New mortgage rules will they change for 2016 and going forward??

Pac2015

I would like to hear people's opinions on this please:

Does anyone think the central bank will change their rules on mortgages in relation to the 10% and 20% bracket needed for deposits ? I ask because we are currently saving to buy a house and as I already own an apartment we fall into the 20% deposit needed unless I sell my apartment at negative equity then we can get the 10% deposit which is not looking likely as it is going up in value due to it being in a really good central spot near all amenities and also the whole complex is currently undergoing investment to be the central area in D24 for cafes, medical centers etc...

So our problem now is where as before with the old rules ie. 10% based on a house of 240K we would have needed 24K plus fees etc and now we need close to 50K if not more which seems nearly impossible as we also rent ourselves.

I think the market has slowed up considerably and I wonder is it because people just cant get the deposit together or is everyone being careful ?
Banks are lending but are gone so strict now plus people who did have the 10% deposit before and were ready to buy are now stuck due to now needing double that.

gaius c

then we can get the 10% deposit

No matter what happens, you will need 20% deposit because you are not a first time buyer. There's only a limited number of exceptions to this rule.

Pac2015

gaius c wrote: »

No matter what happens, you will need 20% deposit because you are not a first time buyer. There's only a limited number of exceptions to this rule.

There is actually an exception I have been to a mortgage broker and you can qualify for the 10% deposit if you sell your current property at a negative equity amount but you must buy and sell more or less at the same time and take a switch up mortgage.
That is only if your property sells at a negative equity but currently my apartment is not in neg equity.

Your answer also was not to what I asked please read the post again.

Michael D Not Higgins

No they are very unlikely to change the limits.

Pac2015

Michael D Not Higgins wrote: »

No they are very unlikely to change the limits.

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

Michael D Not Higgins

Pac2015 wrote: »

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

If they're in positive equity then they have additional funds coming from the sale of the house.

Pac2015

Michael D Not Higgins wrote: »

If they're in positive equity then they have additional funds coming from the sale of the house.

I'm not sure I think they will just break even they were told they needed around 50-60K

I Am The Law

Pac2015 wrote: »

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

To answer your question,
New mortgage rules will they change for 2016 and going forward?
No. The purpose of the rules is to reduce the example of the asking price above to maybe 200K, this would make the deposit more possible for the family in your example.

Pac2015

I Am The Law wrote: »

To answer your question,
New mortgage rules will they change for 2016 and going forward?
No. The purpose of the rules is to reduce the example of the asking price above to maybe 200K, this would make the deposit more possible for the family in your example.

Its a larger house they require and can afford it so why not buy it.

gaius c

Pac2015 wrote: »

Its a larger house they require and can afford it so why not buy it.

If they can't save the deposit, they can't afford the house at present.

L1011

Pac2015 wrote: »

Its a larger house they require and can afford it so why not buy it.

If they can't get a mortgage, they can't afford it now can they?

The new rules basically protect people from themselves, to some extent.

mel123

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

alastair

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

They'll last as long as there's concern that the banks can't be trusted to manage their own lending affairs. The measures aren't driven by how popular they are with buyers/voters.

L1011

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

That still means they can't afford it if they can't save the deposit.

jester77

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

If a couple started saving when they entered employment in their early 20s, and only saved an average of 200 a month for 10 years, the typical age when people buy a house, they would have well over 50k when taking investment/interest returns into account. If they cannot manage that, then it is easy to understand why a bank will not just hand out a mortgage.

AprilMayJune

jester77 wrote: »

If a couple started saving when they entered employment in their early 20s, and only saved an average of 200 a month for 10 years, the typical age when people buy a house, they would have well over 50k when taking investment/interest returns into account. If they cannot manage that, then it is easy to understand why a bank will not just hand out a mortgage.

We would fit into this though saved 60k for our first house which was 20% deposit bought in 2007 house dropped by 140k we'd now get 4k more than our mortgage is for so we're not in negative equity but if we want to move it'll take us 5 years of saving 1k a month to get 60k together whereas the new mortgage would only be €300 a month. So for people like us it's really trapping us.

gaius c

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

They can afford the mortgage now perhaps but what about down the line? The "I can afford the mortgage repayments" attitude is exactly why there are over 100k mortgages in arrears and the CB are dead right to make this move to protect the banks.

gosplan

There will always be people caught in the middle that are screwed over by the new rules.

If they weren't in place though, we'd see 10% YOY growth a greater number of people would either be priced out, or forced to overextend. Then we'd have another crash.

I think that the rules are protecting everyone from themselves, or rather protecting the average homeowner and taxpayer. The CB seem to be the only party involved who think property market that rises in line with inflation would be a desirable outcome.

Jen44

I don't think the inability to save 20% deposit is an indication that you cannot afford the mortgage. We didn't have 20% deposit saved but are still clearly able to pay the mortgage and so were given the mortgage at 90% LTV based on other circumstances. Your friends already have a big chunk of savings, did they go into the banks and speak to people. Ive found that online applications etc are not in your best interest if you are looking for any sort of exemption its best to go in and show your whole circumstance to the bank and go from there. I am no expert perhaps it wont work for you but its worth a try. I know the new rules where brought in for good reason but there are always exceptions to rules and it is my understanding that banks loan books only have to show a certain percentage of compliance to the new rules so even that shows the the central bank are aware that there are exceptions to the new rules out there.

L1011

gosplan wrote: »

I think that the rules are protecting everyone from themselves, or rather protecting the average homeowner and taxpayer. The CB seem to be the only party involved who think property market that rises in line with inflation would be a desirable outcome.

