAMA, so we cant allow the taxpayer to default. Because it would screw up NAMA for the taxpayer.

The above scenario applies to taxpayers in the middle to low income brackets only. Developers can default as private companies.

NAMA doesn't really have much to do with residential mortgages. So people defaulting on them wouldn't really screw over NAMA that much. It'd screw over the banks hugely which we'd probably have to inject cash into to recapitalise so the tax payer is still being screwed over by mass defaults but it wouldn't be due to NAMA.

asdasd

Indeed, this is why nutty ideas like the 60-year and multi-generational mortgages are being muted in papers and even in the Seanad, to deal with people drowning in mortgage debt..

eg http://www.independent.ie/opinion/an...y-1943913.html

Very Japanese.

Marc Coleman is a joke. All of his arguments there would push house prices up ( and no benefit to FTB'ers there), and lock people in mortgage equity for years. The banks would benefit.

The nonsense about stamp duty is such claptrap. What drives housing prices including the cost of stamp duty, is credit and wages. If the real cost of a house during a boom is 330K including 20K stamp duty thats because enough people can afford to pay that to keep the price up (or think they can if they get a 40 year 100% mortgage at historically low interest rates).

If the stamp duty is removed they can still afford 330K and they have to , because they have to compete with others who can afford 330K. So the nomical price of the property increases immediately by the stamp duty rate.

This is trivial stuff, but economists are continously ideological rather than scientific.

Diarmuid

asdasd wrote: »

MThis is trivial stuff, but economists are continously ideological rather than scientific.

I'd say you'll find precious few economists agreeing with Coleman! The guys is clearly clueless regardless of qualification

asdasd

Economists need to get their sh*t together. If he is wrong, but is arguing from a position of authority ( a Masters in Economics) then some peer group of economists should reply to the independent and ridicule his arguments.

nesf

asdasd wrote: »

This is trivial stuff, but economists are continously ideological rather than scientific.

Not really if you exclude commercial economists. If you look towards academics you'll find ideologues all right but most tend towards pragmatism rather than ideology as a guiding principle in my experience.

Commercial economists then aren't really ideological, they're just putting forward the view that best supports their paymasters which isn't really unexpected.

baaaa

RoverJames wrote: »

If you never earned over 35K / gross per annum and you actually decided to take out a mortgage of 350K you can't really blame the bank. There has to be a certain level of personal accountability in life. We all make mistakes, nowadays it seems folk look to blame someone else for them.

In saying that the bank should have been more stringent in this particular case. Did you get a 100% mortgage ? I am presuming that you didn't have a substantial deposit (rightly or wrongly but I reckon rightly somehow)



The market was regulated by supplu and demand, folk on 35K a year applying for 350K mortgages did f it up a bit though. In 2004 I borrowed €209,000 when I was on €50K year and gave it serious thought before I actually went through with it. I remember working out the repayments and my bills along with petrol and other must spends and seeing how much would be left at the end of the month. I think the bank were willing to lend me another €15K or so but I didn't want to borrow that much.

Ok,I'm sorry I didn't explain myself properly vis a vis how much I was actually earning,hence people thinking I drew down 70k salary mortgage on a 35k salary.
I had never earned more than 35k up to the point of drawdown,but when I did actually drawdown I had 6 months done and 2 months left in the job I was in and then had 2 years work lined up on the next job(ie was very confident that I had 70k p.a. for 2years 2 months at least and had been earning it also for the 6 months prior)before the whole thing collapsed.
When you say I am looking for someone to blame if I'm honest you're right.I had a job and a gaff and a future,now I have a debt that's going to end up around 600k in real terms and no job and soon no gaff.I never falsified any information nor did I buy extravagantly or beyond what I thought were my means.
What pisses me off the most is that they gave me the mortgage when they knew right well that construction was in freefall and that I'd never be able to pay it back,and all they wanted was a letter from my construction employer stating that I had 2 years guaranteed work,when they knew this would be virtually impossible.
Personal responsibility is a valid point,shouldn't it apply to both partys though,ie me and the bank?

OMD

baaaa wrote: »

What pisses me off the most is that they gave me the mortgage when they knew right well that construction was in freefall and that I'd never be able to pay it back,and all they wanted was a letter from my construction employer stating that I had 2 years guaranteed work,when they knew this would be virtually impossible.
Personal responsibility is a valid point,shouldn't it apply to both partys though,ie me and the bank?

I have a lot of sympathy for the situation you are in but you say you had work for 2 years and were looking like earning 70K a year. You work in construction and you felt the situation was pretty rosy. Why do you think someone working in the bank with no experience of construction should have known more about it than you? You had a letter from your employer guarenteeing 2 years and 2 months pay. Obviously that guarentee was rubbish. Again if you did not know it was rubbish how could someone working in the bank?

waffleman

baaaa wrote: »

I had never earned more than 35k up to the point of drawdown,but when I did actually drawdown I had 6 months done and 2 months left in the job I was in and then had 2 years work lined up on the next job(ie was very confident that I had 70k p.a. for 2years 2 months at least and had been earning it also for the 6 months prior)before the whole thing collapsed.

I still dont get it - at the time you got approved even at 70k salary your mortgage would have been over half your take home for a 20 year mortgage. crazy.

Not sure what your options are at this point - do banks pursue debts if you leave the country? suppose it depends where you go. In commonwealth countries like Canada / Australia i would say yes - whos your mortgage with?

eamonnm79

baaaa wrote: »

Ok sound.
I wish I was earning that.Got the mortgage 2 years ago,got into construction near the end and was grossing 1500 a week fairly sporadically.
When I applied for the mortgage none of my p60's were over 35k gross so the bank said 4 consecutive weekly payslips would be better.My payslips said 1,500 per week gross so the bank said 1,500 x 52weeks=salary of 75k.
I never earned over 35k gross.

