Buying a home with Credit Union loan

Dublin21

Hi,

Not sure if this has been covered before but i can't find anything on it so apologies if i'm bringing up an old question!

Basically i am wondering if anyone has gone through their Credit Union for a loan to buy a house outright?

Myself and my partner have seen a place that we both like and the asking price is just under 110k (Plz note this is an example, i am not in a position to ask for that tomorrow!). Also we wouldnt be looking at taking out a loan of over 100k so i realise that that would be our budget.

Myself and my partner have good records with our own C.U's as have our families.
I am in full time employment my partner is temping but has regular money going into C.U.

Anyone have experience of what kind of stance the C.U take on home loans?
Pretty much looking for Pro's and cons here.

For the above example we would be looking to take out around 90k. I know they usually give 3x what you have saved and realise they may look for a bit more due to the nature of the loan.
We could either split the loan and both go for half each or i could go for the full amount.
The max term is 15 years and the interest rate currently on a multi purpose premium loan is 5.9%. (Works out about 750e on the above)
I realise this is higher than banks but our thinking is that the place would be ours outright (and not the banks) and we can make extra payments when needed.
*(Please note i realise my Partners chances of getting a high enough loan would be hindered by the fact he is temping but we are asking this on the presumption he will be in Full time employment by that stage)

I also seen on the loan form that if taking out the loan in relation to buying a house they can alter interest rates from time to time... Why? And is there a regulation on this?

Currently i would be more comfortable buying a house via my credit union than the banks but thats from personal experience with my actual credit union (I.e. more flexibility/Recognition etc).

Once again looking for Pro's and cons' - not saying im going to go out and do this in the next few days!

Thanks!

D3PO

the idea that the house would be yours outright is misguided.

no credit union if going to give an usecured loan of 90k out so you will have to secure it against an asset. the only asset you will have i suspect with that value will be the house ergo defeats the purpose.

if makes no economic sense at all to pay a higher rate to the credit union than from borrowing from the bank none at all.

godtabh

D3PO wrote: »

if makes no economic sense at all to pay a higher rate to the credit union than from borrowing from the bank none at all.

If possible you could pay it off a lot earlier when you have extra money.

Very difficult to do this with fixed rate loans over 20/30/40 years

Jo King

godtabh wrote: »

If possible you could pay it off a lot earlier when you have extra money.

Very difficult to do this with fixed rate loans over 20/30/40 years

Very few mortgages are fixed for the full term. Most are variable with the option to fix for period of up to 5 years.
Credit Unions are limited in how much they can lend to any one member and also charge a lot more for loans than the normal mortgage rate.
The APR on a 1% a month loan cane be over 25%

Dublin21

Thanks for the replies.

So if they are limited with the amount they can give - is this set in stone?
Is there a max they will give a single person in full time employment with a certain wage or is it at the discretion of the individual cred union?

Also in regards to the C.U looking for an 'asset' - is this not what the savings are for?
I.e they would have 30k of my savings if it was to be written off as a bad debt (Worst case scenario).
Surely if i bought it 'outright' i could sell it at my own decision and not have to go through the credit union?
If i were to take out a 15 year mortgage with a bank there would be about 50-60e in the repayment difference per month, i initially didn't really mind the difference but that was based on thinking we would own the house outright..

And yes making early payment/lump sums is a big deciding factor for me. Although i realise banks will allow you to make lump sum payments off certain types of mortgages.

The loan offered is a multi purpose premium loan.
The interest is set at 5.9% at the moment (i understand that can change) but why are they allowed to change the interest rate from time to time on the loan if its for a home?
Is this allowed? I could be using the money for anything (within approval) but should they not have a separate loan for this?

Thanks again!

StillWaters

This is not a goer, I'm sorry

There is no way a credit union will give you a loan to buy a house. They are prohibited from giving out mortgages, and no matter what way you dress it up, this is what you are looking for.

Dublin21

Hi Stillwaters,

On the multi purpose loan application one the questions asks you to state the purpose of the loan. Home purchase has its own section on that form.

Kosseegan

Home purchase in that context is to cover borrowing to pay costs associated with a home purchase such as solicitor, stamp duty, land registry fees etc.

Dublin21

Kosseegan wrote: »

Home purchase in that context is to cover borrowing to pay costs associated with a home purchase such as solicitor, stamp duty, land registry fees etc.

Hi,

Ok... but the actual loan application form is that of the Multi purpose premium loan which is loans in excess of 30K.. Would a credit union really loan out that sort of money for just the above?

Dublin21

Just to add, obviously if its a certain No go i'll say close the thread and don't have any need for Pro's + cons but is it absolutely Certain that they will not loan for the purchase of a property? ..

Thanks again.

StillWaters

Like was said in certain circumstances they will loan for costs associated with home purchase, but not for home purchase itself.

In any case, it would leave you locked out of Mortgage interest relief, mortgage interest supplement, MARP etc., far better to go for a bank, and a SVR rate if you want to pay down the mortgage quickly.

Dublin21

I would think loaning 30k + to someone who has just got a mortgage, to just cover the fees of that mortgage, would be a bit much?
Plus i doubt someone with 10k plus in the credit union would need to take out a loan just to cover costs?
If thats all its for then i query again why they specify that rates will change time to time on House Purchase? and do not specify this for other reasons against the loan.
That is quite confusing tbh!

Well the way its going it will be in the new year that i go for this anyway so that leaves MIR out (unless by any miracle it is extended).

In relation to MARP - this is the sort of pros and cons i was looking for.
I.e. ok i can't go the above if i go through the CU but is there an equivalent?
From experience the CU are more flexible in relation to changing the term/repayment amount etc then the bank.