Mortgage Approval & General Advice

Catari Jaguar

Hey all,

Myself & OH have found our dream home in a quiet estate - 4 bed (attic conversion = extra bedroom) huge new kitchen, second toilet under the stairs, extra unit out the back with WC, powerpoints & heating, garden with decking, easy commute to the city centre, close to both our families etc. One of the main attractions for us is that we wouldn't need to remodel down the line or redecorate.

It's €349,000 - is that good value & what would be a good offer to put in for this? It says it's private treaty - what does this mean? I think it was 379k initially and reduced (possibly a mistake on the advert or deliberate?)

It's been on the market for 4 months at least that I know of - is that a long time? There's a family still living there. Do you think it will be on the market for much longer? Do we talk to their agent or do we need our own solicitor/ agent?

We haven't applied for mortgage approval yet. Both working, I'm permanent in public sector, he's in private. After tax we're left with about 40k between us. No loans - no car, no personal loans, no credit card debt. Rent always goes out on time and also bills. Both good savers, I have about 3 times more than he does atm. Not loads but it's a start. Oh, also, we're not married or engaged as of yet (will that go against us on our application?)

Are we likely to get approved? What should I expect at a mortgage approval visit? How long does it take to be approved? How long does the approval last? Even if we are offered a 92% mortgage, it's better to save up as much as possible right?

We were thinking of going to AIB (both have accounts there), EBS or Comhar Linn (I'm a teacher)

Thanks, sorry it's so all over the place. Also, I'm useless with any jargon or tecnical terms...

testicle

40000 is 3333 per month. I believe you need 2500 after you pay your mortgage, for approval.

Your mortgage payment, assuming 92% LTV and 2.6% interest rate, is about 1170 per month.

seamus

Lil Kitten wrote: »

It's €349,000 - is that good value & what would be a good offer to put in for this? It says it's private treaty - what does this mean? I think it was 379k initially and reduced (possibly a mistake on the advert or deliberate?)

"Good value" is hard to say and you will get opinions from all over the place about what constitutes good value. Some people will tell you that paying more than €300k for any kind of home is madness. Others will tell you that you're getting a bargain.

All you can really do is research for yourself. Check out what other properties in the area are selling for and what similar properties in other areas are selling for.

Prices also vary massively from area to area, to reflect how people feel about that area in terms of crime and so forth. A 3-bed in Crumlin, all other things being equal, will be cheaper than a 3-bed in Templeogue, even though there's very little difference in terms of distance to the city and local amenities.

€380k, reduced to €350k, sounds about right in the current climate. You could take another 10% off that and offer €320k. Banks aren't really providing many mortgages at the moment, so you don't have a lot of competition for most homes. There's nothing stopping you from offering well below asking, if you think you can get it.

Budget for prices to drop at least 5% for the next five years, so if you're planning on selling in five or ten years, that's an issue. If you're looking for a family home, it's not so much.

It's been on the market for 4 months at least that I know of - is that a long time? There's a family still living there. Do you think it will be on the market for much longer? Do we talk to their agent or do we need our own solicitor/ agent?

No, four months isn't a long time to be on the market. It's hard to say whether or not it'll still be on the market in four months time, but the answer is "probably", especially if they don't drop the price any further.

If you wish to make an offer, you speak to their agent. Remember that the agent works for them, not for you. You're the chump, the mark, so don't trust the agent to do the right thing by you - check all your facts and don't accept what the agents says at face value.

If your offer is accepted, then you engage your own solicitor, who will walk you through what happens next.

Both good savers, I have about 3 times more than he does atm. Not loads but it's a start. Oh, also, we're not married or engaged as of yet (will that go against us on our application?)

You will need a minimum of 8% of the value of the house saved, as well as solicitors' fees (usually around €3k). The more of a deposit you have saved for the house, the greater the chance you'll be approved for a mortgage.
As said above, the most you should be looking at paying on a mortgage is 25% of your monthly net income. The bank is unlikely to want to give you more.

We were thinking of going to AIB (both have accounts there), EBS or Comhar Linn (I'm a teacher)

Go to a mortgage broker. You fill out a single application form with the broker, they apply to every single bank on your behalf and then present all of the options to you. You don't pay the mortgage broker (ever), the bank does, so this is a worthwhile move.

