Equity release mortgage or similar problems .

tong po

Hello folks , I have an interesting yet frustrating query .

Little background . Self employed within the confines of a family business which is doing good . Doing “good “ In business in Ireland now Adays actually means your on top of your creditors list and have current tax clearance . I’m sure most of you know exactly what I mean .


Anyway here is my problem . My dad is it not well , and it’s time for wills and key decisions .
I have been left a house in a small town , a typical 3 bed shoe box that’s rented back to the councill .
There is no mortgage or dept or standing from any bank or instatutuon on this house .
My dad says sell it , borrow against it do whatever I want with it , it’s mine .

Fine so I thought .

I have my own little investment property similar to the one my dad has given me . Mortgages with k.b.c ( iib in my days ). 15 years paying down this mortgage and finally it’s managbale , not” under water “.
My credit report shows I’ve never missed a payment despite what we all have collectively gone through since 2008 . I held the line with the bank . Went shirt myself many a time , drove a bucket of **** car for years little holidays . That house is my pension I always thought , and my dad and I always understood that I would come in to possession of his investment property when the time came , so that would see me sorted ok for life you would think .
You would be forgiven for thinking , rather .

Anyway cut to the chase . I live in cork city , in a rented house for 9 years . 2 kids in school and my business interests near by . My landlords are getting divorced / so the house I live in has to be sold .
No problem I thought .
I have dads house unincombered by any debt at all . And I fact leaves a few shillings at the end of every month ( his pint money and a few bob for the mother)

I went into kbc bank who I paid on time every month for 15 years on my own property .

They declined to give me anither mortgage , despite being in possession of a house with no mortgage which I have offered as security . Apparently the dept free house is over 50km or so from the nearest kbc hub so that deems it useless ( according to them )

Am I wrong here , did we not just bail out out banks ?

If there’s any bank or instatutuon member reading this please chime in . It’s small beans I’m looking for .
Even not cincidering the debt free house I’ve been let .

Thanks for taking the time to read this .id love to hear opinions .

phormium

Ability to repay is the number one criteria for underwriting new lending, security comes second. So whatever about KBC lending practices and being within a certain distance of a hub! it is your income that is going to determine whether or not you can borrow from any bank.

Banks may take a percentage of your rental income also on the property you own and add to your self employed income for the purposes of calculating how much you can borrow but all the security in the world usually does not help much if at all if there is insufficient disposable income to repay the money borrowed.

The bank is interested in the income stream from continual repayments, not in repossessing property it holds as security. Any bank's hands will be tied to a certain extent if you don't qualify income wise under their present lending criteria regardless of your previous repayment record or security offered. Maybe not fair but that's the way it works.

368100

KBC wasnt one of the bailed out banks by the irish taxpayer.

Id also take a guess that the property isn't in a strong rental location, rather than too far from the hub.

As the other poster said, repayment capacity is number one factor, by sounds of it your business is just getting by so maybe no capacity for you to take a higher salary to support the new repayments

tong po

I thought the fact that I’m paying the rent in the place I wanted to buy for the last 9 years would have had a major impact . A very long demonstrated stress if you will . A mortgage on the property would change my suitstuon bery little financially , it’s a pity it has to be sold .

I also have no problem on the earnings / pay slip side of things and my business is sound ( thank god )
I’ve also a few k for a deposit so I have options . I’m just suprised it wasn’t straight forward and given that I’m an existing customer bla bla bla .

Regarding bailing out ya I stand corrected . Wrong generalization iib homeloans were not bailed out no .

Computer really says no nowadays .

368100

Whats the exact reason they've given for the decline?

tong po

368100 wrote: »

Whats the exact reason they've given for the decline?

The house I’m let is to far away from a hub to be concisered .

I’m told aib would jump at it .

368100

tong po wrote: »

The house I’m let is to far away from a hub to be concisered .

I’m told aib would jump at it .

Somebody is leading you astray on this......as long as the property is in ROI, it should be considered

ANXIOUS

368100 wrote: »

Somebody is leading you astray on this......as long as the property is in ROI, it should be considered

I've definitely seen it before with KBC, they had distance requirements.

368100

Its nothing to do with distance from a Hub, It's to do with Location.

For most major urban areas they are willing to go to max 90%

For more rural areas they will lend less due demand being less for properties in those locations and possible downward pressure on prices.

Other banks have similar in their credit policies, particularly around apartments

ANXIOUS

368100 wrote: »

Its nothing to do with distance from a Hub, It's to do with Location.

For most major urban areas they are willing to go to max 90%

For more rural areas they will lend less due demand being less for properties in those locations and possible downward pressure on prices.

Other banks have similar in their credit policies, particularly around apartments

Just looked at there mortgage calculator it's based on distance from cork, Dublin, galway and Limerick. Then they have other.

368100

ANXIOUS wrote: »

Just looked at there mortgage calculator it's based on distance from cork, Dublin, galway and Limerick. Then they have other.

Again.....this limits the max LTV in the case, not whether a mortgage will be available or not

4ensic15

The banks are not interested in small mortgages. Under 50K they regard as uneconomic. Most rented residential property is not regarded as good security because of the difficulties in realising it.
Your idea of a good proposition may not be the banks' idea of one.
More money is coming into the banks from mortgage repayments than they are lending out in new mortgages. The reality is the banks can meet their lending quota from straightforward mortgage lending to first time buyers with permanent jobs. They have no interest in convoluted situations.