a couple of mortgage refusals

patsy sally

HI, I am in a bit of a dilemma I really don't know what to do. Myself and my husband applied for and successfully obtained planning permission to build our new house.  Then the difficulties arose when we went about about applying for the mortgage, what a shock. 
Basically my husband gets cash in hand so therfore has no bank accounts etc for them to check. I would be getting the mortgage in my name as a result- I work in the hse and have done so for over a dozen years with a clean credit rating and savings record etc. We were refused initially with the PTSB however  I thought this was them been arrogant as they kept us waiting on a decision for 7 weeks - i repeatedly asked them was there a decision and they said not yet even though they made us look like right eejits and asked us to keep bringing in stuff to them. So when that was refused, I decided we should try BOI- we did nt even need to apply with them and got nowhere with them. So next up, we said we would try a mortgage broker and I explained the situation to him. He came back the next day with approval in principle for me provided I could prove my sunday premium with the hse over the past 4-5 years. Luckily, for me i had all my P60s so I brought them to my broker along with all the other documentation required. HE told me in his office, I wont say where this broker is, along with my husband, that he couldn,t see why we were refused by the PTSB and he said with my savings record and I handed him 12 months worth of payslips and 7 years of bank and credit union statements, that we shouldn't have a problem getting the mortgage. Needless, I was optimistic after speaking with him. I do have a car loan, however I did repetedly say to both the PTSB and this broker that this loan can and will be paid off in an instant if necessary, as I had savings in the credit union to cover this. The broker told me I will have to do this but not to pay it off yet, to wait and see. 
Two weeks later I was refused by the same bank that the broker spoke to after this bank telling him I stood a very good chance of getting the mortgage. I asked the broker to appeal this situation when it was discovered that the application had not gone to the headquarters, this man that the broker spoke to decided instead. 
So in fairness to the broker, he rang the supervisor regarding this and hse said to send all the documents up including a gift letter from my parents explaining that the site I was given is indeed a gift, and that they don't want the value of the site to be repaid by me. 
So we went and sent all the documents up along with our fee, now two weeks later this same company declined me again but the broker won't tell me until he received the written letter of explanation.
I contacted another broker over this and he told me I had been ill advised. 
I am now stuck in a rut. I can't get a mortgage. I have substantial savings to build but it will not be enough to build the house- if me and husband continue to build and then go for a mortgage next year, then we have no savings, and no guarantee we will get a loan. Or I could try the credit union and get a small loan and see how far we get but then should we get a mortgage we will have to clear the credit union loan. Or we could build in stages-which we dont want as thatl take years. I have enquired with a different broker about applying for a council mortgage but have been told that that application will be the same as the banks and because I am married there is no way around this. 
I have cried so much over this, I dont know what to do now. 
I could  try two more banks but I think it is a lost cause. 
Has anyone else been in this situation before and if so have they any advice for me?

Boards.ie: Niamh

Moved from Bank of Ireland talk to forum.

phormium

When you say your husband is paid cash in hand do you mean he is just physically paid cash or do you mean it is 'off the books' which I presume is what you mean. Otherwise even if he was paid cash he could have payslips and p60s etc which I see no reason why a bank would not be happy with.

If this is the case I think the banks are big time put off your application by the non compliant implications of his employment.

patsy sally

phormium wrote: »

When you say your husband is paid cash in hand do you mean he is just physically paid cash or do you mean it is 'off the books' which I presume is what you mean. Otherwise even if he was paid cash he could have payslips and p60s etc which I see no reason why a bank would not be happy with.

If this is the case I think the banks are big time put off your application by the non compliant implications of his employment.

My husband gets cash only he is not on the books. He does file his tax return in october .
I don't see why I should have to suffer in that I can't build the house coz the bank has told me I can meet the repayments..
So cruel so unfair.
This is unfortunately having an impact on our marriage and we aren't long married.

fits

I sympathise with you. It would really help your case if your husband could get on the books somehow. After six months of regular income to a bank account, you would have a much stronger case.

patsy sally

fits wrote: »

I sympathise with you. It would really help your case if your husband could get on the books somehow. After six months of regular income to a bank account, you would have a much stronger case.

I think my husband has to be given an ultimatum.

c montgomery

Is your husband self employed?

If he files a tax return in October he can demonstrate earnings. If he's been doing this for a few years he can demonstrate continued earnings which should be enough for it to be considered consistent income. Bank will want to see 3 years income.

If it's cash in hand and he declares only a portion of this in October to reduce tax liability they not getting a mortgage will be the cost of this.

c montgomery

Just to note I was in a similar position last year, refused by 3 banks after jumping through every hoop they had.
I'm self employed, friends who's income was 20k less than mine were approved.