Comhar Linn are a good option if they do mortgages for teachers. You're likely to get better rates and conditions than with a standard bank, and looser conditions too.

---

So here's what I recommend your first steps are:

1. Research, research, research. Spend your evenings looking at daft.ie and myhome.ie. Get a feel for the market, where prices are, where prices are going. Spend your weekends driving around Dublin looking at the various houses and the areas that they're in. Very quickly you'll establish the places where you want to live and the ones where you don't.
2. Go to see lots of houses. Lots and lots. It's impossible to tell exactly what a house is worth from a drive-by. There are big costs in redecoration and remodelling.
3. Get a mortgage broker and get mortgage approval. You don't need to know what house you're buying - you get approval in principle for a maximum amount and that's valid for 3 months (?). You can PM me if you want a recommendation for a broker.

testicle

seamus wrote: »

You don't pay the mortgage broker (ever), the bank does, so this is a worthwhile move.

This is no longer the case since the Banks reduced their commission payable to brokers. It's about €150 you have to pay.

seamus

testicle wrote: »

This is no longer the case since the Banks reduced their commission payable to brokers. It's about €150 you have to pay.

That obviously depends on the broker. Many of them are still free.

baaaa

Lil Kitten wrote: »

Hey all,

Myself & OH have fallen in love with our dream home in a quiet estate - 3 bed with gorgeous attic conversion, huge new kitchen, second toilet under the stairs, extra unit out the back with WC, powerpoints & heating, garden with patio, easy commute to Dublin city centre, close to both our families etc.

It's €349,000 - is that good value & what would be a good offer to put in for this? It says it's private treaty - what does this mean? I think it was 379k initially and reduced (possibly a mistake on the advert or deliberate?)

It's been on the market for 4 months at least that I know of - is that a long time? There's a family still living there. Do you think it will be on the market for much longer? Do we talk to their agent or do we need our own solicitor/ agent?

We haven't applied for mortgage approval yet. Both working, I'm permanent in public sector, he's in private. After tax we're left with about 40k between us. No loans - no car, no personal loans, no credit card debt. Rent always goes out on time and also bills. Both good savers, I have about 3 times more than he does atm. Not loads but it's a start. Oh, also, we're not married or engaged as of yet (will that go against us on our application?)

Are we likely to get approved? What should I expect at a mortgage approval visit? How long does it take to be approved? How long does the approval last? Even if we are offered a 92% mortgage, it's better to save up as much as possible right?

We were thinking of going to AIB (both have accounts there), EBS or Comhar Linn (I'm a teacher)

Thanks, sorry it's so all over the place. Also, I'm useless with any jargon or tecnical terms...

It's a rip lil kitten,don't fall for it.
Prices will drop by way more than 5% this year.
If you want to make a good decision then emotionally detach yourself from it.
Also the bank will only lend you 100k eitherway.
From your post it appears that you are quite clueless about the current market,you would be wise to recognise this and therefore not attempt to invest 350k.

testicle

seamus wrote: »

That obviously depends on the broker. Many of them are still free.

Maybe so, but I am not aware of any that are.

seamus

testicle wrote: »

Maybe so, but I am not aware of any that are.

http://www.sherryfitz.ie/MORTGAGES/what_we_do.aspx

Our service is independent and free to you, the customer - our services are paid for by the lending institution

Now, maybe the website is out of date...

Catari Jaguar

baaaa wrote: »

It's a rip lil kitten,don't fall for it.
Prices will drop by way more than 5% this year.
If you want to make a good decision then emotionally detach yourself from it.
Also the bank will only lend you 100k eitherway.
From your post it appears that you are quite clueless about the current market,you would be wise to recognise this and therefore not attempt to invest 350k.

Yea, we are clueless, just researching and getting a feel for things atm. We're in no rush and would love to wait for the drop, but on the other hand we don't want to be forking out over 12 grand a year in rent for next couple of years as we wait for prices to come down.

Why will the bank only lend 100k?

I wouldn't be investing 350k, as I know there's no way I would be paying that and would be offering at least 10% below asking price. I'm wondering though, how much lower could I offer? It's to be a family property btw, not an investment. Not even thinking about the idea of a "starter home" either. This will be it.

