Mortgage options for low wage high equity house

am i bovvered

Posting this on behalf of a friend....
Basically he has been living in a rent to buy house the last few years, making lump sum payments to the owner which comes off the principle.
So, in September the last payment is due, 70k. He had expected to be able to get a mortgage no problem as the value of the house is 130k but the banks so far have refused on the basis that his wages are 26k, he is 29 years old. Basically no savings as he has been paying the principle aggressively.
So far he has only tried the mainstream Irish banks.
Any advice or help for him would be appreciated.
Thanks

jethrothe2nd

I would have thought that lack of savings would have been more an issue than the salary. Surely he's going to need 10% of the mortgage he's looking for up front?

phormium

If all else fails has he a credit union account? Worth approaching them for a secured loan.

am i bovvered

Presently he has no savings as he was using every euro to pay the principle. He can get a gift from a family member for the deposit 10% but this person is not in a position to guarantor on the loan. He thought that the 60k equity would be enough security.
My understanding is that you need one third of a deposit to secure a CC loan.

phormium

Credit Unions provide loans like this, check with them if he has an account, if no account ask if one is opened will they facilitate this type of lending. The loan is secured on the property so the requirements are different to unsecured loans. Rate will be higher and term shorter.

Trish56

Has he been paying regular as in monthly sums by bank transfer to the owner if so this should suffice as proof of repayment for the lender. Savings should not be an issue as he has built up equity in the property and just needs to provide evidence of the payments.

Something not adding up here is he single with no dependents or short term borrowings in a permanent job for more than 6 months - if so he should have no problem qualifying for a mortgage of 70k based on income of 26k. Does he have a credit issue...he needs to apply to www.icb.ie for a credit report.

am i bovvered

Thanks for the replies so far....

Credit Unions provide loans like this, check with them if he has an account, if no account ask if one is opened will they facilitate this type of lending. The loan is secured on the property so the requirements are different to unsecured loans. Rate will be higher and term shorter.

Unfortuately the local Credit Union does not offer this service, their maxloan is 60k with a 35k deposit at 9%apr

Has he been paying regular as in monthly sums by bank transfer to the owner if so this should suffice as proof of repayment for the lender. Savings should not be an issue as he has built up equity in the property and just needs to provide evidence of the payments.

That's what he had assumed, its only now he realises its an issue.

Something not adding up here is he single with no dependents or short term borrowings in a permanent job for more than 6 months - if so he should have no problem qualifying for a mortgage of 70k based on income of 26k. Does he have a credit issue...he needs to apply to www.icb.ie for a credit report.

I do know this guy very well for 7 years, he is a close work colleague and friend. The facts above are correct, no issuewith credit for the last 7 years, before then I'm not sure I can check tomorrow when we meet up, how long does the record go back ?
He has gone as far as to get a review in BOI but still no joy, it does not make sense to me, or him. Hence I've come to Boards.ie

phormium

Is that the only credit union available to him? Would he be in the common bond for any other area CU.

That loan sounds more like an unsecured one, usually the ones secured on property do not require a large deposit and rate should be nearer 5%.

Trish56

You did not mention if this guy is single or married with or without dependents and other borrowings. Net disposable income could possibly be the issue here. Stressed repayments would be €410 on 70k over max term, can he show that he was paying this amount over the last 6 months ?. If he is single he qualifies, if he is married with or without dependents on one income of 26k he will not qualify with any lender as his net disposable income is too low.

am i bovvered wrote: »

Thanks for the replies so far....


Unfortuately the local Credit Union does not offer this service, their maxloan is 60k with a 35k deposit at 9%apr



That's what he had assumed, its only now he realises its an issue.



I do know this guy very well for 7 years, he is a close work colleague and friend. The facts above are correct, no issuewith credit for the last 7 years, before then I'm not sure I can check tomorrow when we meet up, how long does the record go back ?
He has gone as far as to get a review in BOI but still no joy, it does not make sense to me, or him. Hence I've come to Boards.ie

am i bovvered

He checked out a credit union outside the area, but they said they only deal with people within their catchment.

He is unmarried with no children, he will be the sole owner of the house, although he does have a girlfriend he lives with who presently is on disability after a car accident a year ago.

Trish56

So does he have any short term borrowings? Did all 3 lenders give the same reason for declining the mortgage i.e no savings? If a lender was willing to give him a mortgage of 63k could he get a gift of 10k to cover 10% deposit, stamp duty and legal fees?