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Is it possible to get a loan of 50k on minimum wage?

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  • 18-03-2014 2:43pm
    #1
    macnug
    Registered Users Posts: 619 ✭✭✭


    Asking this question for my nephew. His situation is, hes on about 18k a year but has 40k in savings from a claim years ago, has two kids, wife and paying about €750 in rent, no regular savings. I told him he wouldn't but someone told him he could, is it possible?

    Edit: Sorry should have specified, its for a house.


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    #2
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    Minimum wage and no regular savings; Id say its very unlikely. Is his wife working?


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    As a rough rule of thumb- he 'might' qualify for 4 times the primary salary, and 1.5 times a secondary salary. Unless his wife is working and generating income- their borrowing capacity might max out at around 70k- which together with the 40k nest egg he has- would mean his max budget might be around 110k........

    If he can consistently show paying 700-750 a month rent- and has no debts or marks on his borrowing history- there is no reason he might not get 4 times his gross salary- with conditions and caveats of course.


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    #4
    wench
    Registered Users Posts: 1,645 ✭✭✭wench


    His main problem will be the disposable income limits.
    For example, AIB require a family of 2 adults & 2 children to have 2,500 per month after loan repayments.

    As his gross is only 1,500, he has no chance of passing that test.

    As they will only offer the lowest of the income multiple, proven rent/savings or disposable income, I think he is out of luck.


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    #5
    macnug
    Registered Users Posts: 619 ✭✭✭macnug


    djimi wrote: »
    Minimum wage and no regular savings; Id say its very unlikely. Is his wife working?

    That's what I thought. No she's not working.


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    #6
    macnug
    Registered Users Posts: 619 ✭✭✭macnug


    The_Conductor wrote: »
    As a rough rule of thumb- he 'might' qualify for 4 times the primary salary, and 1.5 times a secondary salary. Unless his wife is working and generating income- their borrowing capacity might max out at around 70k- which together with the 40k nest egg he has- would mean his max budget might be around 110k........

    If he can consistently show paying 700-750 a month rent- and has no debts or marks on his borrowing history- there is no reason he might not get 4 times his gross salary- with conditions and caveats of course.

    Even these days with lending being tight? I thought during the boom maybe but I didn't think he would now a days. Is there any bank/ building society that are more relaxed on their rules than others?


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    #7
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    Unfortunately not with the main lenders as another poster pointed out the lenders require you to have a minimum amount left over per month after stressed mortgage repayments of €2,050 per couple plus €250 per child so in this case €2,550 and his gross monthly income is only €1500.
    Perhaps he should contact his local City or County Council as they may have a mortgage to suit him.


    macnug wrote: »
    Asking this question for my nephew. His situation is, hes on about 18k a year but has 40k in savings from a claim years ago, has two kids, wife and paying about €750 in rent, no regular savings. I told him he wouldn't but someone told him he could, is it possible?

    Edit: Sorry should have specified, its for a house.


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    #8
    macnug
    Registered Users Posts: 619 ✭✭✭macnug


    wench wrote: »
    His main problem will be the disposable income limits.
    For example, AIB require a family of 2 adults & 2 children to have 2,500 per month after loan repayments.

    As his gross is only 1,500, he has no chance of passing that test.

    As they will only offer the lowest of the income multiple, proven rent/savings or disposable income, I think he is out of luck.

    Makes sense really, although what doesn't makes sense is that they would be paying a lot less with a mortgage.


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    #9
    Mr McBoatface
    Closed Accounts Posts: 1,579 ✭✭✭Mr McBoatface


    Any other incomes ? You say the wife isn't working.... is she getting job seekers allowance ? I only ask because if they have no other source of income and his income is not from something like a CE scheme they would qualify for Family Income Supplement .

    Just some rough figures here but going off the information you supplied the weekly income is 340 euro, the FIS rate for a two child househouse is 602 euro so they would get 60% of the difference which is about 157 euro per week.

    With that additional income it should help get a loan. I'd say main lenders may be difficult to deal with and as Trish56 said a better option may be local City or County Councils.


