Mortgage Query

loolloo78

Hi my partner and I are planning on applying for a mortgage. Just wondering about the bank statements: My father gifted myself and my siblings 20 grand to share when he sold a house a year ago and it was agreed that I would manage the money and keep it in my account ( as they are young students) so I have been withdrawing money to give them and buying things using my laser card. Basically what I'm saying is my statement will show all this and it will look like I have been spending frivolously, could this affect my application?

Zamboni

loolloo78 wrote: »

Hi my partner and I are planning on applying for a mortgage. Just wondering about the bank statements: My father gifted myself and my siblings 20 grand to share when he sold a house a year ago and it was agreed that I would manage the money and keep it in my account ( as they are young students) so I have been withdrawing money to give them and buying things using my laser card. Basically what I'm saying is my statement will show all this and it will look like I have been spending frivolously, could this affect my application?

Yes.

killers1

loolloo78 wrote: »

Hi my partner and I are planning on applying for a mortgage. Just wondering about the bank statements: My father gifted myself and my siblings 20 grand to share when he sold a house a year ago and it was agreed that I would manage the money and keep it in my account ( as they are young students) so I have been withdrawing money to give them and buying things using my laser card. Basically what I'm saying is my statement will show all this and it will look like I have been spending frivolously, could this affect my application?

Just explain it to the bank the same way you have done here. So long as you are saving money in a different account and have a proven repayment capacity in your own right & qualify based on income it shouldn't negatively effect your application

Frank Black

Probably, is the short answer.

The bank will want to see a savings history over at least a 6month period to demonstrate you have the financial ability and maturity to take on a long term repayment commitment.

If you have a separate savings account which shows this - you'll probably be ok.

loolloo78

Thanks guys. Killers would you suggest putting it in writing with our application? Otherwise our situation is as follows. i am 32 he is 34 i am employed permanent in public sector earning 30k he works for a telecom firm earning 28k, we have been renting for 4 years paying 12000, no loans or credit cards, have a property abroad which we make 300 a month profit on rent, this has been going into a savings account but we have also been drawing on it so there's only about 3000 in it but we have been gifted 20,000 from his parents on sale of a house . Do you think we stand a chance of getting a mortgage of 180,000?

killers1

loolloo78 wrote: »

Thanks guys. Killers would you suggest putting it in writing with our application? Otherwise our situation is as follows. i am 32 he is 34 i am employed permanent in public sector earning 30k he works for a telecom firm earning 28k, we have been renting for 4 years paying 12000, no loans or credit cards, have a property abroad which we make 300 a month profit on rent, this has been going into a savings account but we have also been drawing on it so there's only about 3000 in it but we have been gifted 20,000 from his parents on sale of a house . Do you think we stand a chance of getting a mortgage of 180,000?

Hi Loolloo78, couple of questions I have first to be able to give you an accurate assessment... The property that you have abroad, is there a mortgage o/s on it? If so how much is o/s and what is the value of the property? If there is a mortgage is it held abroad or here? Just to clarify your rent is €1,000 per month and you have been paying this by standing order from your bank account each month as opposed to in cash? Is the €20k gift from his parents currently held in an account in your names or will you be receiving the money further down the road? Of the money you were given to mind for your siblings how much is left and how much of that is yours to use? If you give me the answers to these I can give you an accurate idea of how you stand. If you'd prefer to send the details privately by PM that's no problem at all, thanks

loolloo78

Hi, the property abroad has a mortgage held abroad of 85,000 oustanding the property is valued at about 110,000. Our rent is 1150 per month and is paid standing order. The 20k gift has been placed in our account. Of the gifted money from my father to my siblings and I we have 5000 left in my account which is mine. we intend to use it for furniture etc. Thanks so much for your help.

The_Conductor

loolloo78- you have a number of separate issues here.

1. The cash in your account- how its apportioned between your siblings and how you managed to get through 15k of that which is yours, in under a year. This is massive outgoings- you've spent possibly as much as 200% of your net income over the past year. You will need to stop this immediately- and start saving- to show that the last year was an anamoly and is not a reasonable milestone to use to determine your credit worthiness.

2. The property abroad will affect your borrowing potential in Ireland- irrespective of whether the loan itself if held abroad or here.

3. You are stating that you are making a profit of EUR300 a month on renting out the property abroad- is this net after tax profit? You are aware that as you're Irish tax resident you are liable for tax on your foreign rental income (less any local tax paid, if there is a reciprocal tax agreement with the country in question)? What have you been spending this 300 a month on? How come you only have 3k of this income saved? Alongside the 15k you've dissipated from your 20k windfall- this would not inspire confidence in your financial affairs.....

4. A mortgage of 180k? Depends...... You will need to clarify the nature of the property abroad and whether you are uptodate with your legal and financial affairs regarding this property.

If you have an o/s loan of 80k on this property- this would normally reduce your borrowing capacity by a commensurate amount here (a bit less- and how its handled would depend on the lending institution).

If you have an income of 30k, you partner of 28k and rental income of another 12k- this equals a gross income between you of perhaps 70k

4 times the 70k is 280k, less the o/s amount on the other mortgage 200k @ 80% as you're not a first time buyer- means you'd need perhaps 30-40k in savings and the property you'd be looking at would have a max price of 220-230k (if you get a cheaper property- you would still only get perhaps an 80% mortgage- as you're not a first time buyer- and a first time buyer would get a max of 90%- providing it was a freehold dwelling, not an apartment).

