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Mortgages and Maintenance

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  • 25-08-2020 2:29pm
    #1
    Fiona
    Registered Users Posts: 2,356 ✭✭✭


    My partner is hoping to buy a house soon, he pays child maintenance weekly by standing order for the last 8 years.

    There was never any proper court order between himself and his ex but they recently got divorced and it's laid out in the terms of settlement document now.

    He spoke with a mortgage broker and she told him to reduce down the standing order to €100 pw and by the balance by cash into his ex wife bank account by lodgement to make the figures look better :confused:

    I think this is a bit of an odd tactic. The court document which banks will want to see as he is recently divorced shows what his liability is, if his bank statements don't add up surely that's a red flag straight away?

    She had also advised that an €11,000 car loan is cleared from the savings he has for the deposit - this woould wipe out the cash needed to kit out the house, is it really not possible to have any outstanding loans that are regularly serviced without any issue and which can be catered for along with a mortgage repayment?


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    #2
    awec
    Administrators Posts: 53,800 Admin ✭✭✭✭✭awec


    Find a new mortgage broker.

    The first advice is just daft.

    The car loan thing, no issue at all with having outstanding loans once you are comfortably paying them and they do not impact on your affordability. They are just another expense.


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    #3
    Fiona
    Registered Users Posts: 2,356 ✭✭✭Fiona


    awec wrote: »
    Find a new mortgage broker.

    The first advice is just daft.

    The car loan thing, no issue at all with having outstanding loans once you are comfortably paying them and they do not impact on your affordability. They are just another expense.

    I just think it's absurd advice!

    I have been speaking to another mortgage broker myself on his behalf and she never mentioned anything of the sort!


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    #4
    awec
    Administrators Posts: 53,800 Admin ✭✭✭✭✭awec


    Fiona wrote: »
    I just think it's absurd advice!

    I have been speaking to another mortgage broker myself on his behalf and she never mentioned anything of the sort!

    The best thing is to be up front and honest in the application, the rules are annoying but they are there to protect you as well as protect the bank, so trying to game them to make it seem like you have fewer liabilities is nonsensical. The loan thing is a fairly common misconception that you need to be debt free before going for a mortgage.

    I honestly would not deal with a broker giving the kind of advice you got. It's nuts.

    Unless one of you is self employed or you think you'll have a tough time getting a mortgage, just forget about a broker entirely. Look at the various interest rates at the banks, pick the one you like the best then go directly to them.


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    #5
    Fiona
    Registered Users Posts: 2,356 ✭✭✭Fiona


    awec wrote: »
    The best thing is to be up front and honest in the application, the rules are annoying but they are there to protect you as well as protect the bank, so trying to game them to make it seem like you have fewer liabilities is nonsensical. The loan thing is a fairly common misconception that you need to be debt free before going for a mortgage.

    I honestly would not deal with a broker giving the kind of advice you got. It's nuts.

    Unless one of you is self employed or you think you'll have a tough time getting a mortgage, just forget about a broker entirely. Look at the various interest rates at the banks, pick the one you like the best then go directly to them.

    I work in finance myself and I absolutely agree it's like applying for life insurance and saying you are not a smoker when you still buy a box of fags when you go out for pints!

    Thanks I just needed to hear it from somebody else that it was a crazy way to approach things!

    *My partner is trying to go it alone as I already have a property but if he can't and needs me then we are counting on a broker to fight our case for a 10% deposit exemption. The broker I have been speaking with seems quite good and knowledgable.


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    #6
    Jet Black
    Registered Users Posts: 3,845 ✭✭✭Jet Black


    There's ways around the banking system and this is one of them, but it's basically fraud. If he got caught it would nullify the loan and the bank would request the total amount back or reposes the property, so it comes with a big risk.

    Second point of clearing the loan may or may not be good depending on circumstances. If his deposit is big enough it shouldn't be an issue. Banks will sometimes request you to clear the loan or consolidate debts with the mortgage.


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    #7
    Fiona
    Registered Users Posts: 2,356 ✭✭✭Fiona


    Jet Black wrote: »
    There's ways around the banking system and this is one of them, but it's basically fraud. If he got caught it would nullify the loan and the bank would request the total amount back or reposes the property, so it comes with a big risk.

    Second point of clearing the loan may or may not be good depending on circumstances. If his deposit is big enough it shouldn't be an issue. Banks will sometimes request you to clear the loan or consolidate debts with the mortgage.

    Exactly that's it, fraud!

    At present he is servicing the loan, paying me housekeeping, all his bills and maintenance and saving so I don't think there is a need to clear it as he is managing to all all those things while repaying it back?


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    #8
    awec
    Administrators Posts: 53,800 Admin ✭✭✭✭✭awec


    Fiona wrote: »
    Exactly that's it, fraud!

    At present he is servicing the loan, paying me housekeeping, all his bills and maintenance and saving so I don't think there is a need to clear it as he is managing to all all those things while repaying it back?

    It depends on how much income you have left over each month after the mortgage is paid as to whether or not you'd need to clear the loan in advance.


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    #9
    Fiona
    Registered Users Posts: 2,356 ✭✭✭Fiona


    awec wrote: »
    It depends on how much income you have left over each month after the mortgage is paid as to whether or not you'd need to clear the loan in advance.

    True, not a huge amount but at the same time we are not simple people lol but I know by law you have to have a certain amount!

    I have shown all your replies to him I think he is seeing now it might not be the best way to approach it thanks people I appreciate it!


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    #10
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    The bank will have rules regarding affordability. With AIB, up to a couple of years ago it was €1050 per adult and €250 per child needed to be left over after you paid your mortgage, other loans and childcare (I’m not 100% on these figures, but they’re not too far out). So even if you’re looking at you’re figures and saying you’ve plenty, it might not meet their criteria and could affect how much you can borrow. If you don’t need the money for the actual purchase of the house, it might be better to pay down debt.


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