Mortgage approval

HeyArnold320

Hi,

Please stick with me I'm very confused with the mortgage approval application.
I went in to a few banks over the last few days and I haven't had any luck.

Bit of backround, I have 2 kids with my fiancee and a nice deposit of around 20% (Most of which is in my girlfriends savings)
Our youngest child is less than 1 year old and I am the only one working at the moment.
The banks wouldn't quote us anything as I have the only income.
One bank told me that I earn enough for a single application for a mortgage but it would be too tricky to apply for because of the kids. I hadn't lied on the online mortgage calculator, I mentioned my 2 kids on the number of dependents and it still says I am approved in principal but the bank told me that it would be followed up with a lot of tricky questions like, do I pay maintenance etc.
I don't really understand this as the options are, single, married or divorced, and in the eyes of the law I'm single.
What is to stop me applying for a single application mortgage? I am just afraid to do this as I don't want to affect my chances in the future.

Can anyone shed some light on this?

Thanks

alibab

HeyArnold320 wrote: »

Hi,

Please stick with me I'm very confused with the mortgage approval application.
I went in to a few banks over the last few days and I haven't had any luck.

Bit of backround, I have 2 kids with my fiancee and a nice deposit of around 20% (Most of which is in my girlfriends savings)
Our youngest child is less than 1 year old and I am the only one working at the moment.
The banks wouldn't quote us anything as I have the only income.
One bank told me that I earn enough for a single application for a mortgage but it would be too tricky to apply for because of the kids. I hadn't lied on the online mortgage calculator, I mentioned my 2 kids on the number of dependents and it still says I am approved in principal but the bank told me that it would be followed up with a lot of tricky questions like, do I pay maintenance etc.
I don't really understand this as the options are, single, married or divorced, and in the eyes of the law I'm single.
What is to stop me applying for a single application mortgage? I am just afraid to do this as I don't want to affect my chances in the future.

Can anyone shed some light on this?

Thanks

I suppose what they are saying is that if you are a single applicant and living with fiance and 2 kids you will be stress tested as a couple with 2 kids which is about 1800 per couple and 300 per child so you would 2400 disposal income etc after mortgage paid where is you were a single applicant solely it would just be 1200 foe yourself but because you have 2 kids you would have to put down maintainance for the kids .

I could be wrong but that's what I am getting from your post . The fact they are not taking fiance income at all in . Although if you are able to cover mortgage plus the stress test and have the available income over every month plus 20 per cent deposit I don't see what problem is . Maybe get broker advice

HeyArnold320

Thanks for the reply, that makes sense. So do you reckon I can apply for a mortgage as a single applicant (while including my kids) but not including my fiancee. The reason I ask this is we are currently living in 2 locations due our landlord selling up and I'm working away. This is technically all the truth but I'm afraid the banks will see it differently.

Eldarion

HeyArnold320 wrote: »

Thanks for the reply, that makes sense. So do you reckon I can apply for a mortgage as a single applicant (while including my kids) but not including my fiancee. The reason I ask this is we are currently living in 2 locations due our landlord selling up and I'm working away. This is technically all the truth but I'm afraid the banks will see it differently.

Think you're treading dangerously close to mortgage fraud here. The banks aren't stupid though, they're gonna ask about the mother of the kids, who's looking after the kids, the costs incurred as a result of that etc.

Besides that the deposit you plan on using is mostly HER funds. How do you possibly plan on explaining that part? She just "gifts" you the deposit then signs away any and all claim on the property?

Again the banks aren't stupid. They'll see through this in a heartbeat. Be honest with your bank and apply in good faith. If you don't get approval then sorry, you are not in a position to buy, try again when your financial circumstances change.

HeyArnold320

I'm not hiding anything here though. Thats what I have been getting at. I have been asking the banks all these questions to make sure I don't fall into any traps.
Sure if my parents were the ones to gift money for a deposit, they wouldn't expect any ownership on the property either.
I can happily show how I pay for my kids. That isn't a problem.
I don't see how anything I said isn't in good faith. I am taking full responsibility if I cannot make repayments by being the sole applicant.
I do understand it looks strange, thats why I posted here. I just can't see how anything I have mentioned yet is 'fraud' as you said.

