Help! I want to get a mortgage!

miss luce

hi. myself and my fiance have been renting for years. we've always said that we'd buy, but we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
what we'd love to know is what we need to do. here is the situation............my partner is self employed, we have car loan, credit union loan, and small bit of credit card debt. i dont work, im a stay at home mom to our 2 yr old. we dont have any savings, but we've never been late with rent repayment once. we have life assurance policies alright. hope that might make us seem some bit sensible to bank!!!!
obviously we need to save for deposit for house, but just want to know, would a bank manager actually fall round the place laughing at us, if we went about getting a mortgage??
we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...
i prob sound stupid, but any advice would be much appreciated:o

John Mason

you need to completely clear your debt

and save your deposit aim for 30k (to cover fees and furniture)

your partner as self employed will have to show his accounts for 3 years, i think, dont quote me on that

miss luce

thanks for reply, guess its bread and water from here on in!!! ha!!!

Treehouse72

miss luce wrote: »

hi. myself and my fiance have been renting for years. we've always said that we'd buy, but we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
what we'd love to know is what we need to do. here is the situation............my partner is self employed, we have car loan, credit union loan, and small bit of credit card debt. i dont work, im a stay at home mom to our 2 yr old. we dont have any savings, but we've never been late with rent repayment once. we have life assurance policies alright. hope that might make us seem some bit sensible to bank!!!!
obviously we need to save for deposit for house, but just want to know, would a bank manager actually fall round the place laughing at us, if we went about getting a mortgage??
we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...
i prob sound stupid, but any advice would be much appreciated:o

1. It is exceptionally difficult nowadays for a self-employed person to get a mortgage. Exceptionally.
2. Banks will take a very harsh view of your existing debt when assessing your application. I would think the 3 types of debt you already have would be deal-breakers straight away.
3. Banks are looking for a record of saving in assessing whether to give you a loan. You have said you have no saving history.
4. Banks will require you to have the deposit you mention - the old days of 100% mortgages are gone. So there is likely no alternative to saving that €25,000.
5. Banks now require that you have a minimum amount left over after your mortgage payment. I have seen this figure quoted at €2500 for a couple after the mortgage is paid:
http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html
If you have a child that article says you would need €3,000 left over after your mortgage is paid.
6. You mention a €25,000 deposit, suggesting you want a €250,000 mortgage. At 4% over 30 years this is about €1,200 pm.
http://www.bankofireland.ie/personal/borrowing/mortgages/repayments.html
To have €2,500 left over, that means you'd need an income of €3,700 - €4,000....that's at least a pre tax salary of €70,000.
http://www.deloitte.ie/tc/Results.aspx
Perhaps I am being too conservative there, so I might stretch that guesstimate back to c. €50,000.



My advice. Wait till property is 30%+ cheaper in the next 3-5 years. At that point, a €40,000 salary would do all of the above for the same property.

sambuka41

Treehouse72 wrote: »

1. It is exceptionally difficult nowadays for a self-employed person to get a mortgage. Exceptionally.
2. Banks will take a very harsh view of your existing debt when assessing your application. I would think the 3 types of debt you already have would be deal-breakers straight away.
3. Banks are looking for a record of saving in assessing whether to give you a loan. You have said you have no saving history.
4. Banks will require you to have the deposit you mention - the old days of 100% mortgages are gone. So there is likely no alternative to saving that €25,000.
5. Banks now require that you have a minimum amount left over after your mortgage payment. I have seen this figure quoted at €2500 for a couple after the mortgage is paid:
http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html
If you have a child that article says you would need €3,000 left over after your mortgage is paid.
6. You mention a €25,000 deposit, suggesting you want a €250,000 mortgage. At 4% over 30 years this is about €1,200 pm.
http://www.bankofireland.ie/personal/borrowing/mortgages/repayments.html
To have €2,500 left over, that means you'd need an income of €3,700 - €4,000....that's at least a pre tax salary of €70,000.
http://www.deloitte.ie/tc/Results.aspx
Perhaps I am being too conservative there, so I might stretch that guesstimate back to c. €50,000.



My advice. Wait till property is 30%+ cheaper in the next 3-5 years. At that point, a €40,000 salary would do all of the above for the same property.

GOOD GOD!!! :eek: Wow how will anyone ever buy a house again!!!!Im all about being responsible and I've accepted to get a house I'll have to sweat for that deposit but really thats very restrictive esp in this current job climate. Who is making that kind of money?? I've taken a pay cut and even with that I think i live comfortably,but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

Victor

Property prices need to come more in line with incomes.

sambuka41 wrote: »

really thats very restrictive esp in this current job climate.

Do you expect them to be loose in the current market?

but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

Realise that you won't need to pay rent when you are paying a mortgage.