It's very frustrating. I decided to wait until next year to try again.

blindside88

if you have substantial savings would a personal loan be enough to cover the remaining cost of building the house? The problem with a mortgage for a once off build is that the banks estimation of the building cost and the actual cost can be very different. We got planning permission to build a house in 2014 but the build cost compared to purchase cost I'm our area didn't make it worth building at the minute so we bought a house. Still have the site and intend on building in a few years but I remember the info required when applying for the mortgage to build was significantly more. Best of luck with it

patsy sally

blindside88 wrote: »

if you have substantial savings would a personal loan be enough to cover the remaining cost of building the house? The problem with a mortgage for a once off build is that the banks estimation of the building cost and the actual cost can be very different. We got planning permission to build a house in 2014 but the build cost compared to purchase cost I'm our area didn't make it worth building at the minute so we bought a house. Still have the site and intend on building in a few years but I remember the info required when applying for the mortgage to build was significantly more. Best of luck with it

A personal loan wouldn't be enough because we would just get the house roofed and then wed need the personal loan and that's not enough to finish the house.

We need more than luck I'm afraid we need a miracle.

My husband left when I was in the shower.

It just goes from bad to worse for me.

phormium

Ignoring the marriage issue as I don't know what to say about that could you get a credit union secured loan of sufficient to build the house, basically a mortgage but done by way of secured loan secured on the new house. The rate would be higher than a main bank and the term shorter so all depends obviously whether or not you would qualify for that on your income.

Your husband's income situation is still not clear. If he is making his own tax returns then is he not self employed? Being on or off books doesn't apply if he is responsible for his own taxes as he isn't an employee of anyone? Or is there some other explanation.

patsy sally

phormium wrote: »

Ignoring the marriage issue as I don't know what to say about that could you get a credit union secured loan of sufficient to build the house, basically a mortgage but done by way of secured loan secured on the new house. The rate would be higher than a main bank and the term shorter so all depends obviously whether or not you would qualify for that on your income.

Your husband's income situation is still not clear. If he is making his own tax returns then is he not self employed? Being on or off books doesn't apply if he is responsible for his own taxes as he isn't an employee of anyone? Or is there some other explanation.

Thanks to every one for there replies its much appreciated.
To be honest I just don't know what to do.
The credit union would only be 25k coz that is all they give anyone,,so no disrespect to my local credit union but that amount won't get us far. It wouldn't be a problem for me to get that loan as I've paid off two car loans in the past with them and then credit check shows that as I ordered it on line so I could c what was on it.
If we did go down the route of the credit union I am left with another decision to make- do I apply for a mortgage again next year and f i do that then the credit union loan will have to be repaid.
As my husband is self employed but is paid in cash only-,as are a lot of tradesmen-,the tax he pays is when he receives the October 31st deadline form. He certainly isn't on the dole and getting cash, certainly not.
I don't know why I have to be punished for this by the banks when I know I can pay the mortgage and the bank has said I can too.

c montgomery

It's irrelevant if he gets paid cash or not, he has an income and his accountant or revenue should be able to provide a tax clearance cert to show no tax is owed.
He will have filed tax returns for a number of years and an average of these can be taken by the bank as potential earnings in the future.

Not many trade jobs get paid cash anymore by the way

patsy sally

c montgomery wrote: »

It's irrelevant if he gets paid cash or not, he has an income and his accountant or revenue should be able to provide a tax clearance cert to show no tax is owed.
He will have filed tax returns for a number of years and an average of these can be taken by the bank as potential earnings in the future.

Not many trade jobs get paid cash anymore by the way

He doesn't have an accountant.

c montgomery

The bank will want a tax clearance certificate from him, can be got from revenue.

His situation sounds quite unconventional and as a result riskier to banks.

I hope he keeps good records, i'm self employed, have and accountant and get paid directly to bank every month and yet was still audited in the past.

johnnyskeleton

patsy sally wrote: »

He doesn't have an accountant.

He will need to get an accountant to do up accounts for him if he wants to apply for a mortgage.

While you can meet the mortgage out of your salary, Im guessing the issue is that you fail the stress test i.e. how you will pay for other expenses, what happens if interest rates go up etc. While these may well be met by your husbands income, the bank will not take it into account.

I hope this doesnt sound offensive but the issue with this "off the books" income is not a suggestion that he is claiming welfare as well, its that any self employed person has to oay income tax. With respect, if he works cash in hand, doesnt use an accountant and the banks are concerned then it suggests that he isnt declaring his full income.

