Saving/Applying for a mortgage 2020-22 Edition

guyfawkes5

dodo87 wrote: »

is it harder to switch in the future?

Compared to your original application, it should be a bit easier as there's no third party (i.e. the seller) involved. There are small risks that a valuer might rate your property at a value and hence LTV level you weren't expecting, etc, but given that you've recently been through a purchase and know all the paperwork is order, it should be far more painless than the first time.

LittleMissRed

I’m wondering if anyone can shed any light on something for me... Myself and my husband have our deposit but are still continuing to save as we plan to start our application in a few weeks time once my probation in work is complete. I’ve read a fair bit on here and in other forums about the process and what banks tend to pick out of your bank statements. However, one thing I haven’t heard mentioned is charitable donations. We make a regular donation which will be noticed on our statement. But I wondered if anyone has any experience with this and knows how the bank would view it in terms of outgoings. What I mean is, if it was a bill or loan repayment it would have to be paid every month and is there for included in our outgoings. However, as this is voluntary on our part, would the banks be likely to think that we would obviously prioritise a mortgage payment over this and therefore it would actually be available to us if push came to shove?

topmanamillion

LittleMissRed wrote: »

However, as this is voluntary on our part, would the banks be likely to think that we would obviously prioritise a mortgage payment over this and therefore it would actually be available to us if push came to shove?

Ya that'd be the banks take on it.

wassie

I wouldn't be worrying about this. The banks will want to see you ability to service the mortgage and will also stress test you - basically assessing your ability to pay if rates went up by 2-3%. If you can show this is not a problem then you wont have anything to worry about. Good luck with it all.

arleitiss

Long story short - I am 26, I have 40k in Savings and I want to apply for mortgage as single applicant.

I am on 45k so I know I can only get like 157k mortgage.


Question 1: Does that mean I can get 157k mortgage + 40k to total of ~197k?
Or does that mean I can get 157k - 10% + anything left from my savings?
So: 40000 - (10% of 157000) = 24'300 + 157'000 So total of: 181'300?

I put into savings 1k every month (2 months so far) so my saving history isn't great (I heard you need 6 months of stable savings history).


Question 2:

Would it be best to save for another 4 months before applying (to come in with strong application) or should I just go for it and see what bank mortgage advisor says?



Question 3:
I have credit card with my current bank that's been in negative for past 2 years, I always pay "minimum amount due" though and even recover slowly from it, would it affect my mortgage application much?


Question 4:
(I have about 7k in shares)
I am also putting EUR 400 into stock market monthly, I heard that they will request account statement on it - how do they judge it? Will they judge it based on total profits/losses or stock of companies you buy?


P.S - I am also paying rent of 700 Eur per month, I heard that can be taken into consideration?

kvr1727

LittleMissRed wrote: »

I’m wondering if anyone can shed any light on something for me... Myself and my husband have our deposit but are still continuing to save as we plan to start our application in a few weeks time once my probation in work is complete. I’ve read a fair bit on here and in other forums about the process and what banks tend to pick out of your bank statements. However, one thing I haven’t heard mentioned is charitable donations. We make a regular donation which will be noticed on our statement. But I wondered if anyone has any experience with this and knows how the bank would view it in terms of outgoings. What I mean is, if it was a bill or loan repayment it would have to be paid every month and is there for included in our outgoings. However, as this is voluntary on our part, would the banks be likely to think that we would obviously prioritise a mortgage payment over this and therefore it would actually be available to us if push came to shove?

Charity outgoings should not be an issue. As this donations/payment is not your liability, it is your willingness to help. They may definitely ask you the reasons for regular outgoing money. I believe it might not considerably big amounts.

If you want to on the safe side, you can keep them payments on hold for few months.

Bank will check for your monthly savings ability versus incomes and expenses.
Good Luck with your Mortgage application.

Renjit

arleitiss wrote: »

Long story short - I am 26, I have 40k in Savings and I want to apply for mortgage as single applicant.

I am on 45k so I know I can only get like 157k mortgage.


Question 1: Does that mean I can get 157k mortgage + 40k to total of ~197k?
Or does that mean I can get 157k - 10% + anything left from my savings?
So: 40000 - (10% of 157000) = 24'300 + 157'000 So total of: 181'300?

For new development you can get max 90% of the property value or 3.5 times your salary, whichever is less.

Some banks may provide exception for as high as 4.7 times but looks like this is not available right now due to covid.

arleitiss wrote: »

I put into savings 1k every month (2 months so far) so my saving history isn't great (I heard you need 6 months of stable savings history).


Question 2:

Would it be best to save for another 4 months before applying (to come in with strong application) or should I just go for it and see what bank mortgage advisor says?

Go for it now, bank can advise you about any requirements. The process takes time. Repayment capability is calculated based on net regular savings each month + regular rent you may be paying each month - net regular expenses (any outstanding loan etc) each month - some amount (if you have dependents).

arleitiss wrote: »

Question 3:
I have credit card with my current bank that's been in negative for past 2 years, I always pay "minimum amount due" though and even recover slowly from it, would it affect my mortgage application much?

