First time mortgage with lump sum from parents but no savings?

SmokeyEyes

Hi there.

I know this is a long shot but thought I'd ask. We're planning on moving out to rent in the next couple of months and planned to use a year of renting/saving to help us apply for a small mortgage this time next year as we have no savings at the moment due to us retraining etc. and I'm currently not working and receiving social welfare.

However my parents, seeing the cost of renting against what we could buy the same apartment for, have offered a 30k lump sum to help us get a 100k mortgage towards apartment.

Now the question is, without savings will the bank touch us? The mortgage would be very small but as it is I'm on social welfare payments and my partner is in a temporary position that will be on a roll over basis each year. Even so we could easily afford the repayments between us and I'm obviously hoping to get a job ASAP.

Would feel like eejits asking the bank what are chances are if they're going to laugh at us so would really appreciate some advice before Monday when we're going to arrange a meeting!

bmwguy

SmokeyEyes wrote: »

Hi there.

I know this is a long shot but thought I'd ask. We're planning on moving out to rent in the next couple of months and planned to use a year of renting/saving to help us apply for a small mortgage this time next year as we have no savings at the moment due to us retraining etc. and I'm currently not working and receiving social welfare.

However my parents, seeing the cost of renting against what we could buy the same apartment for, have offered a 30k lump sum to help us get a 100k mortgage towards apartment.

Now the question is, without savings will the bank touch us? The mortgage would be very small but as it is I'm on social welfare payments and my partner is in a temporary position that will be on a roll over basis each year. Even so we could easily afford the repayments between us and I'm obviously hoping to get a job ASAP.

Would feel like eejits asking the bank
what are chances are if they're going to laugh at us so would really appreciate some advice before Monday when we're going to arrange a meeting!

Its your employment situation that will cause you problems. As for the savings, do something like transfer the 30k into a savings/ credit union account gradually to look like it was built up over time then meet your bank.

Cant see them overlooking the fact that you're on SW though and partner is temporarily employed.

Best of luck anyway

irishgirl19

Why dont you go for the rent-to-buy scheme?

SmokeyEyes

Hmm doesn't sound good for us so!

What if my mam went guarantor on the apartment as well?

I'll check out the rent to buy scheme I didn't realise that was still going although the only problem is if the properties are very expensive in it! Will take a peek!

Fozzie Bear

From my own experince with our Broker he said the Banks want to see a significant history of saving money to prove you can save/sacrifice a certain amount of money every month and not just be pi$$ing it all away. You should lodge small amounts of money into a savings account every month to build up a certain amount. Then maybe get the rest in a lump sum from your parents as a gift. There again the banks might want to know how you managed to save the money given you are on welfare/temporary job. They are EXTREMELY picky about the smaller details and we had to jump through some amount of hoops. They also hate over drafts and anything like gambling/Paddy Power stuff on credit card statements. I'd strongly advise on getting a good mortgage broker too rather then approaching the banks individually.

But as BMWguy said the lack of a permanent job and claiming social welfare is certainly going to be a massive problem for the banks and I seriously doubt they will give you a mortgage without you both having a permanent income to repay it.

Best of luck with it.

SmokeyEyes

Fozzie Bear wrote: »

From my own experince with our Broker he said the Banks want to see a significant history of saving money to prove you can save/sacrifice a certain amount of money every month and not just be pi$$ing it all away. You should lodge small amounts of money into a savings account every month to build up a certain amount. Then maybe get the rest in a lump sum from your parents as a gift. There again the banks might want to know how you managed to save the money given you are on welfare/temporary job. They are EXTREMELY picky about the smaller details and we had to jump through some amount of hoops. They also hate over drafts and anything like gambling/Paddy Power stuff on credit card statements. I'd strongly advise on getting a good mortgage broker too rather then approaching the banks individually.

But as BMWguy said the lack of a permanent job and claiming social welfare is certainly going to be a massive problem for the banks and I seriously doubt they will give you a mortgage without you both having a permanent income to repay it.

Best of luck with it.

If my mother went guarantor which she's willing to do, do you think that would make enough difference on a very small mortgage?

Sandy Vagina

You should save up the money yourself. You'll feel much better if you buy the house yourself with your own money that you earned, instead of sponging off your folks.

SmokeyEyes

Sandy Vagina wrote: »

You should save up the money yourself. You'll feel much better if you buy the house yourself with your own money that you earned, instead of sponging off your folks.

Thanks for that but we're not sponging the money would be a loan to help us avail of the low prices at the moment.

wazzer1

Do the banks recognise paying rent in a situation like this, looking for a mortgage with a lump sum? Would they recognise it instead of savings?

anncoates

Sandy Vagina wrote: »

You should save up the money yourself. You'll feel much better if you buy the house yourself with your own money that you earned, instead of sponging off your folks.