The place it's in, houses are roughly the same amount maybe 10-15k price difference under, but these are normal three bed estate houses only with smaller sitting rooms and pokey kitchens. Although there are three bed council estate houses for 270k and three beds where people have lost the run of themselves looking for anywhere from 425k - 585k. There are some rough estates and seems to me that that is definitely a factor in the price discrepancies.

If we go out into the sticks, houses are cheaper but we don't want to do that. If we try to be along the coast line or somewhere very green and leafy, it's a fortune. So we're limited in where to buy.

All more advice appreciated. Sorry if I have your heads melted

testicle

I wouldn't.

www.daft.ie/1464265

baaaa

Wait for the drop,after that prices will be far more manageable.

seamus

Lil Kitten wrote: »

Why will the bank only lend 100k?

Based on a myth that banks will only lend 2.5 times the total salary of both parties. That's an old rule of thumb which doesn't apply anymore.

There are other more accurate rules of thumb, such as the monthly mortgage outgoing should be no more than 25% of the gross (I said net above) income of all earners. This needs to be stress tested.

So if you earn €50k between you, that's €4,167 per month. So your monthly payments should be no more than 25% of this - €1,041 per month, if we're using the above measure.

If you stress test this to see how much you can afford at 5% interest rates over 30 years, you get roughly €210k. At current rates, you can afford about €270k, but rates are going to go up, so that's not a good indicator.

I wouldn't be investing 350k, as I know there's no way I would be paying that and would be offering at least 10% below asking price. I'm wondering though, how much lower could I offer? It's to be a family property btw, not an investment. Not even thinking about the idea of a "starter home" either. This will be it.

20% lower is €280k. It's a lowball figure, but this is a buyer's market and it's a business transaction - forget about the seller as a family. There are people who'll tell you that you should go in and offer 50% of the value, but you don't want to be seen as a complete timewaster because then the seller will dig their heels in just to piss you off.

At the end of the day, the people selling the house have a floor, below which it makes no sense to sell, so you're wasting everyone's time by offering half of the asking price.

I still couldn't tell you if €280k is "good value" without knowing more about the property, but even then "good value" can be subjective. Since you're planning on a long-term buy, then you can be less concerned about resale values, but consider that if you buy this at full whack, borrow €300k and then realise that you could have bought this exact house in a year's time for €280k (borrowing €230k), then your mortgage repayments would be 25% lower.
That last bit is the uncertainty - if you love this house, then are you willing to let it sit for a year and bet that it's still there and that prices have dropped another 20%? Buying property is something of a gambling game, whether the market is going up or down.

Think about the figures I've posted above in relation to a mortgage and about how much money you have saved, and therefore how much you can realistically afford to pay for *any* house without putting yourselves under pressure.

Do a whole lot of sums and use Karl's Mortgage Calculator to work out mortgage-related stuff. Remember that interest rates rise and fall, so while you can afford €270k at current rates, if the rates rise by just 2.5%, your repayment will jump by 50%.

You don't have to buy this house - trust me, other houses will come and go that you similarly feel are "the one".

ricman

PRIVATE treaty means the owner is selling it, or a single person ie not a company.
LOOK on daft ie, see what other houses same size, in the area 2mile radius,
are going for.
you need to see a broker soon,.
I WOULD advise you to buy a house for around 200/230 cos prices are going down ,interest rates are now round 3 per cent, they could rise to 5per cent easily.
your loan would be round income x 9.
YOU can just go to a bank loan dept, say can i talk bout a loan, they,ll tell you roughly how much you can borrow.Takes maybe 15mins.
i think you,ll end up getting 80percent mortgage, so say gaff is 200k,that means
you need 40k savings,plus money for legal fees, furniture.
ID be surprised if you could get a loan of say 300k
IN dublin you can get a very nice house 3bed semi,with new kitchen,alarm system,maybe2 bathrooms for 215k.eg clonsilla private estate ,nice area.
sounds TO ME you,r paying 130k plus cos its a posh area.
SAY bank says you,r allowed to borrow 240k, then only look at houses that are priced at 250k.
YOU NEED to talk to a broker , i dont think that being married makes much difference.
THERE should be a sticky on this forum ,How to get a mortgage.
4 months is not long, he may have turned down 2 offers of 290k.
IF you want more advice say ,its on estate x area x,IS THIS a fair price 4 this area.
HE may have a mortgage on it.
i know some1 selling a 4bed for 180k,dublin, private estate.
SO YOU are paying 130k premium, cos its in area x.MAYBE ITS on the southside,
ie some people will only buy on the southside.
A HOUSE in rathmines is like 3times the price of an identical house in coolock,private estate.
i see nice houses in good areas going 4 220k, on the west side,eg clonsilla.WELL KEPT safe, private estates, near ,shops ,good transport links.
SAVE a much as you can, the bank looks at your savings record, is it reliable,you should save aleast 150 per week,or more.
if you can get mortgage approval,its a buyers market.
over 140k,you are paying for status,or comfort, ie i want to live in area x, and its near my job,
or near a nice school etc.

