Exemptions to the 3.5 Rule

Thargor

Probably been discussed but can anyone point me to a good post or article explaining what the exemptions to the 3.5 rule are exactly? How much would you be able to get? 5 times salary? I have a 50% deposit saved at this stage but Bray is pricey and I'm having trouble stretching the last mile...

I would be an ideal candidate imo, history of saving 50% of salary minimum every month going back years, early 30s, perfect credit history etc, looking for 3 bed semi for rent a room purposes...

RossieMan

Generally you'll get 4, 4.2 at a push. Anything past that is very, very hard to get. A good broker, perhaps.

GingerLily

Any exemptions are at the discretion of the specific bank so there is no general set of rules

listermint

Wouldnt it have to be in January also to start applying as exceptions are used up fairly early on the year / 1st quarter..

Sarn

Also the CB review on the lending restrictions is out this week. They may or may not tweak the rules.

Creamy Goodness

listermint wrote: »

Wouldnt it have to be in January also to start applying as exceptions are used up fairly early on the year / 1st quarter..

Not quite, I got an exemption from AIB in November.

The way they said they gave them out was they only gave out 1 out of 5 every month so that they didn't blow through them in the first week in January.

NearlyForty

Creamy Goodness wrote: »

Not quite, I got an exemption from AIB in November.

The way they said they gave them out was they only gave out 1 out of 5 every month so that they didn't blow through them in the first week in January.

That’s good to know! We’ll be applying through my own bank AIB, and were trying to decide whether to go in November/ December or wait until January..

Marius34

Creamy Goodness wrote: »

Not quite, I got an exemption from AIB in November.

The way they said they gave them out was they only gave out 1 out of 5 every month so that they didn't blow through them in the first week in January.

That's not in 2018, right?

Creamy Goodness

hmm yeah actually you're right it was 2017. I assumed they wouldn't have changed the process but I shouldn't have assumed ��

NearlyForty wrote: »

That’s good to know! We’ll be applying through my own bank AIB, and were trying to decide whether to go in November/ December or wait until January..

go and see them, if they say no exemption there's no harm going the first day the branch is opened in 2019 and chancing your luck

Marius34

This year, banks had lower number of exemptions, and higher demands. Exempions are counted on the withdrawal, rather then approval, on annual base, that's why they can't plan on monthly basis. Currently banks waiting for Wendsday, when central bank will publish exemption limits for 2019.

Bandana boy

if you have a loan to value ration of 50% you will not have much trouble getting an exemption of 5-1 income to loan

hanaimai

The current max exemption is 4.5.

Henry Ford III

hanaimai wrote:

The current max exemption is 4.5.

Which is nuts.

bri007

After Wednesday, does anyone think/know if the banks will issue exemptions to AIP clients based on drawdown in January after the central bank issue the amounts banks are allowed?

Thargor

Okay thanks for the info, wait and see what happens next week then.

jwabh

hanaimai wrote: »

The current max exemption is 4.5.

You can get higher...I got 4.6 from Bank of Ireland.
I know somebody who got 4.7 from them

hanaimai

jwabh wrote: »

hanaimai wrote: »

The current max exemption is 4.5.

You can get higher...I got 4.6 from Bank of Ireland.
I know somebody who got 4.7 from them

I thought I had read somewhere that the max was 4.5 but on examination of the rules themselves it doesn't actually seem to specify a max, so I guess there's technically no limit!

Glenbhoy

Bandana boy wrote: »

if you have a loan to value ration of 50% you will not have much trouble getting an exemption of 5-1 income to loan

There are many factors, income level is one and it would seem that your income level may not be high enough for a bank to offer an exemption. Location is another very important factor and again, Bray won't help your case.
Probably makes sense to go with a broker as they can make your argument with several banks and see who's more willing to be flexible.

lan

I was offered 4.75x by BOI in January.

What they didn’t make a point of telling me was the offer was only valid for 30 days (it was buried on page 7 of the small print).

By the time I found a house 2 months later, the loan offer had expired and they had no more exemptions to reissue it :mad:

Bluefoam

lan wrote: »

I was offered 4.75x by BOI in January.

What they didn’t make a point of telling me was the offer was only valid for 30 days (it was buried on page 7 of the small print).