Think he's looking for advice, not moral homilies.

OP, I think your curre employment situation will go against you at the moment but you at least will have a decent deposit for when your employment situatio picks up.

Sandy Vagina

anncoates wrote: »

Think he's looking for advice, not moral homilies.

Buzz off. I gave my opinion. I'm entitled to do that.

anncoates

Sandy Vagina wrote: »

Buzz off. I gave my opinion. I'm entitled to do that.

Calling it an 'opinion' is strefthing it somewhat.

Scortho

wazzer1 wrote: »

Do the banks recognise paying rent in a situation like this, looking for a mortgage with a lump sum? Would they recognise it instead of savings?

You need to sort out your employment situation first.
No bank will give a mortgage to a person unless they're pernament.
They only loan to the cream of the crop these days.
Can i ask why an apartment? Do you plan to have children in the future?
Irish apartments aren't exactly the best place to raise a child, they're tiny.

As neither of you are permanently employed, I can't see the bank giving you a mortgage guarantor or not.
Along with the fact that you have no savings record or anything.

What could be possible is if your mam buys the house in her name and you pay the mortgage to her.

xper

bmwguy wrote: »

... As for the savings, do something like transfer the 30k into a savings/ credit union account gradually to look like it was built up over time then meet your bank.

Won't fool anyone. The bank will know the couple's monthly income from job/SW and will want an explanation of where large monthly deposits are magically coming from.

irishgirl19 wrote: »

Why don't you go for the rent-to-buy scheme?

While such schemes may seem attractive to and indeed are targeted at a couple in this position, they are not available in all areas and property types and are generally bad value in the long run.

SmokeyEyes wrote: »

Thanks for that but we're not sponging the money would be a loan to help us avail of the low prices at the moment

Whoa there horse. A parental loan is far worse than a parental gift from the bank's point of view. If your parents were gifting you the money, the lender requires them to put in writing that this is the case and also that they will have no share or other financial interest in the purchased property. It is then considered a fairly neutral arrangement. If its a loan, then they correctly look on this as a liability that diminishes your ability to pay back the mortgage.

I also wouldn't get too hooked up on "the low prices at the moment". Prices are not low. They are merely lower than the crazy prices of the boom. They are approaching normal (compared to rent yields, average wage, etc). And most economic indicators suggest that they will stay more or less where they are or drop further (except maybe in a few select pockets of Dublin) over the next few years. There is no hurry.

wazzer1 wrote: »

Do the banks recognise paying rent in a situation like this, looking for a mortgage with a lump sum? Would they recognise it instead of savings?

Yes, absolutely. Rent and regular savings are looked for as a clear demonstration of the ability to meet a particular level of monthly mortgage payments. Regularly monthly payment of rent will obviously be converted straight to regularly monthly payment of mortgage. Regular savings may be slightly more impressive as they are voluntary and they demonstrate financial discipline but at the end of the day the bank wants to see that you are able to fork out x amount each month after living expenses on your income. Ideally, even if your rent is eating up nearly all of what's left each month after living expenses, its a good idea to put even a very small amount each month to savings if you can. It make a good impression.


Overall, I would estimate that your chances of getting a mortgage now while you are on SW, have no savings and with a parental loan rather than a gift are nil. But I am just a guy on the web. Talk to a professional broker - initial consultation, at least, should cost you nothing.

SmokeyEyes

Thanks for all the replies!

To clarify, the lump sum would be a gift but of course in the future we would want to pay it back down the line that's what I meant.

Ok looks like renting for a year is the best option and hopefully our position will be better by the end of a year and we'll have a record of rent/savings to back it up.

I think my mam would consider buying it with us paying the mortgage and then selling it to us after a year when we'd technically qualify for a mortgage, does that sound like a smart plan or a load of hassle? Appreciate the feedback guys on Monday we'll organise a meeting just wanted to get a feel for what would happen!

bmwguy

I, like you, got a 30k gift from my father to buy a house. I heard the banks trawl through everything, but my 30k just magically appeared one day, it wasnt an issue. I had a credit card balance not always paid on time, and I got the mortgage with 1 payslip and 6 months bank statements. Gambling transactions all over it, plus lots of weekend ATM withdrawals. Approval took about a week, I did have a full time permanent job though. I had a very good broker, this was with AIB in 2010 even after the bank guarantee. It had to be my permanent, decent income that swung it, in every other way I wasnt a model for being good with money. They defo didnt analyse my financial past

Scortho

Can I ask why you're in such a rush to buy and where you're thinking of buying.
There's nothing wrong with renting for a couple of years and no offence, youre not really in the position to buy or own a house.

There's a lot more bills to be paid with home ownership than there is with a rental.

Mrs OBumble

Have you lived together before? Huge risk taking a mortgage together if you haven't. What if the relationship goes west six months down the track.