Too many years of drilling "the property ladder" in to people has them obsessed with buying a shoebox in the hope it'll increase in value enough to sell and buy something bigger (note: it won't, if it increases in value that much the bigger place will too).

Compared to our parents generation many of whom bought once, when they could afford it. My next door neighbours would be in their late 60s and bought the house off the plans - in 1972...

Daith

Do the banks take existing rent/mortgage payments into account?

If I'm saving X amount but also spending X on rent is rent not factored into it?

Or is the Central Bank saying the savings are there to cover if the mortgage payments go up?

Jen44

The banks do take existing rent/ mortgage payments as evidence of ability to pay back your mortgage. They calculate a stressed mortgage payment then look at your current rent/mortgage payments plus savings to see can you make that stressed payment

Daith

Jen44 wrote: »

The banks do take existing rent/ mortgage payments as evidence of ability to pay back your mortgage. They calculate a stressed mortgage payment then look at your current rent/mortgage payments plus savings to see can you make that stressed payment

Sorry I was mixing up myself. They wouldn't take into account your rent with your inability to save the deposit would they?

Jen44

no only as evidence of ability to pay the mortgage re payment. You can get a gift from parents family etc to use towards the deposit but they may need to sign a declaration that they have no interest in getting the money back or the property if the gift is over a certain amount

alastair

L1011 wrote: »

Too many years of drilling "the property ladder" in to people has them obsessed with buying a shoebox in the hope it'll increase in value enough to sell and buy something bigger (note: it won't, if it increases in value that much the bigger place will too).

Compared to our parents generation many of whom bought once, when they could afford it. My next door neighbours would be in their late 60s and bought the house off the plans - in 1972...

That's all well and good, but it's not as if the 'property ladder' is a complete myth. Generally it's the case that your property will increase in value, and while your 'trading up' property will probably have increased in value too, you've the benefit of a big lump of capital that will help fund the purchase of that, more expensive, property. Now, you might well claim that saving/investing elsewhere over the same time would provide the same capital, but that's in a scenario where rental costs will probably have been more of a drain on your ability to save. If you're lucky enough (in your twenties!) to afford a place that serves your long-term needs from the get-go, then obviously that's even better, but it's less realistic now than it was in 1972.

We're selling/buying at the moment, and I know that we could never have afforded to consider the place we're looking at, without having a place to 'trade up' from. We simply wouldn't have got the loan needed.

Pac2015

gaius c wrote: »

If they can't save the deposit, they can't afford the house at present.

They had 34-38k saved already which was the 10% rules plus legal fees etc and this was saved ages ago then the new rules came in and changed it all for them so just as they were about to go and try get a new mortgage the 20% came in so they have to save the rest so in fact yes they did have the deposit needed when the old rules came in.
Did you read the previous postings they are put out because it will now take them a few more years to save the rest they can afford the house and thought they were already to go when the new rules started.
I think any family who have a few kids and pay a mortgage already and who can save up to 38K are a great example.

Pac2015

Jen44 wrote: »

I don't think the inability to save 20% deposit is an indication that you cannot afford the mortgage. We didn't have 20% deposit saved but are still clearly able to pay the mortgage and so were given the mortgage at 90% LTV based on other circumstances. Your friends already have a big chunk of savings, did they go into the banks and speak to people. Ive found that online applications etc are not in your best interest if you are looking for any sort of exemption its best to go in and show your whole circumstance to the bank and go from there. I am no expert perhaps it wont work for you but its worth a try. I know the new rules where brought in for good reason but there are always exceptions to rules and it is my understanding that banks loan books only have to show a certain percentage of compliance to the new rules so even that shows the the central bank are aware that there are exceptions to the new rules out there.

I think they are going to speak to a few banks in the coming weeks to see what options are available to them.

Pac2015

Jen44 wrote: »

no only as evidence of ability to pay the mortgage re payment. You can get a gift from parents family etc to use towards the deposit but they may need to sign a declaration that they have no interest in getting the money back or the property if the gift is over a certain amount

Apparently banks now do not look favorably on gifts from parents they want to see you saving the amount monthly as understandably your parents wont be there to pay the actual mortgage for you.
We were gifted 10K from parents and the broker said look go off and pay anything you owe start saving again and come back debt free at the time we were disappointed to hear that but we did as he said and started saving again which we are not doing plus we also are paying 1100 rent so we know that we can definitely afford a mortgage we just have to power ahead and save the deposit.

Jen44

they want to see at least six months of saving the stressed payment so once you can show you can do that you can add a gift also if you need to.

Pac2015

Jen44 wrote: »

they want to see at least six months of saving the stressed payment so once you can show you can do that you can add a gift also if you need to.

We cleared all debts using the gift so we are now debt free which we feel is a better place for us I still have the mortgage on the apartment but its only small and that will be sold when we buy a house so then for the future we don't have any debts just mortgage payments and bills etc.

L1011

Pac2015 wrote: »

They had 34-38k saved already which was the 10% rules plus legal fees etc and this was saved ages ago then the new rules came in and changed it all for them so just as they were about to go and try get a new mortgage the 20% came in so they have to save the rest so in fact yes they did have the deposit needed when the old rules came in.
Did you read the previous postings they are put out because it will now take them a few more years to save the rest they can afford the house and thought they were already to go when the new rules started.
I think any family who have a few kids and pay a mortgage already and who can save up to 38K are a great example.

If it was "saved ages ago", they're clearly not currently or even recently able to save and can't afford it.

This reads more and more like a case of the new rules saving someone from over-stretching themselves and being the people on the front pages of the tabloids in the next crash complaining that its the banks fault.