Yes, bank will check your credit score. Your maximum loan amount may be less in this case.

You can also get one credit score report free from http://www.icb.ie/cr_options.php

arleitiss wrote: »

Question 4:
(I have about 7k in shares)
I am also putting EUR 400 into stock market monthly, I heard that they will request account statement on it - how do they judge it? Will they judge it based on total profits/losses or stock of companies you buy?

This is also considered. I am not sure how they will judge it. In my opinion it may be the current value of stock in your portfolio.

arleitiss wrote: »

P.S - I am also paying rent of 700 Eur per month, I heard that can be taken into consideration?

This is included in calculation for repayment capability.

Pete123456

All, does anybody have my experience of applying and having shares in an employee share scheme? I wonder do the banks take those shares into account? They’re obviously locked for a period of time, but all the same could be cashed out less tax in the morning?

awec

Pete123456 wrote: »

All, does anybody have my experience of applying and having shares in an employee share scheme? I wonder do the banks take those shares into account? They’re obviously locked for a period of time, but all the same could be cashed out less tax in the morning?

Not taken into account. You could cash them in the morning, or they could be worthless in the morning.

If you want to include the money you have there you'll need to sell.

arleitiss

Renjit wrote: »

Go for it now, bank can advise you about any requirements. The process takes time. Repayment capability is calculated based on net regular savings each month + regular rent you may be paying each month - net regular expenses (any outstanding loan etc) each month - some amount (if you have dependents).

Thanks for your suggestions.
I am single, no dependents.


I feel like going to my banks advisor would be big flag for my next advisor (assuming first one gives a reject) to say no as well.


I'm probably misunderstanding system.

Renjit

arleitiss wrote: »

Thanks for your suggestions.
I am single, no dependents.


I feel like going to my banks advisor would be big flag for my next advisor (assuming first one gives a reject) to say no as well.


I'm probably misunderstanding system.

You can show intent of buying a house later. And just ask them where do you stand at the moment and what you need to. Your bank mortgage advisor will not be making the decision. They can only provide a rough estimate of how much you will get based on your circumstances. It is the underwriters who finally provide the seal of approval/rejection.

Renjit

Pete123456 wrote: »

All, does anybody have my experience of applying and having shares in an employee share scheme? I wonder do the banks take those shares into account? They’re obviously locked for a period of time, but all the same could be cashed out less tax in the morning?

What do you mean by locked for a period of time? Are those mature only after some time (say an year)? If you can liquidate these anytime then this should not be an issue.

Few banks do consider share portfolio amount. I have enrolled in my company's share scheme where a certain percentage of my salary is deducted every month to buy my company's share on my name (my company also adds to it matching my contribution).

arleitiss

Renjit wrote: »

You can show intent of buying a house later. And just ask them where do you stand at the moment and what you need to. Your bank mortgage advisor will not be making the decision. They can only provide a rough estimate of how much you will get based on your circumstances. It is the underwriters who finally provide the seal of approval/rejection.

Will give it a shot and see what they say.
Thanks.

Markitron

arleitiss wrote: »

Question 3:
I have credit card with my current bank that's been in negative for past 2 years, I always pay "minimum amount due" though and even recover slowly from it, would it affect my mortgage application much?

I recently spoke to a broker about my credit card, I owed a fair bit on it but like you I paid the minimum amount every month. Assuming you kept up the payments, this will actually work in your favour. You basically have two choices:

1) Clear it before you apply. If you clear it out of your monthly budget instead of saving, this will count as repayment capacity.

2) Factor it into your mortgage application. If you don't clear it you can still apply as normal, but it will reduce your repayment capacity and might result in you getting a lower mortgage.

I am not aware of all of your details, obviously if there was 30k owed on your CC that changes things, but going on what you posted I would just clear it now. Your savings more than cover the 10% you will require for a deposit.

Top Dog

Renjit wrote: »

What do you mean by locked for a period of time? Are those mature only after some time (say an year)? If you can liquidate these anytime then this should not be an issue.

If you sell your shares less than 3 years after getting them (if they're treated as your annual bonus for example) then you're liable to tax on them which means they're effectively worth less than if you wait the 3 years.

They're not locked as such, but better if you can wait

Jasna1982

So do banks take RSUs into account?
I was given them by my company and they get paid out over 3 years. So currently it’s a nice chunk of money, and from next year on a third will be paid out until 2023. Should I tell the bank I have these?
Or will they not be considered for a mortgage application?

Duke of Url

Jasna1982 wrote: »

So do banks take RSUs into account?
I was given them by my company and they get paid out over 3 years. So currently it’s a nice chunk of money, and from next year on a third will be paid out until 2023. Should I tell the bank I have these?
Or will they not be considered for a mortgage application?

When I got my Mortgage with BOI two months ago it was included in my Salary Cert by my employer under Bonus. If I got payed out its showing under commission.

Does your Company begin with S by any chance?

Jasna1982

Duke of Url wrote: »

When I got my Mortgage with BOI two months ago it was included in my Salary Cert by my employer under Bonus. If I got payed out its showing under commission.