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    #10
    phormium
    Registered Users Posts: 3,340 ✭✭✭phormium


    Credit Union, open an account if he doesn't have one and save some bit if possible. Many credit unions are giving 15 yr loans for houses, in effect a mortgage and the only bet for someone in that sort of bracket. Rate is higher but at least it is an option.


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    #11
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    I don't think Credit Union's are lending for mortgages anymore... they are now regulated by the Central bank and as far as I am aware but not 100% their lending is restricted to circa 30k.
    phormium wrote: »
    Credit Union, open an account if he doesn't have one and save some bit if possible. Many credit unions are giving 15 yr loans for houses, in effect a mortgage and the only bet for someone in that sort of bracket. Rate is higher but at least it is an option.


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    #12
    phormium
    Registered Users Posts: 3,340 ✭✭✭phormium


    No that are not restricted to that amount and some are giving secured loans, secured on the property for longer terms than usual. A certain percentage of any credit unions loan book cannot be for long term loans but within that they have scope to lend for houses.

    I actually think they will become a major source of funding for for small mortgages for people with low incomes in the future, I might be proved wrong, who knows!


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    #13
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    Trish56 wrote: »
    I don't think Credit Union's are lending for mortgages anymore... they are now regulated by the Central bank and as far as I am aware but not 100% their lending is restricted to circa 30k.

    I asked the hypothetical question the last time I was in the CU getting a loan and she said that in theory they could lend amounts up to €30k+ provided the applicant can show the ability to repay. I dont know how it would work if put to the test though! Its one thing lending a few grand to buy a car or whatever, but for that sort of money I would have thought they would want some form of collateral guarantee.


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    #14
    phormium
    Registered Users Posts: 3,340 ✭✭✭phormium


    Low loan to value and take the property as security, that's the collateral. It is being done, ability to repay is of course number one priority and it all depends on the size of the credit union, the smaller ones would probably not be doing them.


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    #15
    macnug
    Registered Users Posts: 619 ✭✭✭macnug


    jobyrne30 wrote: »
    Any other incomes ? You say the wife isn't working.... is she getting job seekers allowance ? I only ask because if they have no other source of income and his income is not from something like a CE scheme they would qualify for Family Income Supplement .

    Just some rough figures here but going off the information you supplied the weekly income is 340 euro, the FIS rate for a two child househouse is 602 euro so they would get 60% of the difference which is about 157 euro per week.

    With that additional income it should help get a loan. I'd say main lenders may be difficult to deal with and as Trish56 said a better option may be local City or County Councils.

    Yea he just found out about fis recently and is going to apply for it if she doesn't get a job soon. I though sw payments aren't included in loan applications though?


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    #16
    macnug
    Registered Users Posts: 619 ✭✭✭macnug


    phormium wrote: »
    Credit Union, open an account if he doesn't have one and save some bit if possible. Many credit unions are giving 15 yr loans for houses, in effect a mortgage and the only bet for someone in that sort of bracket. Rate is higher but at least it is an option.

    I did say the credit union to him but I think he's not really in a position to save atm. Don't know how he can live off that money tbh.


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    #17
    Mr McBoatface
    Closed Accounts Posts: 1,579 ✭✭✭Mr McBoatface


    macnug wrote: »
    Yea he just found out about fis recently and is going to apply for it if she doesn't get a job soon. I though sw payments aren't included in loan applications though?

    He should apply straight away, the payment is not backdated and the longer he leaves it the more he is losing out. The payment is approved for a 52 week period before renewal. So if it is approved it will be paid for the year at the same rate even if the house wages increases at a later stage.

    Some lenders may look at FIS differently to other welfare payments, it will at least increase the household income and give the family a chance to build up a saving history.


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    #18
    L1011
    Registered Users Posts: 68,869 ✭✭✭✭L1011


    I'd need to check but I'm fairly certain that my mortgage offer stated that the cash they required me to have of my own couldn't come from compensation (along with other exclusions - borrowed elsewhere being one). That was with BOI. If I'm not misremembering that'd be another spanner in the works.


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