By the time I found a house 2 months later, the loan offer had expired and they had no more exemptions to reissue it :mad:

That sounds unusual... The loan AIP is offered under the standard terms. To apply for an exemption you would have to go sale agreed on the house, submit the exact address that can be found in the contract, they are evaluated on a house by house basis & issued to the Central Bank. I haven't heard of any bank offering a wide open exepmtion as you have discribed and do not believe it is possible under the CB rules. However, this is the internet, so willing to be corrected.

Cuddlesworth

hanaimai wrote: »

The current max exemption is 4.5.

In fairness, if you have a dual income couple with no kids earning 50k each, their net income per month is 6k. While their total mortgage payments are circa 1500 a month at the 3.5 times rule or 25% of net income. Lots of people can easily put down a lot more money towards a property without being under any strain.

Cuddlesworth

Bluefoam wrote: »

That sounds unusual... The loan AIP is offered under the standard terms. To apply for an exemption you would have to go sale agreed on the house, submit the exact address that can be found in the contract, they are evaluated on a house by house basis & issued to the Central Bank. I haven't heard of any bank offering a wide open exepmtion as you have discribed and do not believe it is possible under the CB rules. However, this is the internet, so willing to be corrected.

We received significantly more then 3.5 times but I think they were fudging the numbers based on bonuses and overtime payments.

Thargor

Bluefoam wrote: »

That sounds unusual... The loan AIP is offered under the standard terms. To apply for an exemption you would have to go sale agreed on the house, submit the exact address that can be found in the contract, they are evaluated on a house by house basis & issued to the Central Bank. I haven't heard of any bank offering a wide open exepmtion as you have discribed and do not believe it is possible under the CB rules. However, this is the internet, so willing to be corrected.

Seriously? Does that not lead to an avalanche of withdrawn offers because people didnt get their exemptions? Is that actually how it works? You put in an offer you cant afford and hope the bank gives you an exemption which they might not even have any left?

Bluefoam

Thargor wrote: »

Bluefoam wrote: »

That sounds unusual... The loan AIP is offered under the standard terms. To apply for an exemption you would have to go sale agreed on the house, submit the exact address that can be found in the contract, they are evaluated on a house by house basis & issued to the Central Bank. I haven't heard of any bank offering a wide open exepmtion as you have discribed and do not believe it is possible under the CB rules. However, this is the internet, so willing to be corrected.

Seriously? Does that not lead to an avalanche of withdrawn offers because people didnt get their exemptions? Is that actually how it works? You put in an offer you cant afford and hope the bank gives you an exemption which they might not even have any left?

Apparently so. Certainly how it has/is happening with me... The rules the bank follows are not aligned with the practices of estate agents.

I had to have the exact address of the property, the agreed price and the AIP in order to apply for an exemption... Although I had gathered allot of information in order that I was comfortable with any offer I was making.

beauf

The rules are there for affordability long term.
If you change job, get sick, or the partner does, and end up on a lower income combined.
You should be allowing for that.
Maxing everything out is how many (including the banks) got into trouble.

lan

Bluefoam wrote: »

Originally Posted by Thargor

Originally Posted by Bluefoam
That sounds unusual... The loan AIP is offered under the standard terms. To apply for an exemption you would have to go sale agreed on the house, submit the exact address that can be found in the contract, they are evaluated on a house by house basis & issued to the Central Bank. I haven't heard of any bank offering a wide open exepmtion as you have discribed and do not believe it is possible under the CB rules. However, this is the internet, so willing to be corrected.

Seriously? Does that not lead to an avalanche of withdrawn offers because people didnt get their exemptions? Is that actually how it works? You put in an offer you cant afford and hope the bank gives you an exemption which they might not even have any left?

Apparently so. Certainly how it has/is happening with me... The rules the bank follows are not aligned with the practices of estate agents.

I had to have the exact address of the property, the agreed price and the AIP in order to apply for an exemption... Although I had gathered allot of information in order that I was comfortable with any offer I was making.

Yes and no.

I did have to specify a property, but I didn't have to be sale agreed or anything like it. The bank said to just pick a property in and around the area I was interested in for the max the price I could afford (including deposit + exemption) to see if I'd get approval. They said that once I was approved, it would be easy to change the specified property when I found a house I actually wanted to buy.

I guess that's how they get around the problem described by Thargor. It would be crazy having to go sale agreed without having mortgage approval first.