You my friend have an excellent case against the bank.
This was gross negligence on their part.

There needs to be a test case in this area.
Are you the man to do it?

Looks like you have nothing to loose!

Shelflife

Noone forced him to take out the loan, did he take in a tenant like he was advised to do.

yes the bank was iresponsible in their dealings but at the end of the day it is the op that has to make sure that he (of his own free will) can make the repayments on the contract that he is entering.

It annoyed me watching the lls last week when turbidy didnt question the couple as to why the remortgaged their house and waht did they spend all the remortgage on.

you can blame the developers all you want but at the end of the day alot of people wanted all the goodies and wanted them now, put it all on the credit card , remortgage the house etc.

if you cant afford someting then you cant afford it period. puting it on the credit card or remortgaging the house so that you can go on holidays or upgrade your car was madness.

sorry op dont mean to be rude but you made your bed so you will have to lie in it, im not suggesting that you did the above but plenty of my friends did and are now all complaining that they have to pay it back.

dan_d

Ok OP, so fair enough maybe you should have had the sense to know. But I will say that I got a mortgage over a year ago and the mortgage broker practically threw the money at us. Never mind that we both had jobs in construction and that things were just beginning to slow. WE actually told HER that we didn't want the amount we were being offered, didn't want a 40 year term and that we had a deposit - well as such, so we only wanted 95% ( still big i know, but at that time, few people had deposits). Unbelievable how they were behaving. We drew down a mortgage almost 100,000 less than we were offered, and it was still about 350k.
No doubt we all bought into it.....but even less doubt that the whole thing was totally and completely unregulated.Stress tests didn't even exist.

eamonnm79

This blame the individual and let the bank off scot frre attitude is moronic.
It is completely obvious that three parties in this are culpable.
The "Greedy" individual the "Greedy" bank and the "Greedy" government.

One of the main purposes of having a government is to protect the people from themselves. Thats why we have punishments for crime.
They failed the people bigtime in a short sighted feeding frenzy via all the property/construction related taxes.

The major banks failed by underpricing risk and leveraging way beyond any kind of reasonable limit. However they have form when it comes to being bailed out by the government So why should they not try to get away with it again.

The individual, especially if they are under 35 had lived most of their adult lives in a reality that was not real. Now that the **** has hit the fan they are left to carry much of the negative equity but is it right and fair that they should shoulder 100% of the blame for a lot less than 100% of the crime?

Some lawfirm needs to take a class action on behalf of those in negative equity to force the banks and the state to shoulder at least a % of the blame.

asdasd

I would think a class action suit against "commercial" economists could work.

asdasd

This blame the individual and let the bank off scot frre attitude is moronic.

I totally agree with that. Bankers, and economists are supposed to be experts. In no other system where experts meet laymen are the laymen held to be responsible, and the experts left off with impunity. If Doctors made more money from selling a product they knew ( or should know, the difference between corruption and incompetence) would harm, not help a patient we don't expect the patient to run to the internet and work out the issues for himself. And we would expect the Doctor to face criminal, or civil charges for corruption and/ or negligence if the patient suffers.

Economists claim to be scientists so why are the ( commercial) economists not been held to account.

bangersandmash

eamonnm79 wrote: »

Some lawfirm needs to take a class action on behalf of those in negative equity to force the banks and the state to shoulder at least a % of the blame.

In both cases this translates as the taxpayer shouldering the blame.

seclachi

asdasd wrote: »

I totally agree with that. Bankers, and economists are supposed to be experts. In no other system where experts meet laymen are the laymen held to be responsible, and the experts left off with impunity. If Doctors made more money from selling a product they knew ( or should know, the difference between corruption and incompetence) would harm, not help a patient we don't expect the patient to run to the internet and work out the issues for himself. And we would expect the Doctor to face criminal, or civil charges for corruption and/ or negligence if the patient suffers.

Economists claim to be scientists so why are the ( commercial) economists not been held to account.

A fair enough statement, but in light of the OP lets look at two contexts

1. Fella earning 30k walks into the bank cap in hand looking for a loan, discloses his real salary. The bank gives him 350k. This is the fault of the regulator and then the bank. People, organizatons and banks will do what ever is legal to make money, so in the end its the goverment who must keep them on a leash.

2.Fella earning 30k walks into the bank with doctored payslips that make him look like he earns 60k a year, bank gives him 350k. This seems to be similar to the OP`s case. This is fraud and is nobody but the individuals fault, the bank and regulator believe he can make the repayments.

Scofflaw

seclachi wrote: »

A fair enough statement, but in light of the OP lets look at two contexts

1. Fella earning 30k walks into the bank cap in hand looking for a loan, discloses his real salary. The bank gives him 350k. This is the fault of the regulator and then the bank. People, organizatons and banks will do what ever is legal to make money, so in the end its the goverment who must keep them on a leash.

2.Fella earning 30k walks into the bank with doctored payslips that make him look like he earns 60k a year, bank gives him 350k. This seems to be similar to the OP`s case. This is fraud and is nobody but the individuals fault, the bank and regulator believe he can make the repayments.

I'd add a third case:

3. Fella earning 30k walks into the bank with doctored payslips that make him look like he earns 60k a year. Bank doesn't ask too many questions, doesn't ask to see any better proof than a couple of payslips. Bank gives him 350k.

That seems to me to match much of what was happening - the banks colluded in giving people unsustainable loans. The proof is that if you try the same trick now, walking in with a couple of doctored pay-slips, it won't work, because the banks no longer want it to.

cordially,
Scofflaw