Treehouse72

sambuka41 wrote: »

GOOD GOD!!! :eek: Wow how will anyone ever buy a house again!!!!Im all about being responsible and I've accepted to get a house I'll have to sweat for that deposit but really thats very restrictive esp in this current job climate. Who is making that kind of money?? I've taken a pay cut and even with that I think i live comfortably,but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

sambuka41, there is a very obvious answer to your question that you are ignoring: all of this changes utterly if house prices fall. Simple.

The reason the above criteria seem so absurd - and they are absurd - is because property prices are still so bubbly. It is IMPOSSIBLE that the scenario I set out above can continue. IMPOSSIBLE. So what will give? Asking prices. Take it to the bank - it is as certain as the sun rising tomorrow.

dolliemix

I'm in the same boat Sambuka.

During the boom. no way could I afford the deposit and mortgage repayments so I didn't, well couldn't buy.

Now I've noticed property prices are falling and I can afford a one bedroom somewhere. I could manage the 10 % deposit and the mortgage repayments. I have a permanent job, teaching for ten years so my salary is quite good at the moment, compared to others.

But now it looks like I need to stretch even further! It's unlikely I'll get a mortgage right now. But I'm going to save my ass off for 12 - 15 months. Hopefully prices will have come down even more by then as well.

This is all so frustrating! I'm sick of sharing with people. The people I'm with are nice but I've been sharing for over 10 years now. If I rent somewhere on my own I wouldn't be able to save. Im 35 on Monday and sometimes I feel like people don't treat me like a proper grown up because I don't have a mortgage to pay and I'm still living in shared accomodation.

I guess it's not supposed to be easy......

miss luce

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

Treehouse72

dolliemix wrote: »

This is all so frustrating! I'm sick of sharing with people. The people I'm with are nice but I've been sharing for over 10 years now. If I rent somewhere on my own I wouldn't be able to save. Im 35 on Monday and sometimes I feel like people don't treat me like a proper grown up because I don't have a mortgage to pay and I'm still living in shared accomodation.

I guess it's not supposed to be easy......

Only last week I had a friend lecturing me about responsibility because I don't have a mortgage. Meanwhile, we have another mutual friend with a young family and every month he sees written on his mortgage slip: Final payment date 2037, Monthly repayment €1800. AND he has an investment property that must be hugely in NE by now. Apparently this guy is responsible but I'm not. Sheesh.

It's pretty clear to me that we have learnt nothing in this country. People still think that massive debt is the same as massive wealth. It really is mind boggling and a testament to how powerful bubble psychology is.

Property prices will be 30% - 40% lower in 5 years. Nothing can stop this absent Ireland striking oil.

Del2005

Treehouse72 wrote: »

Only last week I had a friend lecturing me about responsibility because I don't have a mortgage. Meanwhile, we have another mutual friend with a young family and every month he sees written on his mortgage slip: Final payment date 2037, Monthly repayment €1800. AND he has an investment property that must be hugely in NE by now. Apparently this guy is responsible but I'm not. Sheesh.

Of course he's responsible. For 2 huge debts.....:D

The_Conductor

miss luce wrote: »

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

The EUR2500 over after a mortgage- would be for a couple, its EUR1500 for a single person.

Banks have pretty much stopped lending altogether- despite the marketing and advertising you hear. They want to appear to be in business- when in fact they're on life support......

If you have any o/s debt of any sort- you are almost certain to be turned down for a mortgage- and the list Treehouse72 quoted above, is pretty accurate.

If you really want a mortgage- clear all debt- absolutely everything- and save a deposit equal to 15-20% of the mortage you require, and then give it a shot. I wouldn't even bother trying at the moment- you need to clear that debt........

CamperMan

I am self employed, showed the bank 3 years healthy accounts, I have NO DEBTS, I had a big deposit, cash in the bank, I had land that I could have used as security, and the bank still turned me down for a small mortgage.

The_Conductor

CamperMan wrote: »

I am self employed, showed the bank 3 years healthy accounts, I have NO DEBTS, I had a big deposit, cash in the bank, I had land that I could have used as security, and the bank still turned me down for a small mortgage.

I've a friend who is a civil servant, has a 30% deposit saved with his fiance (who is a staff nurse), no debts whatsoever- and they would meet Treehouse72's income criteria (above). They were also turned down recently.

The banks/lending institutions are not lending as far as I can tell. They have the appearance of being open for business- but appearances can be deceptive......

iguana

smccarrick wrote: »

I've a friend who is a civil servant, has a 30% deposit saved with his fiance (who is a staff nurse), no debts whatsoever- and they would meet Treehouse72's income criteria (above). They were also turned down recently.

The banks/lending institutions are not lending as far as I can tell. They have the appearance of being open for business- but appearances can be deceptive......