And on the other hand, what if one of you gets preggers and has to stop working for a couple of months - have you got savings to buffer you against that? (Apologies if you''re both male - but the post doesn't give clues.)

Frankly, I think you need to sort our your savings record and employment situation first, before you can even think of buying.

Like another poster here, I don't have a lot of time for adults getting unstructured "loans" off mammy and daddy. "It's a gift, but of course we'll pay it back later" cuts very little ice, unless you've got a clear repayments plan in place.

StillWaters

SmokeyEyes wrote: »

I think my mam would consider buying it with us paying the mortgage and then selling it to us after a year when we'd technically qualify for a mortgage, does that sound like a smart plan or a load of hassle?

if your mam buys it, and you pay rent, tax will be due on the rent, and capital gains tax on the sale
the smartest plan as I see it is to get your employment position sorted, then move in together and rent, start saving and a year down the line revisit the possibility of buying.

hmmm

Scortho wrote: »

Can I ask why you're in such a rush to buy and where you're thinking of buying.

Because Rent is Dead Money silly. We're back in 2006.

No bank will give you a mortgage without evidence of being able to save and having a future income stream. So you'll need to show both over the next year - although I'm surprised to hear you'll "easily" be able to repay the borrowings on 70k.

What happens if your partner doesn't have their contract renewed? Any chance she'd be able to go permanent? What if interest rates go up 2 or 3 %?

jlm29

I'll leave my opinions regarding whether you should or shouldn't buy to one side here. I'll just pass on a couple of bits of info (I suppose they're anecdotes really).

A couple of years ago, a friend of mine, on a temporary contract and her boyfriend who was in college with no income, got a mortgage of a bit more than what you're talking about. I'd imagine my friend would have had very regular savings to prove she would be able to pay back a mortgage. I think her parents probably went guarantor. I'd say they also probably gifted a fair bit of a deposit (I've heard reference to her parents helping them out- so must have been one or other, but was probably both).
Another friend of mine bought a house for a little bit less than what you're talking about, and her mortgage repayments would more than be manageable, even if both her and her partner were on social welfare. It's about half the cost of what she would pay to rent in the same area.

I'd imagine you'll have to show evidence of some saving. Could ye stay put for six months, save save save, and THEN go to the bank/mortgage broker? I know it's a pain, if ye want to live together now, but it might be the best option in the long run.

SmokeyEyes

Thanks for all the info guys, to clarify we've been together years but due to us going back to retrain in different careers we just didn't have the money to save and ended up supporting eachother while the other was retraining and now we're finally done and trying to get our careers sorted. My boyfriend is on a teaching contract so won't be made permanent until he has three years under his belt in a school so at the moment he's on a rolling temporary contract.

We're both late 20's, just got engaged last month (I'm the girl by the way) and just wanted to make the best decision about moving out and starting a proper life together.

We're more than happy to rent I just wanted some feedback on whether it would be better for us to try and push to buy. We have no problem renting for the year and saving hard (I'm trying incredibly hard to get a job as well ASAP) to get a mortgage next year just wanted to see if a mortgage was possible. It was our parents who suggested helping with a lump sum to try and buy so that's the only reason we're asking for info and were going to even consider going to the bank with the proposal. We're more than happy to rent and that seems the easiest option. Thanks for all the info!

Villa05

SmokeyEyes wrote: »

Thanks for that but we're not sponging the money would be a loan to help us avail of the low prices at the moment.

100K for and apartment is not low priced

Lyn256

I wouldn't count on getting a mortgage-we've been turned down recently despite excellent help. Hubbie in permanent job, me- retraining this year. Looking for less than 25% value of the house and we've been turned down as we pay our rent in cash and don't withdraw it in one lump sum (couple of withdrawals) so technically we can't show ability to pay. (Have lease, rent book, reg with PTRB and landlord would give affidavit)
Advice given is that we will have no problem after we can show six months of s/o payments to landlord.
Basically, there is a list of criteria that you need to have and if you miss one-no mortgage!

SmokeyEyes

Lyn256 wrote: »

I wouldn't count on getting a mortgage-we've been turned down recently despite excellent help. Hubbie in permanent job, me- retraining this year. Looking for less than 25% value of the house and we've been turned down as we pay our rent in cash and don't withdraw it in one lump sum (couple of withdrawals) so technically we can't show ability to pay. (Have lease, rent book, reg with PTRB and landlord would give affidavit)
Advice given is that we will have no problem after we can show six months of s/o payments to landlord.
Basically, there is a list of criteria that you need to have and if you miss one-no mortgage!

Thanks for this we're gonna head the renting way just wanted people's opinions on the possibility of a mortgage!

