Single income mortgage

ksarin

Hi All,

As I plan on getting a mortgage I went to aib, ebs and boi so far.

We're a couple with 3 kids on a single income of 55 k.

Aib said 110k, boi 115k and ebs 90k as the maximum ammount they would borrow.

Any idea whats the situation with other banks?

I've read here that Ulster counts child benefit towards repayment capacity. Anybody knows is this still the case? If so, do they consider the full amount or just portion of it?

Cheers

omahaid

Hi ya, I don't know if Ulster take childrens allowance as income but I just got approval in principal for €150k on €50k income, same as you 3 kids + 1 income, Ulster as well.

We have a fair bit of equity from the house we're selling so I suspect that's a factor.

Sun in Capri

Term/ lenght of mortgage would also be a factor.

ksarin

Wow that's great. 150 would just get us what we want

Though, we have 10% deposit and we're FTB so I'm not sure would that be considered as advantage or disadvantage?

Based on this looks like Ulster is really most family friendly compared to others.

Regarding the process with them, how does it looks like? Can you get pre-approved when you submit documentation before you decide which house you'll go with or approval in principle based on chat with no documentation is as far you can go before going sale agreed?

omahaid

We provided all documentation so I hope that when the time comes we will be good to go. I was told it was a combination of a large deposit, the fact we've been paying them a mortgage for 14 years and the fact we've been saving 800 a month. Your milage may differ however.

ksarin

Thanks a mill for the help. We'll see how it goes on my end. Fingers crossed.

I'm going to apply for 35 years term. When you got 150k approval, was it also over the max term or it was shorter?

omahaid

It's shorter, 25 years. I'm getting too old for 35 years

I've had a mortgage with Ulster since 2000 and I'm heading back for seconds, never had a bother with them to be fair.

ksarin

Thanks once again. Now I'll sleep better tonight

Wish you luck with the move!

ted1

No real harm in getting the number if kids wrong in the form, having one kid will make a big difference

omahaid

Ha, I gave that some thought but the childrens allowance would give it away to the quick witted banker :pac:

mel.b

ted1 wrote: »

No real harm in getting the number if kids wrong in the form, having one kid will make a big difference

Sorry but isn't it these sorts of shenanigans that helped Ireland get into the mess it is in?

Underdeclare kids or over declare income / rent a room etc...get a bigger mortgage than you can actually afford, get into trouble paying it back and then expecting everyone else to bail you out.

ted1

mel.b wrote: »

Sorry but isn't it these sorts of shenanigans that helped Ireland get into the mess it is in?

Underdeclare kids or over declare income / rent a room etc...get a bigger mortgage than you can actually afford, get into trouble paying it back and then expecting everyone else to bail you out.

I reckon that a large percentage of FTB have kids within a year and their finance changes drastically, people with kids already won't see to much of a change.

HeyArnold320

I'm in a similar situation. I've 2 kids and earn around 43k. I haven't talked to the banks yet but I can't see them lending me enough to buy going on the amounts mentioned here already

Eldarion

Good God, the madness truly is returning. Mortgage fraud should not be encouraged....

Don't lie to your bank!

Any repayment capacity gained from child allowance is going to be heavily reduced anyway by having that child as a dependent. It's a misnomer and should not factor into your thinking.

It's this type of mentality that makes me wish they'd abolish child allowance entirely or at least convert it to a tax credit. People should not be treating child allowance as income.

HeyArnold320

Eldarion wrote: »

Good God, the madness truly is returning. Mortgage fraud should not be encouraged....

Don't lie to your bank!

Any repayment capacity gained from child allowance is going to be heavily reduced anyway by having that child as a dependent. It's a misnomer and should not factor into your thinking.

It's this type of mentality that makes me wish they'd abolish child allowance entirely or at least convert it to a tax credit. People should not be treating child allowance as income.

I agree. Child allowance is not an income and lying on an application is a terrible idea.
But has anyone any advice for single applications? As far as I can see you can't get a big enough mortgage for a house with 1 income, even if you do go for a 35 year stretch. Would a bigger deposit help?

Sleepy

Honestly, the only real options are to either save for (much) longer, find better paying employment, have your partner (if you have one) start earning or to just continue renting until prices drop to a level you can afford.

HeyArnold320

The only option there is to save longer. I am in a decent paid job and I don't think it's possible for my other half to work yet. My kids are too young at the moment. I reckon prices are going up though

Sleepy

They can't continue to rise at the current rate or if they do, we'll have another crash before too long imo. The current prices are the result of a distorted market with a massive lack of supply (in the Dublin area at least).

My own kids are still quite young (5 and 8) so my wife has started child-minding 3 days a week. It's small money each week but it's tax free (up to 10k) and it adds up.

ShowMeTheCash

Just going to jump on the band wagon.

The reason banks will not lend the money is because you cannot afford it, so essentially you are trying to borrow more than you should.

Just something to point out, the ECB have indicated they will raise the interest rates 3% in the next three years, it has been low since the crash but it will eventually move up.

At the moment interest rates on mortages will range from about 3.8 to about 5 %

Let's say the interest rate in 5 years hit 8% which it probably will.

Your interest on 150K per year will be in around 12000 euro or 1000 a month.
And thats before you have paid anything off the actual loan.

To pay it back in under 30 years you would need to be putting over 1200 euro a month into it.

Do not forget back in the 80s the interest rates spike to 16%

For every 1% the interest increases on 150K you looking at around an increase of around 300 euro per month.

ShowMeTheCash

Actually 1% 250 a month its 3000 a year.

HeyArnold320

But that's what I don't get. They will say I can't afford it when I pay 1200 a month alone on rent anyway and I have done for a long time. So that's why it doesn't make much sense to me.

