Saving/Applying for a mortgage 2015/16/17/18/19

wally79

History Queen wrote: »

I'm back again with what is probably a stupid question but I'm just wpndering how the drawdown of a mortgage works when part of the mortgage is for purchasing a house and part is for renovation eg. €180,000 purchase price and €50,000 renovation. Does it all get drawn down together or do we just draw down the purchase amount and tie up the purchase before drawing down the renovation amount? Also are we likely to have to draw down the renovation part in stages like you would with a new build?

Any help/advice appreciated

I didn’t even realise banks were still doing renovation mortgages. What extra requirements are there?

History Queen

wally79 wrote: »

I didn’t even realise banks were still doing renovation mortgages. What extra requirements are there?

None that I can tell... just have to submit quote for work to be done when applying for full approval. Didn't realise renovation mortgage was unusual? Surely lots of people buying second hand homes intend on doing some sort of renovating/updating?

Cows Go µ

I got a small bit of renovation done as part of my mortgage. I'm buying an old cottage (hopefully drawing down tomorrow!) and as part of the mortgage I'm getting a heating system put in. I'd no problem, just gave them a quote and they were happy enough.

That was with AIB though in my case it was to bring the house up to a minimum living standard, not just wanting to renovate

wersal gummage

Does anyone have any experience in trying to get some kind of preliminary mortgage approval, subject to certain conditions?

Eg, if 6 months bank statements of savings are required, is there any hope (perhaps via a broker) to get a preliminary approval with 4 or 5 months savings, with such approval subject to actual demonstration of 6 months savings? So to give an idea of the mortgage approval amount and allow you to start viewing houses etc??

Also can anyone comment on their experiences of what the banks are like with the 6 months statements? Do they question specific expenditure items or just looking for general patterns /incoming v outgoing etc? (edit: not gambling etc, but if you had one off type expenses in a particular month, is that a discussion you can have with the bank or is it simply a numbers game and all six months must demonstrate a certain pattern of expenditure?)

Finally, if something material happens between mortgage approval and draw down (say the birth of a child), I guess this throws a major spanner in the works?

purpleisafruit

wersal gummage wrote: »

Does anyone have any experience in trying to get some kind of preliminary mortgage approval, subject to certain conditions?

Eg, if 6 months bank statements of savings are required, is there any hope (perhaps via a broker) to get a preliminary approval with 4 or 5 months savings, with such approval subject to actual demonstration of 6 months savings? So to give an idea of the mortgage approval amount and allow you to start viewing houses etc??

Also can anyone comment on their experiences of what the banks are like with the 6 months statements? Do they question specific expenditure items or just looking for general patterns /incoming v outgoing etc? (edit: not gambling etc, but if you had one off type expenses in a particular month, is that a discussion you can have with the bank or is it simply a numbers game and all six months must demonstrate a certain pattern of expenditure?)

Finally, if something material happens between mortgage approval and draw down (say the birth of a child), I guess this throws a major spanner in the works?

I applied for Approval in Principle, 3 months into a new job and several thousand short of 10% deposit amount with baby no.2 on the way and had no issues, they won't allow you to drawdown until you meet all the conditions. Talk to the bank is the best advice I can give.
Just to add, we withdraw a certain amount each week rather than paying by card and allowing the bank to see your love of fast food and take away coffee

awec

wersal gummage wrote: »

Does anyone have any experience in trying to get some kind of preliminary mortgage approval, subject to certain conditions?

Eg, if 6 months bank statements of savings are required, is there any hope (perhaps via a broker) to get a preliminary approval with 4 or 5 months savings, with such approval subject to actual demonstration of 6 months savings? So to give an idea of the mortgage approval amount and allow you to start viewing houses etc??

Also can anyone comment on their experiences of what the banks are like with the 6 months statements? Do they question specific expenditure items or just looking for general patterns /incoming v outgoing etc? (edit: not gambling etc, but if you had one off type expenses in a particular month, is that a discussion you can have with the bank or is it simply a numbers game and all six months must demonstrate a certain pattern of expenditure?)

Finally, if something material happens between mortgage approval and draw down (say the birth of a child), I guess this throws a major spanner in the works?

When you go to the bank to apply they don't really go through everything there and then. They will just check that you have provided all the documentation required, give you an overview of the process and answer your questions. They aren't going to do a line-by-line walkthrough of your statements in front of you.

If there's something on your statements you feel needs some additional context just mention it to them. Like if you made a big withdrawal from your savings for something legitimate you should clarify.

The bank does not care if you get a chipper every wednesday, love the pints on a Saturday and what not. They just want to see a record of fiscal responsibility and prudent spending for your level of income.

As for material changes throwing a spanner in the works, this really depends on how much room you have to spare in your application. If you apply for 300k for example and you just about meet the criteria for that amount then it's going to be a problem. If you are applying for an amount that's below your theoretical maximum it will probably make no difference.

tailgunner

wersal gummage wrote: »

Does anyone have any experience in trying to get some kind of preliminary mortgage approval, subject to certain conditions?