Thanks

whippet

@HeyArnold320 ... I think you need to take a step back and have a look at your actual application .. just like a bank would.

As it stands you are a single income applicant with 3 dependant (2 kids and a partner) as your partner is not earning at the moment. The bank can't lend based on the assumption that she will reenter the workforce.

So, between you and your partner you have a savings history which is a positive; however; the affordability of the mortgage is now what they need to look at.

- What multiple of your annual salary are you looking to borrow?
- How long are you in your current employment?
- Is it Full time?
- Can you show a history of how the deposit was actually saved (as a lump sum from a relative isn't saving and the bank will want to see how the money was accumulated)

You can always apply as a single person with two dependant, it's not fraud it is the status-quo, however should your girlfriend become your wife and the relationship breakdown she can walk away without having to worry about servicing the debt.

If you are applying as a single applicant, the deposit will be a gift from your girlfriend; the bank will want a letter from her to state that the money is a gift and will not be expected to be repaid and that she will have no financial interest in the property (will she sign that letter?) ... and also; as it is a gift and not your savings the bank will not be satisfied that you are capable of this saving and that is a big negative when applying for a mortgage.

Lessons hopefully have been learned after the bubble burst and when you are being refused credit from banks for a mortgage maybe the simple fact of the matter is that you can't afford the mortgage at the moment - and could be a blessing in disguise as there are far too many people who massaged financial statuses along with banks who didn't carry out due diligence who are now sitting on a pile of debt, no way to meet the monthly payments and generally in a mess

ForEffsSake

To be honest, those online calculators are a complete waste of time. Using the online calculator, we were approved for 380K and then when we went through the proper application process, 270 was the max we could get (all we wanted anyway luckily enough). I think the online calculator is so simplified it doesn't take into account that you need to eat and pay for a roof over your head.
To apply, you will be assessed as a couple, you're living together with children and will be treated as any other married/cohabiting couple. The fact that you have a deposit is great, but it looks much better if that deposit is obtained with regular monthly savings that build up and are left untouched for at least 6 months. If your girlfriend got the lump sum through other means such as a gift or a previous property sale, you will need to provide proof of the source.
What they need for an application is 6 months statements of all current, credit and savings accounts. At least 2 if not 3 recent payslips and ID/proof of address.
If banks are being funny about 1 wage (which is stupid of them), your best bet is probably through a broker as they will know what criteria the banks are looking for and will only put you forward where you have a good chance of being approved.
If you're not buying immediately, for the next 6 months, if you can, put regular sums towards your savings so you build up a good record of savings. And keep clean bank accounts with no dipping into the overdraft!

Oh and another thing, check out how much your monthly mortgage payment would be at 6% or thereabouts, and adjust your savings+rent to match accordingly. For example, if your mortgage would cost €1300 per month and you're currently paying rent of €1000, then you must put away at least €300-400 to prove you can meet the mortgage payments even if interest rates went up. If you can't prove that the likelihood is you won't be approved for that much.

The best of luck, to be honest with the new CB rules, it makes sense to bide your time for the next few months, and build up your savings record. You're in a good position with your deposit and they'll be biting your hand off in six months.

Edited to say: sorry missed the bit about you not living together! Just explain about the temporary arrangement - if you're buying the home together both names will be on the deed. Maybe I'm being stupid but don't lots of couples buy together while not cohabiting? I know we did ( a while ago now but still)!

HeyArnold320

Thanks for the previous replies. They are very helpful. Where I wasn't saving regularly I was paying high rent, higher than my mortgage payments will be. When I moved back with the family, i turned that rent (plus a couple of hundred more) to savings. On top of that I am giving a sum to my family as rent for the time being.
I am not in a hurry to get approved, but as I started an online application, I am wondering should I finish it. Is the worst case that they can say no?
My credit history is good.
As regards to my girlfriend signing over money as a gift, it's not an issue. We will marry in the future and once our children are old enough and she goes back to work, we can re-finance and add her to the property. I know it's not the easiest to do but it is possible.