Does your Company begin with S by any chance?

Haha, yes it does!
Unfortunately they didn't put it on my salary cert...

Dec2020

Duke of Url wrote: »

When I got my Mortgage with BOI two months ago it was included in my Salary Cert by my employer under Bonus. If I got payed out its showing under commission.

Does your Company begin with S by any chance?

What did BOI request from you before drawdown?

Duke of Url

Dec2020 wrote: »

What did BOI request from you before drawdown?

Nothing after my loan offer.

But there was a condition to this,

I was told by my Adviser that if I drawdown within 6 weeks of the loan offer letter arriving there would be no more checkups.

After 6 weeks they would require more payslips.

After my Loan offer letter it was between My Solicitor, Builders Solicitor and the bank.

I was just signing forms that my Solicitor asked me to.

Renjit

Top Dog wrote: »

If you sell your shares less than 3 years after getting them (if they're treated as your annual bonus for example) then you're liable to tax on them which means they're effectively worth less than if you wait the 3 years.

They're not locked as such, but better if you can wait

Ok, so these are one time thing then? Not something that you buy monthly?

Top Dog

Renjit wrote: »

Ok, so these are one time thing then? Not something that you buy monthly?

Depends on different companies and how they operate. If I get shares in January 2021, I can sell them without tax implications in January 2024. I can still get shares in January 2022, but those won't be tax free till 2025.

Pete123456

Renjit wrote: »

Ok, so these are one time thing then? Not something that you buy monthly?

By monthly, it might be that someone participates in a salary foregone scheme where money is deducted before tax monthly but the transaction is usually done once or twice a year including any annual bonus used to purchase shares.

Top Dog wrote: »

Depends on different companies and how they operate. If I get shares in January 2021, I can sell them without tax implications in January 2024. I can still get shares in January 2022, but those won't be tax free till 2025.

Yes also there might be a period where they are locked - for example locked for two years, tax payable for a year and then tax free the year after (after 3 years)

I can understand why they may not be included in the calculation, but if someone was involved in the scheme for the previous two years, I think they should be able to factor in at least a percentage. A lot of the bigger companies are not going to see huge changes in their share prices for example (a generalisation I know, but still) no more risk than the person being made redundant or being let go etc.

On the other hand it seems AIB are hit and miss with bonuses - they only factor half on the calculator whereas some people will have all of a minimum bonus guarantees in their contract which may be more than half...

wally79

Pete123456 wrote: »

By monthly, it might be that someone participates in a salary foregone scheme where money is deducted before tax monthly but the transaction is usually done once or twice a year including any annual bonus used to purchase shares.



Yes also there might be a period where they are locked - for example locked for two years, tax payable for a year and then tax free the year after (after 3 years)

I can understand why they may not be included in the calculation, but if someone was involved in the scheme for the previous two years, I think they should be able to factor in at least a percentage. A lot of the bigger companies are not going to see huge changes in their share prices for example (a generalisation I know, but still) no more risk than the person being made redundant or being let go etc.

On the other hand it seems AIB are hit and miss with bonuses - they only factor half on the calculator whereas some people will have all of a minimum bonus guarantees in their contract which may be more than half...

I thought RSUs were liable for PAYe etc at vest?

Pete123456

wally79 wrote: »

I thought RSUs were liable for PAYe etc at vest?

Sorry share purchase scheme I meant. No PAYE if held for three years from date of purchase or can sell with PAYE after 2 years in my case. This may vary but I believe the scheme is pretty much the same everywhere

Duke of Url

wally79 wrote: »

I thought RSUs were liable for PAYe etc at vest?

Yep they are.

wally79

Pete123456 wrote: »

Sorry share purchase scheme I meant. No PAYE if held for three years from date of purchase or can sell with PAYE after 2 years in my case. This may vary but I believe the scheme is pretty much the same everywhere

Would you still need to declare for CGT?

Renjit

Pete123456 wrote: »

By monthly, it might be that someone participates in a salary foregone scheme where money is deducted before tax monthly but the transaction is usually done once or twice a year including any annual bonus used to purchase shares.

I am enrolled in monthly share purchase program. I contribute 10% of my salary and company top ups 10% each month. So every month I get additional shares in my account.

I did submit the current amount in portfolio to the underwriters. However, I am not sure how much weightage was given to that during the whole process outcome.

awec

wally79 wrote: »

Would you still need to declare for CGT?

Yes, once you sell them.

You obtain the shares without paying income tax on them when you get them, but when you sell them you still have to pay the CGT of 33% on all profits, minus the 1.2k allowance.

There is no way you can obtain shares, make a profit and pay no tax.

Renjit

awec wrote: »

Yes, once you sell them.

You obtain the shares without paying income tax on them when you get them, but when you sell them you still have to pay the CGT of 33% on all profits, minus the 1.2k allowance.

There is no way you can obtain shares, make a profit and pay no tax.

Yeah, that is it. If you purchased shares for 5k. And you are selling it for 7k. Then the taxable amount will be 7k - 5k - 1.27k. Taxed at 33%.