Aib refused mortgage.

wonga77

Even thinking about it now gets me annoyed, we had the guts of 80k saved up with BOI over the last 10 or so years and had financial backing from the family business but they more or less laughed at us. The woman in the bank apologised and said that these applications were decided by someone in Dublin who didnt seem to understand that cost of living in Sth Kerry would be much cheaper than the capital.
In the end it probably worked out better for us but still.

CarrieDzzz

Hi OP, we were also in similar situation last year, we applied to AIB, they told us there would be no problem whatsoever in getting the amount required. We submitted all the papers, letters, accounts, and back and forth to them for about a month and then came the phone call, sorry even though you meet the financial requirements and we had no other loans, my OH is a farmer and the turned it down based on the fact his job "is seasonal", despite submitting 5 years of accounts and showing the same earnings each year. Anyways, we were advised to go through a broker, I would definitely recommend going this route. Its in their best interest to get you approval.

Best of luck with it. Hopefully it works out for you too.

Muas Tenek

Not sure if you would qualify for Home Choice loan http://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/home_choice_loan.html
Here is a list of brokers in Cork area http://www.homechoiceloan.ie/Authorised-Brokers.aspx?id=4
I hope this helps.... best wishes to you and your family.

Shop40

Hi OP,
my advice would be to try KBC. We got a much better deal with them than BOI etc were offering and they were prepared to lend us a bit more.
I wouldn't see them refusing the amount you need to be honest.
Good luck!

Trish56

Hi OP,
I'm a mortgage broker with over 40 years experience so will try and help out here as there seems to be a lot of confusion and incorrect information given out.

Firstly I must say I am shocked at how you were dealt with by a very inexperienced staff member at AIB and would have to believe that she was not a mortgage advisor. All the lenders have affordability calculators and when all your information is input it tells you if you qualify for a mortgage or indeed will tell you how much you qualify for.

I'm not sure from your post if an actual application was submitted with supporting documentation (P60's, payslips etc) however I do know she could have advised you within a few minutes just from the info you posted here.

The calculator will calculate what your net disposable income is per month which is after tax, PRSI and USC and pension deductions for those in public service. In your case your net disposable income is €2260 per month and as far as the lenders are concerned that after stressed monthly repayments of in your case €615 you should have €2550 left over for a couple with two children. The result is you are short on income of €290 per month to qualify for a mortgage of 100k over 28 years. Your income qualifies you for a mortgage of 54k. Is there any possibility that your wife can get an evening job?

Lenders also look at the following when assessing your mortgage application:
Affordability - you need to provide evidence that you have monthly savings or paying out rent or both equal to the stressed monthly repayment. In your case you are paying rent in excess of €615. This rent must be shown to go out from your bank account monthly.
You also need to show savings of at least 10%.

I'm also not a 100% sure that any of the lenders would accept a log cabin as security and the cost would be a lot more than 100k when you take into consideration, site preparation, entrance, driveway, sewerage, water, ESB, footpaths, planning permission, Architect fees and legal fees.

You did not mention that you have any savings to cover the above however you mentioned that you were looking for 100k to cover site 20k and log cabin 80k. The most you can borrow is 90% of the purchase price subject to all of the above so you would need savings to cover the 10% plus extra's.

I hope the above explains why you were refused and hopefully your wife might be able to get some part time work in the evenings to help you qualify for a mortgage in the future.

I am horrified at how you were treated at the bank and the mis - information you were given and perhaps you should write a letter of complaint to the Manager of the branch.

Trish

phormium

OP did I read it right and you are looking for a mortgage for a log house?

If so double check with the lender that this is ok, I worked for a main bank for many years and they would not do a mortgage on a log home as a home loan. They would do them as holiday homes but not at the same loan to value, I think it was only around 50% they would lend. House insurance used to be higher on them too, maybe things have changed there though.

ChampagnePop

What deposit do you have OP?

Make a complaint against your original advisor, you can't borrow over 3.5 times your salary so to be advised to do so was stupid and will now affect your AIB credit rating.

Trish56

It wont affect his credit rating just because he applied for a mortgage and got declined. I would think a full application was never submitted to Dublin and a more senior person in the branch than the staff person the OP met made the decision.

ChampagnePop wrote: »

What deposit do you have OP?

Make a complaint against your original advisor, you can't borrow over 3.5 times your salary so to be advised to do so was stupid and will now affect your AIB credit rating.

matt-dublin

Trish56 wrote: »

It wont affect his credit rating just because he applied for a mortgage and got declined. I would think a full application was never submitted to Dublin and a more senior person in the branch than the staff person the OP met made the decision.