Gatling

Something I don't think anybody has pointed out if your on social welfare and have a lump sum over 20,000 in a bank /credit union expect to have your payment reassessed possibly cut

No Pants

Fast forward 18 months. OP can't afford the mortgage for whatever reason and is back complaining that the bank should never have given the mortgage to a teacher on a temporary contract and someone on the dole and now they shouldn't have to pay it back.

SmokeyEyes

No Pants wrote: »

Fast forward 18 months. OP can't afford the mortgage for whatever reason and is back complaining that the bank should never have given the mortgage to a teacher on a temporary contract and someone on the dole and now they shouldn't have to pay it back.

Guys I was asking for a bit of advice not an attack. We're two responsible people who were made an offer to help us along and wanted to ask people on boards.ie at the weekend before we asked the bank on Monday. There's no need to be rude we knew it was a long shot but there's no need to get snide about it when you don't know us in the slightest. Thanks to all the genuine replies but we've made our decision.

Mr Teeny

In a very similar situation to you op. I went back to retrain as a teacher and my fiancee has also gone back to college part time so we put everything on hold for a few years. College course and living costs killed us with both out of work so we are left with our little savings pot.

We had two options… rent or get a small mortgage and buy a starter home using the rest of our savings.

The only reason we even considered buying at this stage is because the rent where we are is crazy high. Pay €1000+ a month for renting something half decent or €500-600 on a small mortgage… seemed like a no brainer for us. EBS were giving mortgages to teachers on temp contracts and most of the other providers would give one if you were temporary but had panel rights for a future perm job. Now though even if you have panel rights and are guaranteed a permanent position you are fighting an uphill battle until you can provide that scrap of paper that says ‘permanent’.

My advice (and the option we are taking), rent for the year or two and put a few quid into savings too when you can. Then touch wood your OH will be made permanent soon enough (if he’s primary, with three years of service in a temp position he’d get subsidiary panel rights), you’ll be working away too hopefully and you’ll have proof of savings, a good spend record and all the paperwork to go with it. It will be plain sailing for you then. As it is now, while you are on SW your contribution wouldn't count towards the mortgage so application would be made solely in the name of your OH and while he is still temporary it will be a tough ask.

Best of luck with it and with the job hunt!

SmokeyEyes

Mr Teeny wrote: »

In a very similar situation to you op. I went back to retrain as a teacher and my fiancee has also gone back to college part time so we put everything on hold for a few years. College course and living costs killed us with both out of work so we are left with our little savings pot.

We had two options… rent or get a small mortgage and buy a starter home using the rest of our savings.

The only reason we even considered buying at this stage is because the rent where we are is crazy high. Pay €1000+ a month for renting something half decent or €500-600 on a small mortgage… seemed like a no brainer for us. EBS were giving mortgages to teachers on temp contracts and most of the other providers would give one if you were temporary but had panel rights for a future perm job. Now though even if you have panel rights and are guaranteed a permanent position you are fighting an uphill battle until you can provide that scrap of paper that says ‘permanent’.

My advice (and the option we are taking), rent for the year or two and put a few quid into savings too when you can. Then touch wood your OH will be made permanent soon enough (if he’s primary, with three years of service in a temp position he’d get subsidiary panel rights), you’ll be working away too hopefully and you’ll have proof of savings, a good spend record and all the paperwork to go with it. It will be plain sailing for you then. As it is now, while you are on SW your contribution wouldn't count towards the mortgage so application would be made solely in the name of your OH and while he is still temporary it will be a tough ask.

Best of luck with it and with the job hunt!

Thanks a mill!

chris85

Mr Teeny wrote: »

In a very similar situation to you op. I went back to retrain as a teacher and my fiancee has also gone back to college part time so we put everything on hold for a few years. College course and living costs killed us with both out of work so we are left with our little savings pot.

We had two options… rent or get a small mortgage and buy a starter home using the rest of our savings.

The only reason we even considered buying at this stage is because the rent where we are is crazy high. Pay €1000+ a month for renting something half decent or €500-600 on a small mortgage… seemed like a no brainer for us. EBS were giving mortgages to teachers on temp contracts and most of the other providers would give one if you were temporary but had panel rights for a future perm job. Now though even if you have panel rights and are guaranteed a permanent position you are fighting an uphill battle until you can provide that scrap of paper that says ‘permanent’.

My advice (and the option we are taking), rent for the year or two and put a few quid into savings too when you can. Then touch wood your OH will be made permanent soon enough (if he’s primary, with three years of service in a temp position he’d get subsidiary panel rights), you’ll be working away too hopefully and you’ll have proof of savings, a good spend record and all the paperwork to go with it. It will be plain sailing for you then. As it is now, while you are on SW your contribution wouldn't count towards the mortgage so application would be made solely in the name of your OH and while he is still temporary it will be a tough ask.

Best of luck with it and with the job hunt!

Banks are happy now when teacher has CID and they would consider that permanent more or less.

OP, no chance of mortgage unless you get CID or permanency.