On the advice given I do think I am better waiting, but should I proceed this application or abandon it?

ForEffsSake

Personally, I'm an impatient person and usually jump in to these things!

I don't think there's any harm applying, if nothing else, it will flag up any issues the bank would have with your application and you'll be able to fix these before you next apply. Also, it won't even go to the underwriters if the mortgage officer in the bank doesn't think it will be successful so won't have any impact on future applications.

I would definitely take your time with the house purchase though, but at least if you do have a successful application, you'll know your ballpark figure and can offer with a degree of confidence if you do come across something you like.

As for your girlfriend, I'm not sure of the legalities but surely if her name is on the house deeds (which it will be as she's joint owner) then she has to be on the mortgage or at least approve the mortgage on your joint property? Then the other points about her not being liable wouldn't be true.
Your solicitor will clear all that up anyway.

MouseTail

You apply as a single applicant with 2 children. First question the bank will ask, are you living with/in a relationship with the mother. You say yes and she is added as a dependent. You say no, and you are asked are you paying maintenance, you say no, and you are probably asked for proof of how she is supporting herself and your children.

The banks aren't daft, they will see through this. Whilst in the eyes of the law you are single, in the eyes of the bank you are married.

HeyArnold320

MouseTail wrote: »

You apply as a single applicant with 2 children. First question the bank will ask, are you living with/in a relationship with the mother. You say yes and she is added as a dependent. You say no, and you are asked are you paying maintenance, you say no, and you are probably asked for proof of how she is supporting herself and your children.

The banks aren't daft, they will see through this. Whilst in the eyes of the law you are single, in the eyes of the bank you are married.

Again, there is nothing to see through here. I'm not lying or trying to hide anything. I have told them numerous times on the phone today our situation. They never said there is any problem with this. I rang 3 times during the day to get clarification and none of them could see what I was concerned about.

MouseTail

Is your fiancée financially dependent on you? If she is you have to disclose this and you will not be treated as a single applicant, as in you can of course still apply for a mortgage in your sole name, but you will be stress tested as a couple.

missjuly

I would finish the online application only one way to find out. As someone else waid it could flag up certain things for further application. You never know could be approved best of luck with it :-)

You do realise you cant just "gift" someone money?

You will have to pay Capital gains Tax.

Best thing to do is take a joint mortgage, otherwise your gift will get you in trouble with revenue.

CIARAN_BOYLE

[Deleted User] wrote: »

You do realise you cant just "gift" someone money?

You will have to pay Capital gains Tax.

Best thing to do is take a joint mortgage, otherwise your gift will get you in trouble with revenue.

Capital acquisitions tax

womandriver

[Deleted User] wrote: »

You do realise you cant just "gift" someone money?

You will have to pay Capital gains Tax.

Best thing to do is take a joint mortgage, otherwise your gift will get you in trouble with revenue.

You actually can gift somebody money as long as it's under the relevant thresholds.

womandriver

womandriver wrote: »

You actually can gift somebody money as long as it's under the relevant thresholds.

From Girlfriend to boyfriend the threshold is very low.

I believe its something like €15,000

Based on a 20% deposit of €15,000 that would be a mortgage of €100,000.


http://www.revenue.ie/en/tax/cat/thresholds.html

womandriver

[Deleted User] wrote: »

From Girlfriend to boyfriend the threshold is very low.

I believe its something like €15,000

Based on a 20% deposit of €15,000 that would be a mortgage of €100,000.


http://www.revenue.ie/en/tax/cat/thresholds.html

I know the limits, I never suggested you could gift as much as you want/need. I was simply pointing out that to say you can't gift money to some one is incorrect. You can most certainly gift within the thresholds.

doubter

have you track of your rent paid? Banks will often accept that as the ability to save-especially if the mortgage would turn out lower than your current rent payment.