ricman

I think you,d get mortgage approval 4 round 270k, depends on your savings etc. some people borrow money from the credit union ,in order to get up 2 20percent.

Jesh1

@ LIL KITTEN.....A Broker can get you a mortgage of 5.6times your salary.(single anyway, not sure how they work it for dual income)


Does anybody know how much conyeaces fee's are likley to be. I recently recieved a quote of aprox 2K. Is 1% still a good indicator?

ricman

Just google.ie flat fee conveyancing fee ireland.
or see here http://www.moving.ie/conveyancing/
say vat is 21 percent ,budget around 1500 , on a 230k house.
sounds like your max loan is around 230k.
IF so i,d advise you to get a mortgage cert 1st from a bank,
ie it states i have clearance to borrow x amount.
SEE daft.ie cabra ,
see http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=c1&s[a_id]=195&s[mnp]=&s[mxp]=250000&s[bd_no]=&s[route 220k,2bed that would be within your budget.

JuliusCaesar

seamus wrote: »

So here's what I recommend your first steps are:

1. Research, research, research. Spend your evenings looking at daft.ie and myhome.ie. Get a feel for the market, where prices are, where prices are going. Spend your weekends driving around Dublin looking at the various houses and the areas that they're in. Very quickly you'll establish the places where you want to live and the ones where you don't.
2. Go to see lots of houses. Lots and lots. It's impossible to tell exactly what a house is worth from a drive-by. There are big costs in redecoration and remodelling.
3. Get a mortgage broker and get mortgage approval. You don't need to know what house you're buying - you get approval in principle for a maximum amount and that's valid for 3 months (?). You can PM me if you want a recommendation for a broker.

I agree with almost all the above. Especially go see houses - lots of them! even if you're not interested - in the area you want, as it'll give you a feel for value. And go see the area at different times - rush hour, late evening etc.

The bit I don't agree with is the broker. I went to a broker PLUS I went round to a few banks/building societies myself. (Some banks won't deal with brokers.) The Broker couldn't get me the amount I needed, but two of the banks/building societies I went to offered more than I needed.

No broker is free. If the bank pays the broker, they'll build that fee in the price they charge you. They're not paying brokers out of the goodness of their hearts - they will recoup their money from you.

ricman

ANY bank ,building society will have a person there to deal with loan enquirys,no need to make an appointment.
SAY i,m enquiring re possible mortgage,how much can i borrow,interst rates etc.
GO for a standard rate variable mortgage ,theres like 4 types of mortgages.
BY the way i think mortgage tax relief is being phased out in 6 years, not sure bout that.
IF YOU want say 300k ,you may need to see a broker.
otherwise try and bypass the broker.
SAY you r buying in area x ,look at least 5 houses .
eg some houses ,have big,gardens,kitchen, etc.
IF THERES a house with a small kitchen, the ;larger the garden,the easier it is to build a kitchen/extension.

ie id much prefer to buy a standardhouse for 200k, with a small kitchen,then build an extension,
than pay 350k, 4 a house cos it has a large kitchen.

SAY you borrow 200k, over the next 20 years you,ll pay 400k minimum
back to the bank,approx.
A KITCHEN extension costs 20/30k depends on the size/ specs.

hed

cherub rock wrote: »

Why will the bank only lend 100k?

I am also a teacher,i am only three years teaching. I am buying a house on my own, i know that Aib were willing to give me over 200,000 but BOI were only willing to give me 160,000. Didn't want or need that much but that's with me on my own and only on point 5 of the salary scale!! Hope that helps.

testicle

hed wrote: »

I am also a teacher,i am only three years teaching. I am buying a house on my own, i know that Aib were willing to give me over 200,000 but BOI were only willing to give me 160,000. Didn't want or need that much but that's with me on my own and only on point 5 of the salary scale!! Hope that helps.