Eg, if 6 months bank statements of savings are required, is there any hope (perhaps via a broker) to get a preliminary approval with 4 or 5 months savings, with such approval subject to actual demonstration of 6 months savings? So to give an idea of the mortgage approval amount and allow you to start viewing houses etc??

Also can anyone comment on their experiences of what the banks are like with the 6 months statements? Do they question specific expenditure items or just looking for general patterns /incoming v outgoing etc? (edit: not gambling etc, but if you had one off type expenses in a particular month, is that a discussion you can have with the bank or is it simply a numbers game and all six months must demonstrate a certain pattern of expenditure?)

Finally, if something material happens between mortgage approval and draw down (say the birth of a child), I guess this throws a major spanner in the works?

A lot of this depends on the bank.

We had a pretty good experience with AIB, with a similar savings history. They just divided the amount we'd saved by six to work out our monthly savings - we'd only really been saving regularly for four months. Just to point out though, the mortgage approval amount will be tied to your salary, not the amount you've saved.

All they're looking for is that you can afford the mortgage repayments. As long as the average amount you're saving each month is above their threshold, they'll be happy enough. In our case, they questioned a couple of large transactions, because it wasn't clear what they were. If there's something specific you're worried about, I'd just explain it up front.

I don't have any experience of the last question I'm afraid!

wersal gummage

Thank you all for your comments, very helpful.

The expenditure is not chipper or pints etc, more like several large amounts over a 2 month period but those costs are associated with one off event (eg selling a house and associated fees and some renovation work prior to sale).

We have been saving for a long time but not at the "stress test" level....

wardides

Quite a generic question coming up, and don't expect a black or white answer. But if you are currently renting at the moment does this negate some of the savings threshold required? For example, we are saving 500e a month between us, on top of paying rent €1,000 (as well as bills then on top of this) and have 3 years history of doing so. By my thinking (and I know it isn't quite as straightforward as this) if we go for a mortgage where repayments work out at €1,000, a month, I would expect it to be somewhat more straightforward due to history of rent payments?

ILikeBoats

Yes, that's taken into account in your repayment ability

aloooof

wardides wrote: »

Quite a generic question coming up, and don't expect a black or white answer.But if you are currently renting at the moment does this negate some of the savings threshold required? For example, we are saving 500e a month between us, on top of paying rent €1,000 (as well as bills then on top of this) and have 3 years history of doing so. By my thinking (and I know it isn't quite as straightforward as this) if we go for a mortgage where repayments work out at €1,000, a month, I would expect it to be somewhat more straightforward due to history of rent payments?

The simple answer, is that yes, banks do take into account your rent when calculating your ability to re-pay.

However, if I'm understanding your question in bold correctly, you'll still require the 10% deposit for FTB's, regardless of rent & savings history.

cloneslad

wardides wrote: »

Quite a generic question coming up, and don't expect a black or white answer. But if you are currently renting at the moment does this negate some of the savings threshold required? For example, we are saving 500e a month between us, on top of paying rent €1,000 (as well as bills then on top of this) and have 3 years history of doing so. By my thinking (and I know it isn't quite as straightforward as this) if we go for a mortgage where repayments work out at €1,000, a month, I would expect it to be somewhat more straightforward due to history of rent payments?

Yeah, as everyone said they do take it into account. For example. Our rent was more than our mortgage payments would be so the fact that we had regular savings being made on top of that, even thought the amounts varied depnding on how many weddings we had to attened each month, made it pretty easy for us to get approved. BOI approved us in full within 3 days of meeting them for the first time.

wardides

aloooof wrote: »

The simple answer, is that yes, banks do take into account your rent when calculating your ability to re-pay.

However, if I'm understanding your question in bold correctly, you'll still require the 10% deposit for FTB's, regardless of rent & savings history.

Ah yes yes, sorry I had meant deposit aside. Long question short, i was wondering how much of a benefit paying €1,000 a month rent would be when applying for mortgage where repayments would be similar.

myshirt

Is anyone paying their rent in cash?

Strictly it should not count towards your capacity to pay, but I'd be interested to hear of any cases where the bank were ok with it.

Pelvis

myshirt wrote: »

Is anyone paying their rent in cash?

Strictly it should not count towards your capacity to pay, but I'd be interested to hear of any cases where the bank were ok with it.

Assuming you have a rent book then I don't see it being an issue.

izzyflusky

myshirt wrote: »

Is anyone paying their rent in cash?

Strictly it should not count towards your capacity to pay, but I'd be interested to hear of any cases where the bank were ok with it.

I didnt pay in cash but most months part of it were paid in cash. They queried that, but once I explained and sent a signed letter from the landlord they were happy. I was going to send a letter from the bank showing that the rent matched mortgage repayments from the property buy they sent my AIP before I had the chance.

wally79

History Queen wrote: »

None that I can tell... just have to submit quote for work to be done when applying for full approval. Didn't realise renovation mortgage was unusual? Surely lots of people buying second hand homes intend on doing some sort of renovating/updating?