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

amcalester

matt-dublin wrote: »

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

But they may have declined in locally without sending it to the underwriters, perhaps someone more senior felt that it was a waste of time sending it up and so declined it.

wonga77

Thats may of happened but would be very irresponsible of any bank employee, I couldnt imagine anyone would do it

matt-dublin

amcalester wrote: »

But they may have declined in locally without sending it to the underwriters, perhaps someone more senior felt that it was a waste of time sending it up and so declined it.

They don't have the authority to decline it. They would advise that it's unlikely the mortgage would be approved but would still have to send it to underwriting.

The branches have no authority any more.

Judge Trudy

I'm sorry to hear about this and I hope you'll be able to explore other options. We will be in a similar situation to you next year. We will be looking for a €100,000 mortgage with two children. My partner is self employed and I'm not permanent at the moment. I'm really hoping I'll get another contract after my maternity leave is up in January. Can I ask if you had much of a deposit saved?

matt-dublin

Judge Trudy wrote: »

I'm sorry to hear about this and I hope you'll be able to explore other options. We will be in a similar situation to you next year. We will be looking for a €100,000 mortgage with two children. My partner is self employed and I'm not permanent at the moment. I'm really hoping I'll get another contract after my maternity leave I'd up in January. Can I ask if you had much of a deposit saved?

You will need 20% of what you intend to spend plus overheads.

Your husband will need 5 years of accounts for the bank and I don't think they will take part time or contract income into consideration or it will be heavily scrutinised.

Trish56

The branch manager has the responsibility to ensure all mortgage applications sent to Dublin for underwriting complies with the credit policy and that all supporting documentation is attached. The first item to accompany the application is the 'mortgage affordability calculator' which would clearly show the OP does not qualify for 100k or the 210k that was mentioned. Therefore the application would not be sent. There are very strict guidelines for both brokers and Branch Managers before sending an application for underwriting.

matt-dublin wrote: »

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

Trish56

There's a lot of incorrect information being posted on here.

A first time buyer can borrow up to 90% of the purchase price or 3.5 times joint income which ever is the lesser up to a purchase price of 220k and 80% on the balance. Therefore a 10% deposit will be required plus 1% stamp duty and approx. €2200 in legal fees.

You need to have a net disposable monthly income after stressed tested mortgage repayments of €1300 for a single person and €2050 for a couple plus €250 per child.

Self employed will need 3 years accounts and/or 3 years P21's (Revenue Tax Assessment forms) plus a letter from their Accountant stating their taxes are up to date. Lender will take the average over the 3 years as income.

If you pay childcare or maintenance this will be treated the same as a short term loan.

Part time income will be taken into consideration once the position is permanent.

For a home choice mortgage the minimum income for a joint application is 45k and 30k for a single applicant.

If you are paying rent it needs to be reflected in your current account and not paid by cash.

Hope the above helps.
Trish

matt-dublin wrote: »

You will need 20% of what you intend to spend plus overheads.

Your husband will need 5 years of accounts for the bank and I don't think they will take part time or contract income into consideration or it will be heavily scrutinised.

matt-dublin

Trish56 wrote: »

There's a lot of incorrect information being posted on here.

A first time buyer can borrow up to 90% of the purchase price or 3.5 times joint income which ever is the lesser. Therefore a 10% deposit will be required plus 1% stamp duty and approx. €2200 in legal fees.

You need to have a net disposable monthly income after stressed tested mortgage repayments of €1300 for a single person and €2050 for a couple plus €250 per child.

Self employed will need 3 years accounts and/or 3 years P21's (Revenue Tax Assessment forms) plus a letter from their Accountant stating their taxes are up to date. Lender will take the average over the 3 years as income.

If you pay childcare or maintenance this will be treated the same as a short term loan.

Part time income will be taken into consideration once the position is permanent.

For a home choice mortgage the minimum income for a joint application is 45k and 30k for a single applicant.

If you are paying rent it needs to be reflected in your current account and not paid by cash.

Hope the above helps.
Trish

I forgot about the first time buyer exceptions. Well spotted.

RE the branch approval process. Based on the mortgage affordability calculator that loan should never have been suggested based on current affordability information so the loan officer shouldn't have sent it for approval in the first place.

The branch manager wouldn't really look at it unless there were considerable extenuating circumstances as it suddenly becomes a micromanagement role (first hand experience with both ebs and AIB).

The lending officer is supposed to deal directly with central underwriting and cut out the middle man unless they were looking at doing something out of the norm like rule exceptions (which potentially they were trying to do with that loan amoun possibly?)

What really strikes me is that they seem to have suggested an application value based on 5-6 times the gross income??

Can't understand why they would do that as it's usually a massive push to get 4-4.5 times income?

matt-dublin

Some other costing which are missing:
Surveyer fees : €1500 + vat
Land registration and search outlays (should be included in solicitor charges but roughly €750)
Some lenders also charge a €150 valuation fee as well