Was that in principle or real approval?

seamusmcspud

Hi Hed and Testicle...... I'm also a teacher .... teaching 7 years and still not permanent (due to switching schools) but no bank will look at me!!!! I'm trying since August '09. I've absolutely no debt and a nice bit saved up!!

Are ye Permanent?? if not what banks are offering you a loan and i'll give 'em another go!!

hed

Yeah, I am permanent. I have my mortgage with Bank Of Ireland. I know last year boi wouldn't even talk to me without my permanent job!!
If you apply through a broker and see what they can do, its worth a shot!

hed

testicle wrote: »

Was that in principle or real approval?

that was real approval. I had applied with a random address just to see what I would be approved. I got an offer loan letter for 210,000 from AIB and 160,000 from BOI.

testicle

seamusmcspud wrote: »

Hi Hed and Testicle...... I'm also a teacher .... teaching 7 years and still not permanent (due to switching schools) but no bank will look at me!!!! I'm trying since August '09. I've absolutely no debt and a nice bit saved up!!

Are ye Permanent?? if not what banks are offering you a loan and i'll give 'em another go!!

If you have 2 refusals in writing, you can get a mortgage from the County Council, depending on other factors.

Here's the information from Galway Co Co's website - http://www.galway.ie/en/Services/Housing/HousingLoans/HousePuchaseBuildingLoan/

testicle

hed wrote: »

that was real approval. I had applied with a random address just to see what I would be approved. I got an offer loan letter for 210,000 from AIB and 160,000 from BOI.

That sounds like approval in principle to me!

hed

but when you get a mortgage offer letter is that not real approval? It wasn't just in for a chat, I got the letter in the post about a week after applying.

icescreamqueen

seamusmcspud wrote: »

Hi Hed and Testicle...... I'm also a teacher .... teaching 7 years and still not permanent (due to switching schools) but no bank will look at me!!!! I'm trying since August '09. I've absolutely no debt and a nice bit saved up!!

Are ye Permanent?? if not what banks are offering you a loan and i'll give 'em another go!!

I am too am a teacher and looking for mortgage approval at the minute. I have been teaching for 4 years, I'm not permanent but I am entitled to go on the supplementary panel. I got my principal to send in a note explaining the panel etc. Like you, I have no debt and have a good deposit saved. I wonder will any bank take a sniff if your job is not permanent. I'm hoping my job is being made permanent in September but not absolutely sure yet.

testicle

hed wrote: »

but when you get a mortgage offer letter is that not real approval? It wasn't just in for a chat, I got the letter in the post about a week after applying.

Maybe so in that case, but I don't know how you got approval if you didn't give the right address.

stepbar

hed wrote: »

I am also a teacher,i am only three years teaching. I am buying a house on my own, i know that Aib were willing to give me over 200,000 but BOI were only willing to give me 160,000. Didn't want or need that much but that's with me on my own and only on point 5 of the salary scale!! Hope that helps.

Probably the reason why AIB are fcuked.

Let me tell you a wee story. I bank with AIB for a number of years. Both my self and my bro bank in the same branch. In mid 2008 I went in looking about a mortgage. So arranged a meeting and all that. Assuming I had no debt and a deposit, AIB would have offered me and the bro 400k over 35 years. Now lets put that into context. A 400k mortgage over 35 yrs is roughly 1.5k p.m (back then is was about 1.8k). I'd estimate the monthly payment would have been roughly a little under 40% of our joint salaries. For the love of god 400k...... I nearly fell out of my seat with shock.

Anyhow from what I can see point 5 on the teaching scale is €35,775 meaning that AIB were prepared to offer you 5.6 times your salary and BOI 4.47 times your salary.

stepbar

cherub rock wrote: »

We were thinking of going to AIB (both have accounts there), EBS or Comhar Linn (I'm a teacher)

Just so you are aware Comhar Linn arrange mortgages on behalf of EBS. Your mortgage would be with EBS if you went with them.

hed

stepbar wrote: »

Probably the reason why AIB are fcuked.

Throwing money hand over fist, no wonder is right!!!