I agree but was sure that banks had stopped doing them. Will have to talk to mortgage adviser tomorrow to find out

tailgunner

wersal gummage wrote: »

Thank you all for your comments, very helpful.

The expenditure is not chipper or pints etc, more like several large amounts over a 2 month period but those costs are associated with one off event (eg selling a house and associated fees and some renovation work prior to sale).

We have been saving for a long time but not at the "stress test" level....

I'd say you'll be fine in that case. We'd been saving for a while as well, but yeah, not quite at the "stress test" level.

dmm82

tailgunner wrote: »

I'd say you'll be fine in that case. We'd been saving for a while as well, but yeah, not quite at the "stress test" level.

What is the stress test level?

tailgunner

Depends on the bank. AIB wanted to make sure we'd be able to cover the mortgage repayments if interest rates went up to 6 or 7%.

If you borrowed 200k over 30 years at an interest rate of 3.5%, your repayments would be around 900 euro a month. If interest rates were to go up to 6%, the monthly repayments would be 1200.

emc87

myshirt wrote: »

Is anyone paying their rent in cash?

Strictly it should not count towards your capacity to pay, but I'd be interested to hear of any cases where the bank were ok with it.

I pay my rent in cash and was able to show them a rent book, which both Ulsterbank and PTSB were happy with.

A few months before I was ready to apply, I spoke to a broker who told me to start withdrawing my rent in cash at my local branch and ask them to put a reference of "rent" on it, just to make it easier for the reviewer. I'm not sure how much of an impact this had, but I guess anything that stops a query is a good thing.

Bargain_Hound

emc87 wrote: »

I pay my rent in cash and was able to show them a rent book, which both Ulsterbank and PTSB were happy with.

A few months before I was ready to apply, I spoke to a broker who told me to start withdrawing my rent in cash at my local branch and ask them to put a reference of "rent" on it, just to make it easier for the reviewer. I'm not sure how much of an impact this had, but I guess anything that stops a query is a good thing.

I did both the above and no issues with BOI/PTSB.

z0oT

How does it work with getting a mortgage from a bank who your daily current account is not with? You obviously have to change the current account over to them?

Just curious if anyone else here has done it and how it worked.

We're with BOI and their variable rates are the highest at the moment. It seems a bit of a no brainer to get the mortgage from a bank with a lower rate to be honest.

zedhead

z0oT wrote: »

How does it work with getting a mortgage from a bank who your daily current account is not with? You obviously have to change the current account over to them?

Just curious if anyone else here has done it and how it worked.

We're with BOI and their variable rates are the highest at the moment. It seems a bit of a no brainer to get the mortgage from a bank with a lower rate to be honest.

My bank account is with one bank, my partners and our joint account is with another and our mortgage is with a third. Made no difference at all. Just had to provide statements for all accounts with the application.

aloooof

z0oT wrote: »

How does it work with getting a mortgage from a bank who your daily current account is not with? You obviously have to change the current account over to them?

Just curious if anyone else here has done it and how it worked.

We're with BOI and their variable rates are the highest at the moment. It seems a bit of a no brainer to get the mortgage from a bank with a lower rate to be honest.

You'll just have to provide documentation of your current account to the bank you're applying to. I'm with BOI as well and while their variable rates seem to be the highest, their fixed rates are amongst the lowest.

D3V!L

Can any shed any light on "guaranteed income" ?? if say someone was getting a monthly allowance similar to a trust fund can this be taken into account ?

So far from one bank they said they can't accept it.

Cuddlesworth

D3V!L wrote: »

Can any shed any light on "guaranteed income" ?? if say someone was getting a monthly allowance similar to a trust fund can this be taken into account ?

So far from one bank they said they can't accept it.

Can it be cut off with no recourse? Can you show a long history of the payments, IE 2+ years. I would approach a broker about it, they are more used to what banks will accept and how to frame it.

D3V!L

Cuddlesworth wrote: »

Can it be cut off with no recourse? Can you show a long history of the payments, IE 2+ years. I would approach a broker about it, they are more used to what banks will accept and how to frame it.

Its from a parent, so technically it could be cut off but this would never happen. Yes the payment can be confirmed for 2+ years through monthly bank statements.

jc11

I aso have a q re guaranteed income.. im a nurse and get extra pay for nights and weekends..have heard different things from people whether its seen as guaranteed extra income.

Id make up to 400 extra monthly from my basic salary doing out of hours shifts. Would always have to do these shifts but the amount vary monthly. Would the banks consider it as part of my applicantion? Wages not great without it (not really great with it either but better lol)
Cheers

z0oT

zedhead wrote: »

My bank account is with one bank, my partners and our joint account is with another and our mortgage is with a third. Made no difference at all. Just had to provide statements for all accounts with the application.

aloooof wrote: »

You'll just have to provide documentation of your current account to the bank you're applying to. I'm with BOI as well and while their variable rates seem to be the highest, their fixed rates are amongst the lowest.

I take it you obviously would have to switch over your current account at some point though?