Called AIB and TSB about a mortage. Kinda shocked.

StickyIcky

Hi there

So I called AIB and TSB about a mortgage. I've been saving up and got a nice little saving fund going, plus I can put away a few grand a month, so thought I'd be in a position to get a reasonable loan for a house.

I was shocked to hear their mortgage policy is 3 x my annual salary, which means the kind of house I wanted to buy ( 300K - 400K minimum) is way out of my mortgage range. It seems my only option is to save 100K and then get a mortgage and then maybe I can afford the kind of house I want.

By my calculations I could pay off a 360K loan in ten years (not taking interest into account) but that doesn't take into factor my savings, or the fact if I were paying a mortgage I wouldn't be paying rent so I could pay it off even faster. Yet the amount I'm eligable for is half that.

Are their any lending institutes that have better mortgage rates then this 3 x your annual salary without any regard to your actual savings account or monthly savings abilities? I'm a very thrifty good saver with a good job and steady promotions and thought this would count for something. So a bit shocked, disappointed and hoping for advice, or I'll have to cancel my dream of buying a house in the next couple of years.

Thanks lads and go easy on me. I'm admittedly clueless when it comes to mortgages etc.

Tefral

StickyIcky wrote: »

Hi there

So I called AIB and TSB about a mortgage. I've been saving up and got a nice little saving fund going, plus I can put away a few grand a month. I was shocked to hear their mortgage policy is 3 x my annual salary, which means the kind of house I wanted to buy is way out of my mortgage range, unless I spend a few more years making my saving account a lot bigger.

By my calculations I could pay off a 360 loan in ten years (not taking interest into account) but that doesn't take into factor my savings, or the fact if I were paying a mortgage I wouldn't be paying rent so I could pay it off even faster. Yet the amount I'm eligable for is half that.

Are their any lending institutes that have better mortgage rates then this 3 x your annual salary without any regard to your actual savings account or monthly savings abilities? I'm a very thrifty good saver with a good job and steady promotions and thought this would count for something. So a bit shocked, disappointed and hoping for advice, or I'll have to cancel my dream of buying a house in the next couple of years.

Thanks lads and go easy on me. I'm admittedly clueless when it comes to mortgages etc.

Thats what happened in the boom.. its alright borrowing on the strength of that now in this current snapshot in time, however, what happens if you lose your job in the future?

LiamoSail

StickyIcky wrote: »

.

By my calculations I could pay off a 360K loan in ten years (not taking interest into account)

The interest alone on that would be circa 12k p/a. You may want to start taking interest into account.

sword1

If you can save 50k a year ,pay rent etc how can your salary not be enough to borrow 300 k

Tell me how

StickyIcky wrote:

By my calculations I could pay off a 360K loan in ten years

If you could do this then you would be entitled to much more than you suggest.

Warning crude calculations alert!

360k / 10 = 36k a year
36k / 12 = 3k a month
If 3k = max 40% of your nett income then your nett must be 7.5k a month.
Therefore your gross income must be circa 15k a month so your annual salary is about 180k. 3.5 times this is 630k.

There's something wrong with either my figures or yours.

StickyIcky

Yes Tefral, we could go into that whole topic of the boom and what if's etc, but I don't really want to get into that path of conversation. Thanks for the feedback though. I have of course taken that into consideration, I feel very safe and know I could walk into another job. The real threat is what if I got extremely sick or disabled. Job wise and income wise the chances of things going wrong are so small I'm literally willing to bet losing my house on it.

The real thing I want to find out really is this...

What's the best place to get a mortgage from these days? Are all institutes essentially the same these days? I'm I basically screwed getting a decent mortgage any time within the next couple of years?

Laura_A

From the looks of it your saying they will only give you half of what you want so based on a 300/400K house im assuming salary somewhere in the 50-70K region.. If your going for a single mortgage based on this only recommendation would be to talk to a broker they are your best bet.. All banks are ruled by the 3.5 times gross salary rules but there are some exemptions available on either the lending cap OR the deposit needed (cant get both) - not sure they could double the cap though so you might have to look at lowering your budget to somewhere in the 250-300 as a max range.

Seen some great recommendations on here for Killers1 but havent used him myself yet - my savings isnt as good as yourd from the sounds of it.. Good luck with it!

StickyIcky

Tell me how wrote: »

StickyIcky wrote:

By my calculations I could pay off a 360K loan in ten years

If you could do this then you would be entitled to much more than you suggest.

Warning crude calculations alert!

360k / 10 = 36k a year
36k / 12 = 3k a month
If 3k = max 40% of your nett income then your nett must be 7.5k a month.
Therefore your gross income must be circa 15k a month so your annual salary is about 180k. 3.5 times this is 630k.

There's something wrong with either my figures or yours.

Yea you're figures are wrong because my figures are bogus as I don't really want anyone knowing my financial situations. I'm not asking for help with my figures Just advice on what's the best way to get a decent mortgage.

I did notice something interesting though. You write 3.5 times your annual salary. So 3.5 is the standard amount and it's just based off that? It doesn't take into account how much you save each month etc? Thanks

p.s. cracked up at your 'warning crude figures' alert

StickyIcky

Laura_A wrote: »

From the looks of it your saying they will only give you half of what you want so based on a 300/400K house im assuming salary somewhere in the 50-60K region.. If your going for a single mortgage based on this only recommendation would be to talk to a broker they are your best bet..