Are people being turned down initially or only when they seek to draw down the loan they had approval for?

giveityourbest

have read the previous comments with interest & concern... So, would the general consesus be, that we should all hold off buying for another 18-24 months at least, and just keep saving, saving, saving?!
I myself am also self employed, small car loan.. no other debts, 25k saved with partner who is in full time employment - am feeling pretty despondant about ever getting our own home at this stage....:(

Actually just found Miss Luces other thread about prices reducing, - i think this thread answers my questions!...

The_Conductor

iguana wrote: »

Are people being turned down initially or only when they seek to draw down the loan they had approval for?

Approval is now only valid for a very short period of time (between 3 and 5 weeks depending on the institution) and approval in principle- means absolutely nothing these days. Many people who have (or had) approval in principle- are finding that when they come to draw down the mortgage that they are being told their original offer is no longer valid- some are facing a refusal- others more usually are given a fresh demand for a lower LTV ratio.

The days of easy credit are well and truly in the past.

iguana

smccarrick wrote: »

Many people who have (or had) approval in principle- are finding that when they come to draw down the mortgage that they are being told their original offer is no longer valid- some are facing a refusal- others more usually are given a fresh demand for a lower LTV ratio.

That's what I've been wondering about. I've heard lots and lots of anecdotal evidence of people getting fairly generous mortgage approval but not too much about people actually drawing down these loans. Yet it seems strange that banks would waste everyone's time by giving approval in principle for a loan that will never be given. What would be the point of that?

shayser

Joint income €50k pa. Both private sector. No history of saving. Deposit by way of gift from family member. No real outstanding debt. Good credit history. Mortgage approved and drawn for 228,000 on a 240,000 house. I'm guessing what they looked at was the 5-year loan (coming to it's end) + rent = approx. mortgage repayments, and maybe that the cc was paid off in full each month. I don't know though.

The_Conductor

iguana wrote: »

That's what I've been wondering about. I've heard lots and lots of anecdotal evidence of people getting fairly generous mortgage approval but not too much about people actually drawing down these loans. Yet it seems strange that banks would waste everyone's time by giving approval in principle for a loan that will never be given. What would be the point of that?

Approval in principle can be given at branch level- actual draw down has to go via credit control (and they seem to vary in their requirements almost on a day to day basis).

S.

miss luce

this is not sounding good atall!!! im by no means experienced in this side of things, but it just doesnt make sense when the bank are turning nearly everybody down!!! i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????
if we all wait another 4 or 5 years to buy, then not much is going to change in the next few years mortgage wise either. maybe lots of other european countries have the right idea by everybody just renting!!!

hinault

miss luce wrote: »

this is not sounding good atall!!! im by no means experienced in this side of things, but it just doesnt make sense when the bank are turning nearly everybody down!!! i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????
if we all wait another 4 or 5 years to buy, then not much is going to change in the next few years mortgage wise either. maybe lots of other european countries have the right idea by everybody just renting!!!

Don't depair : continue to save your money and clear your credit card on time.

House prices will continue to fall for at least the next 12-24 months.
In that time the banks will start to re-open for business.

The reason the banks are not granting loans now is because the banks
have huge level of debts on their books and, even when they transfer loans to NAMA, they will be cautious.
But it won't remain that way for ever.

12-24 months time, they will begin to make loans again : if you've got a good record and have sufficient savings, house prices will have dropped to meet your budget.

iguana

miss luce wrote: »

i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????

Not really. You're missing two important things. The first is that I don't believe the banks are refusing mortgages out of choice, but because they can't. They literally do not have the funds to give out many mortgages and so will only give the few they can to the very best applicants.

The other is that things can't be kick-started. It's neither possible nor desirable. The country is in the middle of an awful mess because of the way things were. We never, ever want to go back to that even if that was possible. But it isn't possible, there is rising unemployment and no way to turn that around. There are also nearly €350k empty housing units in the country. Houses in Ireland may have fallen by close to half, but they are still ludicrously high. Until the prices fall to reasonable levels the market will remain in the doldrums and even then there will be the oversupply to deal with.

But don't despair. Things are good for you. Seriously would you rather hold a mortgage on a small 2 bed flat in the likes of The Grange which is worth half of what you owe and falling fast while the rest of the building becomes social housing. You are in a good position. You just need to clear your debts and save like crazy for a few years (just like our parents did). In the mean time prices will keep falling and when you have your deposit together you will have a great big market to choose from, with you in the driver's seat.

In the mean time the rental market is falling too. If you aren't satisfied with where you live spend some time looking for a nicer place. Even an unfurnished place that you can furnish yourself to make more your own. And even if you do like where you live now you should investigate the new market rent and see if you can negotiate a discount.

NewDirection

All the anecdotal evidence for or against banks giving mortgages makes me laugh.

