Mortgage Options

lightoffshore

Combined gross income of 93K, both in high tech industry (one of the ones which hasn’t been affected by the recession). Highly educated etc., but neither of us permanent as we both recently switched jobs.

Savings of 60K, currently saving 1300 per month, and paying rent of 600. Would like a mortgage of 200K to buy a house for 250K.

Thoughts on our chances of getting a mortgage? We’ve already been told by the bank that until one of us is permanent we won’t get one. Potential for a guarantor but we haven’t proposed this to the bank yet.

1. Will a guarantor help our case?
2. One of us will be permanent in 6 moths, does this matter – could we put the guarantor in place until then?
3. Any other way around this?
4. Is there a lower number for which we might qualify for (say 120k?)

Senna

You have been given the answer already, wait till you are permanent. Its unlikely that the bank would give you a mortgage for any amount if you are not permanent. Dont go down the route of a guarantor, what if both of you are laid off before being made permanent? You are both in the same industry and so both jobs could be threatened at the same time (unlikely, but still possible).
Asking someone to go guarantor on your mortgage is very selfish and there are countless examples of parents who went guarantor for their kids and are now faced with being responsible for paying mortgage out of their pensions.

There is nothing happening in the property market that should mean buying a house now is any better than in a years time.

lightoffshore

Senna wrote: »

You have been given the answer already, wait till you are permanent. Its unlikely that the bank would give you a mortgage for any amount if you are not permanent. Dont go down the route of a guarantor, what if both of you are laid off before being made permanent? You are both in the same industry and so both jobs could be threatened at the same time (unlikely, but still possible).
Asking someone to go guarantor on your mortgage is very selfish and there are countless examples of parents who went guarantor for their kids and are now faced with being responsible for paying mortgage out of their pensions.

There is nothing happening in the property market that should mean buying a house now is any better than in a years time.

Thanks Senna. A few questions:

1. Will a guarantor help our case?
2. One of us will be permanent in 6 moths, does this matter – could we put the guarantor in place until then?
3. Any other way around this?
4. Is there a lower number for which we might qualify for (say 120k?)

Guarantor would not be a parent. The suggestion that we would get one as a selfish act is not a very fair thing to say given you don't know the full situation. I just asked a few factual questions.

The only thing which is happening in the housing market is that there is a shortage of supply where we'd like to buy. We've been looking for over a year and nothing has come up which meets our needs. So if we don't act when we see the right thing we end up waiting a round ages. Also, we are in one of the areas where prices have started to recover.

D3PO

seriously he has already answered your questions.

until one of you are permanent you have no chance. Relax 6 months wont kill you. Its people rushing in head first that got many people into trouble in the first place.

lightoffshore

Okay D3PO, I get the picture, a guarantor will not be something of interest to the bank. Thanks.

What I don't get is why people don't just address the questions I asked, but instead prefer to give a moral lesson. I carry no debt, I have never carried debt. I have always operated prudently. I don't rush into things, and I do my best in life not to be "very selfish".

D3PO

lightoffshore wrote: »

I don't rush into things,

Your trying to rush this. You were told you needed to be permanent by the bank but your trying to corcumvent it to rush this.

Relax prices arent going up anytime soon theres no panic its only 6 months.

Scortho

lightoffshore wrote: »

Combined gross income of 93K, both in high tech industry (one of the ones which hasn’t been affected by the recession). Highly educated etc., but neither of us permanent as we both recently switched jobs.

Savings of 60K, currently saving 1300 per month, and paying rent of 600. Would like a mortgage of 200K to buy a house for 250K.

Thoughts on our chances of getting a mortgage? We’ve already been told by the bank that until one of us is permanent we won’t get one. Potential for a guarantor but we haven’t proposed this to the bank yet.

1. Will a guarantor help our case?
2. One of us will be permanent in 6 moths, does this matter – could we put the guarantor in place until then?
3. Any other way around this?
4. Is there a lower number for which we might qualify for (say 120k?)

A guarantor might help your case but you still mightn't secure the loan.
Banks really want to lend to people who are the best quality candidates. You and your partner tick 2 of 3 boxes:
1. You've a good income and combined your borrowings are just over two times your income.
2. You've got substantial savings, enough to cover deposit and legal fees etc and an lfv of 80%.

