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Collateral & Deposits

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  • 30-11-2017 4:05pm
    #1
    hots
    Registered Users Posts: 5,200 ✭✭✭


    Broad query here. I've spoken to a couple of the banks but only to junior staff members and not always the best informed.

    Scenario: Couple, both FTBs, one currently in possession of a mortgage free property being let out.

    KBC said the property was irrelevant and wouldn't be considered at all, just the usual deposit, combined sal. and ability to repay etc.

    AIB have said the rental income would be considered as part of the combined earnings but the property not as collateral (I suspect this is actually the case for most banks)

    So the question is, are all banks similar to the AIB case? Would any bank view the house as collateral & provide a different response as a result? And is there anything creative that doesn't involve selling the current asset that would aid in buying a house quicker? Taking debt out against it doesn't seem like it would be right but could that be used to get a deposit for a new house?

    Appreciate any ideas or insights...


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    #2
    thebeerbaron
    Registered Users Posts: 182 ✭✭thebeerbaron


    I actually discussed the same idea with AIB & KBC in 2016, unfortunately they did not accept the use of collateral. I assumed at the time the other banks would say the same.


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    #3
    hots
    Registered Users Posts: 5,200 ✭✭✭hots


    thebeerbaron wrote: »
    I actually discussed the same idea with AIB & KBC in 2016, unfortunately they did not accept the use of collateral. I assumed at the time the other banks would say the same.

    I kind of see why, I guess they were burnt before, a lot of hassle, very difficult to repossess here. It's a shame as it would take the risk of them lending me X down to X less a safe valuation of the other property, surely making it an attractive loan for them...


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    #4
    CIARAN_BOYLE
    Registered Users Posts: 14,599 ✭✭✭✭CIARAN_BOYLE


    hots wrote: »
    I kind of see why, I guess they were burnt before, a lot of hassle, very difficult to repossess here. It's a shame as it would take the risk of them lending me X down to X less a safe valuation of the other property, surely making it an attractive loan for them...

    Have you considered two separate loans, an equity release secured on the rental property and a mortgage secured on the home.


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    #5
    L1011
    Registered Users Posts: 68,828 ✭✭✭✭L1011


    CIARAN_BOYLE wrote: »
    Have you considered two separate loans, an equity release secured on the rental property and a mortgage secured on the home.

    The equity release will be considered borrowed money in any calculations (deposit requirement, LTV etc) on the second mortgage which generally means it cannot be considered the deposit


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    #6
    hots
    Registered Users Posts: 5,200 ✭✭✭hots


    CIARAN_BOYLE wrote: »
    Have you considered two separate loans, an equity release secured on the rental property and a mortgage secured on the home.

    That's what I was thinking alright but as the other poster said I'm not sure if it would be accepted... I'm a request in with a broker anyway to see what they say.


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    #7
    hots
    Registered Users Posts: 5,200 ✭✭✭hots


    Had a good call with a company suggested by PM. According to them we count as second time buyers so for the purchase we'd need to go to 20% deposit however they said that all of that can be covered by the remortgage or the other property by the looks of things. Time to go away and think about the numbers!


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