What carries more weight for a mortgage lender?

DrPhilG

Evidence of savings...

or

Ability to pay...

I have little or no evidence of savings other than a healthy lump sum for a deposit, (50%) but the total mortgage payments would be less than 30% of our total net monthly income. What I mean is that the lump sum arrived in 1 big chunk rather than being carefully squirreled away over time.

I suppose evidence of savings demonstrates an ability to pay, but does a lack of it do much damage to an application even if the mortgage payment is a low enough percentage of income?

I'm in the middle of the painful wait at the moment, most of the relevent documents are with the mortgage advisor but it will be probably middle of next week before I hear anything about a decision.

TonyStark

DrPhilG wrote: »

Evidence of savings...

or

Ability to pay...

I have little or no evidence of savings other than a healthy lump sum for a deposit, (50%) but the total mortgage payments would be less than 30% of our total net monthly income. What I mean is that the lump sum arrived in 1 big chunk rather than being carefully squirreled away over time.

I suppose evidence of savings demonstrates an ability to pay, but does a lack of it do much damage to an application even if the mortgage payment is a low enough percentage of income?

I'm in the middle of the painful wait at the moment, most of the relevent documents are with the mortgage advisor but it will be probably middle of next week before I hear anything about a decision.

Ability to pay is the main thing from my experience and having a good deposit works as well. They don't really look at the savings all that closely.

CatMH

Hi DrPhilG

I am hoping to draw down my mortgage in the next fortnight or so. i was in the same position as you in that i had a large deposit, repayments would be less than 30% of income and not much evidence of savings. had an accumulation of leftover salary each month but no real monthly savings. Got my mortgage based on ability to repay i imagine but the bank (BoI) have checked, rechecked and triple checked where my deposit came from. wanted external confirmation from solicitors etc so be prepared for that.

HTH
CatMH

DrPhilG

Tony and Cat, thanks. Encouraging posts.

I already have a letter explaining the source of the deposit, which will account for about a 52% deposit and leaving only a €65k mortgage.

I know they will want it confirmed by an independent solicitor but that's no problem.

The tricky thing in my case is that I may be renting out my current house rather than selling, so I will have 2 mortgages. However that 30% of income figure is based on the cost of both mortgages. If I successfully rent the old house, it will leave mortgage payments of just 13% of net income.

Dades

I got mortgage approval last month from 3 banks - and I would say ability to pay (long term) is the key factor.

If you are approaching the limit of what you can pay compared to what you are requesting, the banks will look to see whether you have been saving anything which you could otherwise put towards your monthly.

f9710145

I'd go with ability to repay - we've just got approval, moving house, new mortgage will be the same amount as the old one, albeit at a slightly higher rate, but we were overpaying the old one so that more than showed the ability to repay. We haven't had a consistent large savings pattern but had decent savings due to a couple of lump sums (redundancy and inheritance) which they asked for explanations for but a simple note from us seemed to be sufficient. Repayment is less than 30% of income, mortgage is 50% LTV.

ewanalex

Another great thread on boards! We have litterally just submitted all our everending paperwork request today to our broker who confirmed application is now with PIBA so we have our fingers and toes crossed! I reckon it will be a long wait but i do hope they go on ability to pay like posters have said above as this would go in our favour rather than the great bistorical banking/saving trends we save in lump sums from bonuses etc.... i will post back here in a few months to let you all know....

DrPhilG

A few months? Hope you're kidding! :eek:

ewanalex

Haha I wish i was but broker was very honest an said expect min 8 weeks waiting time before we hear anything! Do you think she is being over cautious? Are there any mortgage brokers on boards that could answer this for us....

DrPhilG

ewanalex wrote: »

Haha I wish i was but broker was very honest an said expect min 8 weeks waiting time before we hear anything! Do you think she is being over cautious? Are there any mortgage brokers on boards that could answer this for us....

Seems excessive, my advisor knows I'm in a big hurry but hasn't given any time frame. I'll call him today to ask.

Surely with not a lot of people buying it shouldn't take that long?

DrPhilG

BOI's website says you should have approval within 3 days of submitting all the paperwork, mortgages.ie say the same.

I've emailed my MA (Mortgage Advisor, not mammy ) to see what he reckons.

Dades

AIB took over 6 weeks to get back to me. And I've banked with them all my working life - so they have all my details already.

KBC were much quicker (2 weeks max).

DrPhilG

Dades wrote: »

AIB took over 6 weeks to get back to me. And I've banked with them all my working life - so they have all my details already.

KBC were much quicker (2 weeks max).

Is it better to go through a broker/advisor then? Firstly because they approach a number of lenders at the same time and secondly because they might have more of a relationship with the lenders through doing regular business?

Dades

DrPhilG wrote: »

Is it better to go through a broker/advisor then? Firstly because they approach a number of lenders at the same time and secondly because they might have more of a relationship with the lenders through doing regular business?

That's what I did, anyway. I didn't have the time to be chasing up a bunch of banks and the broker did that for me. Seemed to work out, as the three banks we approached all approved the amount I wanted (which I'll admit was ambitious!)

DrPhilG

Dades wrote: »

That's what I did, anyway. I didn't have the time to be chasing up a bunch of banks and the broker did that for me. Seemed to work out, as the three banks we approached all approved the amount I wanted (which I'll admit was ambitious!)

I'm still waiting on 1 bit of info, a mortgage statement. That should arrive today hopefully so I'll drive over and post it through his door so he has it first thing in the morning!

So 3 banks gave approval, but the times ranged from 2-6 weeks?

Dades

DrPhilG wrote: »

So 3 banks gave approval, but the times ranged from 2-6 weeks?

At least 6 weeks with AIB. Only towards the end of that we tried KBC and (can't remember!) and they were much quicker.

AIB kept coming back with questions, and every answer seemed to go to the bottom of an inbox again.

DrPhilG

Fingers crossed it works out.

We are in a hurry and the advisor knows this so hopefully he can pull some strings.

ewanalex

Can I just ask if any of you are self build mortgages? This could be what the issue is with us perhaps?

DrPhilG

Well ICS aren't too keen, refused on the basis of lack of savings.

A few more to go.

ewanalex

Well, were still waiting to hear anything, good or bad! Our broker has submitted our application to aib, ics, Ptsb I think BOI more or less were not interested for whatever reason...