In 6 months time you will tick the 3rd box. However the bank may still not lend the 200k as its only one of you who will be permanent. Depends really in the mortgage department in the head office.
I don't know if they will remove the guarantor after 6 months. If I was the bank I wouldn't as I now have someone else who is liable for the loan if anything happens.
The same mortgage criteria applies for all mortgages no matter what the size of the loan. I can't really see them giving two people who aren't permanent a loan of 120k as the same risks still apply.

Your best way around this is to wait 6 months until one of you is permanent and apply again. Houses prices may have risen by 1 or 2% but I can't see them rising by 20% so your not going to lose out on a massive amount by waiting 6 months. There is also the likely scenario that they will fall with the ending of TRS and the start if repossessions in the buy-to-let sector!

You say that there is a shortage of houses that ticks the right boxes for you. When buying a house, it is rare/unheard of to find a house that has everything you want! Normally you'll have to compromise, maybe you might have to renovate, or forgo the double garage, off street parking or the south facing rear garden.

However say the bank gave you 120k and you went out and bought a property that you liked and in 6 months time your dream home pops up for 250k, one of you has been made permanent and the bank would loan you the 200k. How'd you feel knowing that had you waited, that house could have been yours.

Just because there's a lack of supply now doesn't mean that there won't be a house that meets your requirements in 6 months time. You'll also be in a much better situation financially if you wait as you'll have a greater deposit, so a lower LTV and lower repayments as a result.

I wish you the best of luck with whatever you decide to do

roro2

Leaving aside the permanency issue, banks generally don't like using guarantors anymore. But in the (unlikely, in my opinion) event that it accepted a guarantee as security, this would be for the term of the mortgage. To remove the guarantee, you would be need to reapply for a mortgage on your own merits in 6 months, but why would the bank agree to this change then? From its point of view, it would be difficult to justify voluntarily reducing its security position by releasing the guarantee. Best to talk to the bank on it.

killers1

lightoffshore wrote: »

1. Will a guarantor help our case?
2. One of us will be permanent in 6 moths, does this matter – could we put the guarantor in place until then?
3. Any other way around this?
4. Is there a lower number for which we might qualify for (say 120k?)

1. Most likely not as banks have moved away from accepting guarantors on mortgage applications to a large degree.
2. If you can provide some comfort to a lender that the position will automatically become permanent this may help your cause. Is it a case of probation hasn't been completed or you are contract employees? You say you recently both moved jobs, how recent?
3. Banks tend to be reluctant to lend to contract employees although in industries where contract positions are the norm they are more open to it. They tend to ask for a CV style working background to see how long you have been employed in your particular field, the types of positions you've held, what they know about your current employer & the sustainability of your income going into the future.
4. If you can provide comfort around being made permanent in 6 months being a formality you may have a chance of approval for a lessor amount than the €250k.

If I was to hazard a guess I'd say the lender you spoke to was BOI?

lightoffshore

Thanks Schortho, roro and Killers1 for your replies. Really appreciated. Its seems unanimous - a guarantor won't help.

Until now, we've been sussing things out through a broker. The broker hasn't given our names etc, which means we still have the option to go in and present our case. I know these things are pretty black and white, so I wonder if meeting the banker in person, and giving them a bit of a dog and pony show would help.

Killers1: To answer your question, I'm on a contract which ends in two years. I'm being approached by other employers fairly regularly so I'm sure I'll have lots of options when its done. The other half is also on a contract and has been told it will be a permanent position once the contract is complete, so I suppose you could call it probation. We both moved jobs in the last 6 months. Interesting that we might be able to provide comfort on that end. Since our broker has spoken to a few of the banks I'm not sure whether BOI were in the mix.

Senna

lightoffshore wrote: »

so I wonder if meeting the banker in person, and giving them a bit of a dog and pony show would help.

Unless you're meeting with Michael Noonan, no point what-so-ever.

lightoffshore wrote: »

Killers1: To answer your question, I'm on a contract which ends in two years. I'm being approached by other employers fairly regularly so I'm sure I'll have lots of options when its done. The other half is also on a contract and has been told it will be a permanent position once the contract is complete, so I suppose you could call it probation. We both moved jobs in the last 6 months. Interesting that we might be able to provide comfort on that end. Since our broker has spoken to a few of the banks I'm not sure whether BOI were in the mix.

All huge negatives.

Is there a reason why you have to buy now, rather than in 6 months time? change in circumstances etc etc?