Maybe have a frank discussion with your husband about his tax affairs - if he isnt declaring his full income and revenue catch up with him, not being able to get a mortgage is the least of his worries!

phormium

Obviously the bank are uneasy about whatever accounts he is able to produce.

I am also self employed, paid almost exclusively in cash, don't have an accountant and do my own returns, make buttons mind you and thankfully am not looking for a loan but I can see why a bank wouldn't consider someone like me a good bet either. It doesn't mean I pay one penny less in tax than I should, just because someone pays me cash doesn't mean I don't record it correctly (which I do) but there is always the presumption that cash businesses fiddle the figures. Unfortunately the banks have long experience with this too and compliance being as it is these days are not going to take any chances.

Pity your credit union is limited, it must be a smaller one, the bigger ones lend up to regular mortgage amounts if income is enough.

A bank underwriter always has an eye to the day the bank are standing in front of a judge looking for repossession and making sure their lending decision day one is watertight. Put yourself in the underwriter's position, yes your honour I gave this woman xxx amount to build her house even though her husband's income was not good enough for the bank to take into account, yes I know they now have 3 small children and childcare costs have made it impossible for her to work full time/continue working/work and pay the childcare and pay the mortgage fully. What is the judge going to say? Now while unforseen things happen lots of people, something like having children in the future and the extra costs that brings is not that unforseen.

Fol20

If they dont have children while applying for a mortgage, they cant calculate that in your ability to repay.. Not everyone wants children..

phormium

Of course they can't calculate it or be seen to be even thinking about it, but they are!

Fol20

So if they dont calculate it then its not even considered. They can think about it, but if it isnt used in their calculations and algorithms, it shouldnt impact them.

phormium

Yes but just because computer says yes doesn't mean you get approved, there are other variables.

OP seems to have enough income for amount needed or brokers wouldn't have even bothered put it through but yet is being refused, there is clearly something else being taken into account.

Trish56

When applying for a mortgage the lender will look for evidence of all income and need prove of affordability and need a paper trail of all transactions under the money laundering act. As far as the lender is concerned your husband is either self employed or not and if self employed you need to provide evidence by employing an Accountant to submit your tax return to the Revenue by 31st October each year. Revenue will then issue you with a P21 Balancing statement and a lender will accept same as evidence of Income for past 3 years. If you cannot provide a P21 for past 3 years well then the lender will only take into consideration your Income. If your stressed mortgage repayments are €800 per month you need to show monthly savings/rent of €800 per month and again evidence of same must be shown in your bank accounts.

Also for a couple after taking the stressed repayment into consideration you need to show that you will have in excess of 2k left over per month and this is probably what is causing the problem. So your net income per month should be approx. 3k. Your Broker should be well aware of all the above and indeed all the lenders now supply calculator's which will show if you qualify for a mortgage or not and also it's important to have a paper trail for all income and expenditure. Your husband should have a business bank account and lodge all income and pay expenses from same.

Fol20

What other variables are in play with your getting a mortgage.. Everything is based on numbers nowadays with little flexibility. Its all maths based with their calculations. Bank managers and employees have very little pull these days if the numbers dont stack up.
Maybe we havent received the entire picture of the op, do both of them have a good credit rating,gabling history or any other red flags on their statements. How much have they been able to save in the past 6-12months within their given income. Is their substantial deposit just a gift from family. We dont know much about the op so its hard to form a proper opinion on the situation.

Trish56

I totally agree however I would have thought that the broker who charged them a fee would have explained where their application fell down and also the broker should have examined their bank statements to check for Paddy Power or other online transactions.
Very easy to get a Credit check by applying to www.icb.ie. The Op and husband need to get mortgage ready either by he finding a job or sorting out his self employed status. Easy enough to get a mortgage once you qualify under Income, savings, credit rating and affordability.

Fol20 wrote: »

What other variables are in play with your getting a mortgage.. Everything is based on numbers nowadays with little flexibility. Its all maths based with their calculations. Bank managers and employees have very little pull these days if the numbers dont stack up.
Maybe we havent received the entire picture of the op, do both of them have a good credit rating,gabling history or any other red flags on their statements. How much have they been able to save in the past 6-12months within their given income. Is their substantial deposit just a gift from family. We dont know much about the op so its hard to form a proper opinion on the situation.

Fol20

You would think the broker would have inspected all that alright.. I would recommend the op to check the icb report.. Its only 6 euro and will give all your credit history for the past few years. From what the op has describing we are missing some critical info that is causing her applications to be declined. Op have a look on askaboutmoney.com. They have a template to fill out and then they will give you advice on what needs to be done to get a mortgage.