So- lots of possible ways of looking at this- but- you need to stop spending significantly more than you have in income. You need to ensure your tax affairs are in order. You need to save possibly as much as a 20% deposit etc. etc. etc.

Victor

Transfer your siblings' money into a separate account, possibly one for each.

killers1

smccarrick wrote: »

loolloo78- you have a number of separate issues here.



If you have an income of 30k, you partner of 28k and rental income of another 12k- this equals a gross income between you of perhaps 70k

4 times the 70k is 280k, less the o/s amount on the other mortgage 200k @ 80% as you're not a first time buyer- means you'd need perhaps 30-40k in savings and the property you'd be looking at would have a max price of 220-230k (if you get a cheaper property- you would still only get perhaps an 80% mortgage- as you're not a first time buyer- and a first time buyer would get a max of 90%- providing it was a freehold dwelling, not an apartment).

So- lots of possible ways of looking at this- but- you need to stop spending significantly more than you have in income. You need to ensure your tax affairs are in order. You need to save possibly as much as a 20% deposit etc. etc. etc.

No bank in the country will allow rental income derived overseas as income to be factored into a homeloan application.

You'll get more than 4 times income as no lender operates off a multiple of income X 4

You will get up to 92% irrespective of the fact that you are not a first time buyer.

RXMPS

loolloo78 wrote: »

Hi my partner and I are planning on applying for a mortgage. Just wondering about the bank statements: My father gifted myself and my siblings 20 grand to share when he sold a house a year ago and it was agreed that I would manage the money and keep it in my account ( as they are young students) so I have been withdrawing money to give them and buying things using my laser card. Basically what I'm saying is my statement will show all this and it will look like I have been spending frivolously, could this affect my application?

It sounds dodgy because it is.

Should be a seperate account for each, with it's own laser card etc.

The way your doing it is a mess and there will be alot of fighting and alot of accusations thrown around the place in the future.

killers1

RXMPS wrote: »

It sounds dodgy because it is.

Should be a seperate account for each, with it's own laser card etc.

The way your doing it is a mess and there will be alot of fighting and alot of accusations thrown around the place in the future.

You're assuming her siblings have an issue with how the money has been distributed? Her question was in relation to her chances of getting a mortgage...

rcdk1

OP, you should look into implications of the Gifts which have been given to you and your partner.

On paper ye have received €40,000 which may have tax implications in terms of:

• tax on the gifts themselves [EDIT: Tax on future gifts/inheritances] (Gift Tax and Capital Acquisition Tax) and
• on future inheritances.

The bank may want assurances that the money given to you is actually a gift:

• that it's not a loan, which would affect your ability to repay the mortgage, or
• that the person giving you the money (even if it's your parents) doesn't have an interest/stake in the property (which is the bank's collateral)

killers1

rcdk1 wrote: »

OP, you should look into implications of the Gifts which have been given to you and your partner.

On paper ye have received €40,000 which may have tax implications in terms of:

• tax on the gifts themselves (Gift Tax and Capital Acquisition Tax) and
• on future inheritances.

The bank may want assurances that the money given to you is actually a gift:

• that it's not a loan, which would affect your ability to repay the mortgage, or
• that the person giving you the money (even if it's your parents) doesn't have an interest/stake in the property (which is the bank's collateral)

In relation to gift tax the first €434k or so given from a parent to a child is exempt. The figure is added to any future or previous gifts received and only when you pass that threshold will you have a tax liability. You need to be gifted or inherit assets valued @ another €414k before a tax laibilty arises.

In relation to the bank looking for assurances re the gift the following will suffice:

'I Joe Bloggs confirm I am gifting my daughter Jane Bloggs the sum of €20k to assist with the purchase of (address). I also confirm that this gift is non-repayable and I have no beneficial interest in this property en foot of making this gift'

rcdk1

killers1 wrote: »

In relation to gift tax the first €434k or so given from a parent to a child is exempt. The figure is added to any future or previous gifts received and only when you pass that threshold will you have a tax liability. You need to be gifted or inherit assets valued @ another €414k before a tax laibilty arises.

I mis-read the threshold table for CAT and was referring to child-to-parent gifts/inheritances threshold (which is only ~€33k). However it is also true that the old €434k threshold for parent-to-child has been progressively reduced over the last few years to €250k.

killers1

rcdk1 wrote: »

killers1 wrote: »

In relation to gift tax the first €434k or so given from a parent to a child is exempt. The figure is added to any future or previous gifts received and only when you pass that threshold will you have a tax liability. You need to be gifted or inherit assets valued @ another €414k before a tax laibilty arises.

I mis-read the threshold table for CAT and was referring to child-to-parent gifts/inheritances threshold (which is only ~€33k). However it is also true that the old €434k threshold for parent-to-child has been progressively reduced over the last few years to €250k.

A lot of the inheritance tax was being earned on asset values of property so it makes sense for the government to reduce the threshold to reflect falling property values, whilst trying to boost the Revenue's coffers at the same time

loolloo78

Some of you have not read the details correctly and have jumped to assumptions. I did not have 15k from my fathers gift to spend on myself and please be advised that there is absolutley nothing"dodgy" about my financial affairs. Killers thank you, you have been the most helpful, least judgemental, much appreciated.