Seen some great recommendations on here for Killers1 but havent used him myself yet - my savings isnt as good as yourd from the sounds of it.. Good luck with it!

Thanks Laura. Yip I've been saving my ass off with savings especially the last few years with the promotions. I really want that house I've been dreaming off, with a little tiny bit of land, some chickens, garden, a dog. Get out of rat race a little. A bit heart broken today finding that even with all the hard work over the past years I'm still a good way away from it. But yes, I'll try brokers! Good thinking. Thanks Best of luck to you too! It's hard to save but the longer I concentrated on it and the more I saved it easier it started to get because I became more and more obsessed by it. Picturing that home getting closer and closer.

Utah

It is possible to get an exemption on the 3.5 times rule. We were offered it from one of the banks but declined.

matrim

The lending rules for all institutions are a max of 3.5 times your salary and that you have to have a 10% deposit for the first €220,000 and 20% after that (assuming you are a first time buyer).

So for a €400,000 house you need a deposit of €58k and a mortgage of €342,000. To get a 342,000 mortgage you would need a household salary of around €98,000

The banks are allowed to have a number of exceptions to the above rules a year but you would need to make a good case for it and from what I've read elsewhere you would likely only get an exception for one of the rules.

StickyIcky

THanks Utah and Matrim. Good info there.

3.5 x your annual salary as your maximum mortgage rule is fairly standard.
Then you need 10% up to 220K and 20% for anything over 220K.
You may get an exception to one of those rules but generally only one, if you're lucky kinda thing.

So I'm currently mulling this over in my head...

Option 1) Wait until my savings are large enough. Bummer as it will be fairly long time.
Option 2) By a house I don't really want and live in it until my first time buyer status goes away
Option 3) Buy some land and look into building a basic but nice studio style bunglo. Just big enough to live in comfortably. Then as time goes on and I can afford, start expanding it.
Option 4) Look at financial situations in other countries and if moving to Canada or New Zealand etc is an option.

Those are the options I'm currently going to look into. I don't think that getting a large enough mortgage any time soon is going to be on the cards unfortunately. In the mean time will carry on pouring into my savings each month.

Thanks for replies lads. Much appreciated.

Mrs OBumble

StickyIcky wrote: »

I really want that house I've been dreaming off, with a little tiny bit of land, some chickens, garden, a dog. Get out of rat race a little.

If you want to be allowed to keep chickens, I think you'd need to be fairly rural. They type of money you're talking would get quite a mansion in a rural-enough place, surely?

StickyIcky

Yip, that's the plan. (minus the mansion, but a large place in a more rural setting would be my ideal end game yes)

ArthurG

StickyIcky wrote: »

Option 1) Wait until my savings are large enough. Bummer as it will be fairly long time.

Something not adding up here. If you can repay a 360k loan in ten years you can save a massive deposit in less than 2. How is that a fairly long time?

The you say your figures are bogus. What exactly are you after? A Celtic tiger era 6x mortgage loan? Not gonna happen.

fits

Building isnt any cheaper unfortunately. Its more expensive if anything.

PokeHerKing

Mrs OBumble wrote:

If you want to be allowed to keep chickens, I think you'd need to be fairly rural. They type of money you're talking would get quite a mansion in a rural-enough place, surely?

Allowed by who? I know two couples who live in residential semi-ds with hens.

I'm sure a rooster might piss off the neighbours tho!

Thoie

StickyIcky wrote: »

Option 2) By a house I don't really want and live in it until my first time buyer status goes away

First time buyer status is not something you want to get rid of casually Non first time buyers now have to have a 20% deposit of the whole amount.

bee06

On option 2 the rules for non-first time buyers are more rigorous not less so you'd need 20% deposit on the full amount if you weren't a first time buyer.

NIMAN

afaik, the rule was always around 3x your salary.

Its just that it was bent ever so slightly by quite a few, or should I say all, the lenders back in the boom times.

caviardreams

It constantly surprises me that so many people (not necessarily directing this at you OP, it's a general point) consider themselves ready to buy a property which in most cases is a long-term, significant decision, without even understanding the basic process, how interest works etc., or doing some basic research e.g. on the central bank LTV rules, before making that decision.

iainBB

caviardreams wrote: »

It constantly surprises me that so many people (not necessarily directing this at you OP, it's a general point) consider themselves ready to buy a property which in most cases is a long-term, significant decision, without even understanding the basic process, how interest works etc., or doing some basic research e.g. on the central bank LTV rules, before making that decision.

Agree so much with this , shocked at so many people who have no idea what they are getting into.

on_my_oe

StickyIcky wrote: »

Option 4) Look at financial situations in other countries and if moving to Canada or New Zealand etc is an option.

Those are the options I'm currently going to look into. I don't think that getting a large enough mortgage any time soon is going to be on the cards unfortunately. In the mean time will carry on pouring into my savings each month

You can knock the NZ idea on the head - where do you think the Central Bank got their mortgage cap ideas from?!? An overheated NZ market...

To buy a three bedroom 'lifestyle block' near Auckland you'd need $725,000 minimum and to rent it you'd need $680/wk /$35,360pa... So more than 20 times the annual rent.

I will however recommend Killers as a mortgage broker (but we only wanted 3x our income and had a 25% deposit)