The banks are lending, when it makes sense to lend. If they wont give you a mortgage there is a reason. Ask the bank what the problem is, and rectify it.

They are a business, and their bread and butter is loans and deposits. They have been stung recently so will understandably be alot more picky with who they loan money to. I'm sure anyone who is posting an anecdote about not getting a loan, has left out some essential piece of evidence as to why the bank doesn't want their business.


Now to the OP, as has been said by other posters, you will need to pay off your outstanding debt and save a deposit before even thinking about applying for a mortgage. Simple as that. When you have a strong enough financial situation, the bank will loan you the money.

D3PO

Totally agree with the last post. Clearly their are more stringent criteria to get approval but banks are lending. I know 5 people that have drawn down this year and only 2 people that have been refused mortgages.

Quite frankly if I was underwriting the loans I wouldnt have approved the 2 people that got refused either, in fact 1 of the people I know that did get approved I wouldnt have approved. The same way I wouldnt approve the OP on this thread, debts, no savings record, 1 person self employed.

I think rather than people complaining about getting refused they should actually take a look at their credit situation.

I only know 1 person first hand who was refused a mortgage unjustly in the past year. (Bank said they didnt accept their record of saving in the credit union as they used to withdraw from the atm and lodge into the CU rather than transferring directly fomr their account) The bank contended that the "savings" in the CU could have been a gift rather than genuine savings. Now given the lodgements were the same amount every month for 4 years thats a little rediculous but thats the only example of banks making a wrong decision in relation to mortgage approval that Im aware of.

Hellrazer

Anyone know how banks are regarding people trading up (Well technically trading up to a bigger house but a lot smaller mortgage)

We`re looking at moving out a bit further from Dublin and if everything adds up we`ll have approx somewhere between 80-100k going into the new property.

New property is 200k so the max mortgage I`ll be looking at is around 130 or so.

Repayments will drop by a third over 10 years less.

D3PO

Hellrazer wrote: »

Anyone know how banks are regarding people trading up (Well technically trading up to a bigger house but a lot smaller mortgage)

We`re looking at moving out a bit further from Dublin and if everything adds up we`ll have approx somewhere between 80-100k going into the new property.

New property is 200k so the max mortgage I`ll be looking at is around 130 or so.

Repayments will drop by a third over 10 years less.

Sounds like a dream scenario to me if I was a bank.

Hellrazer

D3PO wrote: »

Sounds like a dream scenario to me if I was a bank.

It does doesnt it.But yet some of the lenders Ive approached are apprehensive about lending me and heres a quote "that small an amount over that short a period"

I`d have a better chance of borrowing a few million.

To me its a no brainer--all debts cleared and a new mortgage that I could pay even if I lost my job tomorrow and over only 10-15 years.

D3PO

yeah well i think BOI have a min drawdown of 150k.

Theres obviously a threshold of which a mortgage under that threshold is of little or no benefit to the bank due to the costs associated with the mortgage from their end. Perhaps thats why your getting the comments your getting.

I would assume if its the same bank your current mortgage is with would be in a different position. Essentially they wouldnt be funding from the markets to facilitate your mortgage, it wouldnt be little more than an accounting excercise their side.

shoegirl

miss luce wrote: »

1. we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
2. my partner is self employed
3. we have car loan, credit union loan, and small bit of credit card debt.
4. i dont work - im a stay at home mom to our 2 yr old
5. we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...

Ok you kind of put up a fairly good picture here. You're not on a big income obviously, and managing to make ends meet, but don't really have anything left over - which more or less explains why you don't have savings. (Don't be ashamed of that by the way, lots of people cannot afford to save for a variety of reasons). You've a few small loans - probably to manage your cash flow, which you can afford, but not having savings or cash gifts or equivalents, you're paying your own way and probably managing ok.

The fact that your partner is self-employed could make things difficult in terms of borrowing. Even if his business doesn't have borrowings, they might want extra security. Secondly, in the event of the business going, your welfare entitlements are reduced. The fact that you don't work means you're being disadvantaged by a tax system that favours working couples BUT on the other hand you're probably saving on childcare, and can probably return to work in the future.

You'd definitely need to clear your existing loans. Maybe consider a little part time work yourself?

Last suggestion is that some of the rent-to-buy schemes might suit you? At least you don't have to commit up front.

By the way 30 is still fairly young to buy a home today, a lot of people esp singles and single income couples in their late 40s are completely priced out of the market. There are 6 of us working here together on my team, ages ranging from 31 to 38, mostly 35-36, some married or separated with children, all on about 1/3 more than the average wage, and only 1 owns their own home - I think!!

shoegirl

miss luce wrote: »

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

2500 a month is a couple of hundred more than a so-called "average industrial wage" earner would take home after tax.