Sun in Capri

The banks are properly stess testing this time so they will give a loan based on which they think you can afford with a bit factored in for unexpected expenses. Hard and all as this is when in a lot of cases it means people can't afford to buy what they want, it really is the way it should have always been.

Potatoeman

mel.b wrote: »

Sorry but isn't it these sorts of shenanigans that helped Ireland get into the mess it is in?

Underdeclare kids or over declare income / rent a room etc...get a bigger mortgage than you can actually afford, get into trouble paying it back and then expecting everyone else to bail you out.

The leason everyone learned was that they can get away with it as its the family home and they wont be evicted.

omahaid

6% is what Ulster stress tested us on. €2000 for couple and €250 per child after that + mortgage at 6%. As we have 0 debt other than our current mortgage and are saving €800 a month we're a pretty good bet.

eyescreamcone

mel.b wrote: »

Sorry but isn't it these sorts of shenanigans that helped Ireland get into the mess it is in?

Underdeclare kids or over declare income / rent a room etc...get a bigger mortgage than you can actually afford, get into trouble paying it back and then expecting everyone else to bail you out.

Can you point me in the direction of these bail outs please?

I can't recall there being much help out there for mortgage holders - just the mortgage lenders!!!

ShowMeTheCash

eyescreamcone wrote: »

Can you point me in the direction of these bail outs please?

I can't recall there being much help out there for mortgage holders - just the mortgage lenders!!!

Very true.... But..

I think pre 2008 the attitude was, if the bank gives me the loan then I must be able to afford it...

The mortgage holder needs to take some responsibility as well.. Granted only the banks got bailed out...

But I know people who got 10x their salary on a mortgage, the whole idea being prices are going up and will never come down...

Anyone that actually bought into this is a fool, and you know what they say about fools and money.. Unless you are a bank... The government gave them a get out of jail free card at the expense of the tax payer!

mel.b

HeyArnold320 wrote: »

But has anyone any advice for single applications? As far as I can see you can't get a big enough mortgage for a house with 1 income, even if you do go for a 35 year stretch. Would a bigger deposit help?

I am single and got a mortgage last year. Admittedly I'm not in Dublin, but even still I couldn't afford to buy where I wanted. Well I could have, but it would have meant either compromising on the house (which I didn't want to do) or spending more than I was personally comfortable with each month.

I ended up moving to a village about 15min away and got what I wanted in a house. And it's actually been a great move - everyone is very friendly and I have meet more of my neighbours in 6mths than I did spending 5yrs in town where I had been living.

So two options are to compromise on what you want in a house or look in other locations.

ShowMeTheCash wrote: »

Just going to jump on the band wagon.

Just something to point out, the ECB have indicated they will raise the interest rates 3% in the next three years, it has been low since the crash but it will eventually move up.

Do you have any links for this? Not that I don't believe it, but would be interested in reading more.

HeyArnold320 wrote: »

But that's what I don't get. They will say I can't afford it when I pay 1200 a month alone on rent anyway and I have done for a long time. So that's why it doesn't make much sense to me.

Paying the mortgage is not the only expense when you own a home - there is so much more than compared to renting. Already I've had to pay for plumbing work to be done, the alarm needs fixing etc. These are things that weren't picked up on the survey. Something breaks, it's now completely your own responsibility - you can't ring the landlord and get them to come around and fix it. Plus there's all the other things that add up - like buying a lawnmower, then you need a strimmer, then you decide you want to plant the garden beds etc etc. It's never ending. And then you have property tax, forthcoming water charges, mortgage protection insurance, house insurance etc.

Don't get me wrong, owning your own home is great, but it comes with a lot of extra costs that you don't see or think about when you are looking at buying and I can see why even if you are paying more in rent that it still might not be enough for the banks. I'm currently paying 25% of my after tax income on mortgage and I'm glad I didn't go for anymore.

ShowMeTheCash

The 3% I will try and look out a link, I saw this on some morning financial news channel after the announcement to lower the rate to 0.1? 0.2? Last week.

Now this is all predictions, but people should never the less get too comfortable with the current rates.
You should really ask yourself, could I afford this mortgage if interest rates move to 8%? 9%? etc.. etc..

@HeyArnold320
As for 1200 a month which you are already paying....

This just comes down to risk, if you are stretched with the 1200 or if the bank deems that its a stretch the you are out of luck, the bank is really (now) only looking to lend what they think you can comfortably afford.

HeyArnold320

I understand all the points made but telling me that there are more expenses to owning a house rather than renting is stating the obvious.
I live comfortably at the moment with my income and can usually afford extras when they arise. Saying that, like everyone else it can be a struggle at times.
I see why the banks are cautious though. I would just like to think that they would look at my rent and factor this in to my application.
I am a long way away from applying though as I've to get the biggest deposit I can

No Pants

ksarin wrote: »

I've read here that Ulster counts child benefit towards repayment capacity.

Is that the definition of "family friendly" now?

ShowMeTheCash

HeyArnold320 wrote: »

I understand all the points made but telling me that there are more expenses to owning a house rather than renting is stating the obvious.
I live comfortably at the moment with my income and can usually afford extras when they arise. Saying that, like everyone else it can be a struggle at times.
I see why the banks are cautious though. I would just like to think that they would look at my rent and factor this in to my application.
I am a long way away from applying though as I've to get the biggest deposit I can

Are you in Dublin?

The reality in Dublin is it's going to be like London, unless you can land a high paid job you are going to find it very difficult to live in or around Dublin. Kind of sucks if that's where you are from.

When I worked in Dublin I shared a house with 3 other profs I earned decent money for anywhere else in Ireland but it was relative to Dublin...