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Asset Rich, Cash Poor first time buyer - Options?

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  • Options
    #32
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    antoinolachtnai wrote: »
    It is easy to confuse cash and wealth. The whole point of a bank loan is to convert wealth into cash. Cash is the end result of a loan, not the precondition.

    What??


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    #33
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    aido79 wrote: »
    Cayden Millions Shortchange wrote: »
    Welcome to farming in Ireland unfortunately. You have to invest to keep things going but you don’t necessarily see a big return on the investment but it still has to be done.

    Regardless of what the business is the OP after 2 decades hasn't enough money for the deposit for a house. Why should farming be different from any other business? If it's not working out maybe it's time to try something different or a different approach to farming.
    This is way off topic though.

    He didnt say he’s not making money from farming, he said he’s been re-investing it to expand his business. Without a bit more information, no one can assume his business isn’t working out. Maybe he inherited a 30 acre farm, a David brown tractor and a few disused outhouses, and now he’s farming 100 acres with state of the art machinery and lovely new sheds. He may have reached a point where he doesn’t need to reinvest quite as much and can draw a bigger wage for himself.
    OP, your best bet is to go into the bank and talk to whoever is assigned to deal with your account there. They should be able to advise you what to do. Presumably you have a couple of years of accounts to show them.


  • Options
    #34
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    GingerLily wrote: »

    So your telling the OP to mortgage the farm? Is that good advice? Should they not just cash in on their crypto currency? Would they be subject to commercial rates? Are they higher?

    The OP never said he (or she) had crypto currency (whatever that is!). An earlier poster surmised that that might be the asset they were talking about. In the not very distant past, a person who owned their own site outright could get a 100% mortgage to build a house, because the finished product would still be worth more than the mortgage. I.e. the site would be the deposit, and the LTV would still be within the limits. The rest of the farm probably wouldn’t come in to play really, once the OP can show that they have sufficient income to repay the loan. I can’t remenver if the OP specified whether they wanted to buy or build a house though!


  • Options
    #35
    TheShow
    Registered Users Posts: 1,157 ✭✭✭TheShow


    djPSB wrote: »
    One has to pay tax on crypto profits. Harsh if regarded as gambling.

    Not regarded as gambling but you couldn’t rely on the value of the account. Could be 10k one day and 10p the next.


  • Options
    #36
    TheShow
    Registered Users Posts: 1,157 ✭✭✭TheShow


    antoinolachtnai wrote: »
    In brief, the bank.

    Let’s say the OP owns a farm. The land of farm is worth one million euros.

    The farm, let’s say, is unencumbered by any other debt.

    The OP now wants to buy a house. Let’s say the house is adjacent to the farm but it might not be. Or the house might need to be built. But let’s keep it simple.

    The house is €240,000.

    The OP could apply for a mortgage for 250,000 euros he needs to cover the house and expenses tgat will qrise like legal fees and stamp duty abd very basic furniture abd moving fees. The OP would offer the farm and the house together as security.

    The combined value of the house and land is 1.24 million euros.

    The bank will assess the application on the basis of the loan to value being just under 20 percent.

    If the bank is satisfied the OP has income to repay and the security is good, then there is no reason why the bank wouldn’t advance the entire 250,000 the OP woild require.

    The fact that the amount being advanced is more than 100 percent of the value of the house actually being purchased is immaterial to the bank.

    As per cca and ccp and mortgage conduct of business and a few other bits of legal framework, you can’t take out a resi mortgage on anything other than the proposed property.
    He could raise equity against the farm by way of a commercial loan to purchase a property, providing that the farm generates sufficient income to service the debt. And that’s assuming that the land isn’t already held as security for farm debt...


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  • Options
    #37
    TheShow
    Registered Users Posts: 1,157 ✭✭✭TheShow


    antoinolachtnai wrote: »
    It’s evidently a residential property loan not a commercial loan to develop a business.

    Not true, it’s a business loan against the farm so it will be at commercial rates. The purpose of the loan is largely irrelevant. You look at what is primary economic activity of the entity.


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    #38
    Azizur Rahman
    Registered Users Posts: 70 ✭✭Azizur Rahman


    All farm related loans were cleared last year. No loans on the go. Things have been going reasonably well for farm income over the last few years.

    I could save for the deposit, be able to have that in three or four years. Looking to build a house near the farm. The way family life has been, I've never really needed to leave home as I was able to help the folks out around the house with maintenance and up keep etc.

    Just wondering is there any way I can use my graft from the last 20 years to help speed things up up with mortgage and building.

    And I don't know what cypto currency is!


  • Options
    #39
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    TheShow wrote: »
    As per cca and ccp and mortgage conduct of business and a few other bits of legal framework, you can’t take out a resi mortgage on anything other than the proposed property.
    He could raise equity against the farm by way of a commercial loan to purchase a property, providing that the farm generates sufficient income to service the debt. And that’s assuming that the land isn’t already held as security for farm debt...

    There are going to be issues with the structure, sure and it needs a bit of imagination. He could raise a small commercial loan to provide the ten percent. He could use part of the land adjacent to the house as collateral. If he is building the house the OP could develop the house as part of the farm business and then buy it out of the business with a mortgage while it is complete.

    The main problem with all of the above is tax.

    But if the OP has a strong balance sheet then there should be a way.


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    #40
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    Are you hoping to use a site of your own or to buy another site? On the AIB website it says that for self build mortgages you can borrow 100% of the cost of the build if you have the site gifted to you (I presume that also stands if you own the site already). If you can show that you have sufficient income to afford the mortgage it really shouldn’t be an issue.


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    #41
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    aido79 wrote: »
    Cayden Millions Shortchange wrote: »
    Welcome to farming in Ireland unfortunately. You have to invest to keep things going but you don’t necessarily see a big return on the investment but it still has to be done.

    Regardless of what the business is the OP after 2 decades hasn't enough money for the deposit for a house. Why should farming be different from any other business? If it's not working out maybe it's time to try something different or a different approach to farming.
    This is way off topic though.

    Agree with this whats the point


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