3.5x Salary

Penn

Have met with both AIB and EBS recently to apply for a mortgage. Both of their online calculators were saying that I would be able to borrow up to 4.25x my salary, but when meeting with them, they've said they could only give up to 3.5x my salary, even though I've shown I would be able to make the repayments of borrow more through their stress tests.

I have a property in mind and would only need to borrow just under 4x my salary (which would be 90% of the property value). I've read that the 3.5x rule isn't absolute. Does anyone know who offers over the 3.5x or what criteria needs to be met for them to be able to go over the 3.5x salary.

Cheers.

Michael D Not Higgins

Are you applying on your own or joint? The 3.5 LTI limit is the rule from the Central Bank and can only be deviated from in 20% of cases, which are likely to be cases where the LTV is low. Since you're maxing out the LTV and overshooting the LTI, you likely haven't a hope of meeting the exception to the rule.

Penn

Michael D Not Higgins wrote: »

Are you applying on your own or joint? The 3.5 LTI limit is the rule from the Central Bank and can only be deviated from in 20% of cases, which are likely to be cases where the LTV is low. Since you're maxing out the LTV and overshooting the LTI, you likely haven't a hope of meeting the exception to the rule.

Yeah, single applicant.

Well that's a balls. Both AIB & EBS agreed I could meet the repayments fairly easily (between paying rent & saving each month more than the repayments would be). Then again, rules are rules and given what went on years ago, there have to be rules. Can't expect them to let me be exempt.

Rew

They can only exempt from one of the two rules in this case you looking to exempt from both.

Michael D Not Higgins

Rew wrote: »

They can only exempt from one of the two rules in this case you looking to exempt from both.

Not if he's a FTB.

Penn

Michael D Not Higgins wrote: »

Not if he's a FTB.

Yeah, I'm a first time buyer if that helps.

Rew

Michael D Not Higgins wrote: »

Not if he's a FTB.

Ahh I didn't realise FTB could exempt both.

Penn wrote: »

Yeah, single applicant.

Well that's a balls. Both AIB & EBS agreed I could meet the repayments fairly easily (between paying rent & saving each month more than the repayments would be). Then again, rules are rules and given what went on years ago, there have to be rules. Can't expect them to let me be exempt.

What industry are you in, could they consider it potentially unstable?

Michael D Not Higgins

Penn wrote: »

Yeah, I'm a first time buyer if that helps.

It means you qualify for 10% deposit up to 220k, however they usually only allow exceptions to one rule by compensating with the other. For example if you wanted a 4x LTI, you'd need a much larger deposit on top of the stress testing.

If my maths is right, you'll need to just over double your deposit to meet the requirements.

Michael D Not Higgins

Rew wrote: »

Ahh I didn't realise FTB could exempt both.

They don't exempt both, they're allowed a 90% LTV up to 220k.

Penn

Rew wrote: »

What industry are you in, could they consider it potentially unstable?

Construction industry (employee). Have worked all through recession and my wages have increased a fair bit over the last two years. But at the same time, because my wages were low during the recession, I don't have a lot in savings and will have to be gifted money from parents to help with the deposit, so that's another nail in my coffin with looking for exemptions.

Michael D Not Higgins wrote: »

It means you qualify for 10% deposit up to 220k, however they usually only allow exceptions to one rule by compensating with the other. For example if you wanted a 4x LTI, you'd need a much larger deposit on top of the stress testing.

If my maths is right, you'll need to just over double your deposit to meet the requirements.

Aye, but that defeats the purpose though. I'm looking to limit the amount my parents will have to gift me, so if I can either be at the limit of LTV or LTI, looks like I'll still have to borrow roughly the same amount off them. I mean they've offered it to me, but just wanted to do whatever I could to not have to ask them for as much.

Jet Black

I'm in a similar situation as yourself op except I have managed to save my deposit, have enough left over for other fees and to furnish the property. Went to BOI and the mortgage advisor said I was a good case to go above the 3.5 rule because I had a good level of savings, no loans, no credit cards and stable employment. Got approval fairly quickly but its bang on 3.5. I was only looking for 3.8 but didn't get it. So I'll have to be gifted the rest or wait until I make it up myself.

Rew

We were offered exemption (unsolicited by us) but on the deposit side not the 3.5x, dual application not FTB, I work in Tech & my wife is a Civil Servant. No other outstanding debit. Right now we don't want it so i don't know if we went back looking for it what we would get in practice. Couple of guys I work with were offered similar but as FTB single applicants.

Logicost31

Sorry to jump in with a different question, but is 3.5x salary generally what people apply for / get approved for?
I know it's the default MAXIMUM under the new rules, but is it generally recommended to get a mortgage at that level?

Currently trying to save a deposit for our first house, and was working off a rough guideline of 2.5 x combined salaries (gross) = rough value of property we'd consider affordable.

Are we aiming too low / limiting ourselves too much at that level?
Not talked to the banks yet as we're still at the deposit-saving stage, so I'm curious!

Michael D Not Higgins

Logicost31 wrote: »

Sorry to jump in with a different question, but is 3.5x salary generally what people apply for / get approved for?
I know it's the default MAXIMUM under the new rules, but is it generally recommended to get a mortgage at that level?

Currently trying to save a deposit for our first house, and was working off a rough guideline of 2.5 x combined salaries (gross) = rough value of property we'd consider affordable.

Are we aiming too low / limiting ourselves too much at that level?
Not talked to the banks yet as we're still at the deposit-saving stage, so I'm curious!

My thinking would be if you have somewhere in mind that is the right size for you, why spend another year's salary on a bigger place? The difference could be hundreds every month.

Rew

Logicost31 wrote: »

Sorry to jump in with a different question, but is 3.5x salary generally what people apply for / get approved for?
I know it's the default MAXIMUM under the new rules, but is it generally recommended to get a mortgage at that level?

Currently trying to save a deposit for our first house, and was working off a rough guideline of 2.5 x combined salaries (gross) = rough value of property we'd consider affordable.

Are we aiming too low / limiting ourselves too much at that level?
Not talked to the banks yet as we're still at the deposit-saving stage, so I'm curious!

Depends what you want. if you max out yourself financially you may find you have a nice house but cant afford to do anything but live in it!

Makes perfect sense to me to want to live in a more affordable house and have more money for holidays and/or hobbies and a life outside the home!

Logicost31

Don't have anywhere in mind yet, still at the saving and planning stage, just trying to gauge what is normal really!
Because the new rules set 3.5x salary as the max, i'm just wondering if that's now a "sensible" maximum (if that's even possible!) that most people now use?

We would of course like to be able to do more than just survive there!

Michael D Not Higgins

Logicost31 wrote: »

Don't have anywhere in mind yet, still at the saving and planning stage, just trying to gauge what is normal really!
Because the new rules set 3.5x salary as the max, i'm just wondering if that's now a "sensible" maximum (if that's even possible!) that most people now use?

We would of course like to be able to do more than just survive there!

You'll have to gauge it for yourself. In Dublin you're likely to have to max out. In rural Ireland and if you have a well paid job, 2.5 could be plenty for a house. It really depends.

Eric Cartman

you have the 10% saved , how likely would it be to get to 25% ? if you could get to the <75% LTV you would be in an awful lot more favourable position for a bank to go over the odds.