Why do renters equate the ability to pay rent to mortgage eligibility?

...Ghost...

Deleted User wrote: »

meh, during the 1980s:



https://www.cso.ie/en/releasesandpublications/ep/p-hes/hes2015/aiw/


They were able to buy houses for a song, interest rates were high but so was wage growth.

And you could literally be a cleaner and be able to buy a house if you saved for a deposit and approached the bank. Nowadays, you have little chance of buying unless you are a double income professional household with no kids, or you are Ok to buy somewhere far outside of the major cities.

Tork

JizzBeans wrote: »

Here we go... teachers are lazy, teachers paid too much bla bla bla

I never said any such a thing if you read back over what I wrote. Did I get anything factually wrong in what I did actually write? Your job is secure and you get increments almost indefinitely. Somebody like you will never have a problem getting mortgage approval.

...Ghost...

...Ghost... wrote: »

And you could literally be a cleaner and be able to buy a house if you saved for a deposit and approached the bank. Nowadays, you have little chance of buying unless you are a double income professional household with no kids, or you are Ok to buy somewhere far outside of the major cities.

Even that'd be doing well.

I just got off the phone with a broker today, who i gave all my details to about a fortnight ago (documents, etc.)

Seems that bank rules are that a mortgage can be 3.5 times your gross income. However, the broker told me they (the banks in general) are being picky, so they'd only take net income into account.

Then also added that any government supplement money wouldn't count (PUP), so even though 2020 was an anomaly for me and i only made about 50% of what i made in the three years previous, and even though my 2021 income (so far) is back in line with my income in 2017/18/19, they won't exclude 2020 from calculations, or use 2021 projected earnings.



Legs getting cut out from under people left right and centre.

(I can understand excluding PUP, but I can't get my head around being even stricter than the central bank rules and using net income instead of gross).

Zaney

May have been mentioned. But owning a house costs more than just the mortgage. Any appliance breaks cost to you. Storm damage, cost to you, water leak, cost to you.

House maintenance costs money in the short or long run.

Finty Lemon

Finty Lemon wrote: »

Whats gotta give
Foreign holiday x2 every year
The beauticians bill
Weekend takeaways
PCP cars
Takeaway coffee bullshxt
Asos
Premier league 'pilgrimages' (pis$ups)
De fags
There's a chunky deposit to be had within 40 months for most mid earning couples out of this junk. Just sayin.

Agree with you on PCP anyway. Utterly ludicrous financing arrangement on a depreciating piece of metal. Fair enough if your in the house and taking the hit but it's probably a huge negative to underwriters.

Zaney

[Deleted User] wrote: »

Even that'd be doing well.

I just got off the phone with a broker today, who i gave all my details to about a fortnight ago (documents, etc.)

Seems that bank rules are that a mortgage can be 3.5 times your gross income. However, the broker told me they (the banks in general) are being picky, so they'd only take net income into account.

Then also added that any government supplement money wouldn't count (PUP), so even though 2020 was an anomaly for me and i only made about 50% of what i made in the three years previous, and even though my 2021 income (so far) is back in line with my income in 2017/18/19, they won't exclude 2020 from calculations, or use 2021 projected earnings.



Legs getting cut out from under people left right and centre.

(I can understand excluding PUP, but I can't get my head around being even stricter than the central bank rules and using net income instead of gross).

We’re applying for a mortgage. My husband is self employed and they are scrutinising his 2020 earnings. Banks seem very nervous of income shocks suffered.

It’s a right pain, we both worked from home throughout and are not looking to max out our mortgage potential. Have been verbally told we’ll be offered more than we want. But still the bank is dragging their heals on a formal offer. Meantime we are watching potential homes going sale agreed inside of a few weeks and estate agents won’t talk to us without mortgage approval. Really frustrating.

Flinty997

[Deleted User] wrote: »

meh, during the 1980s:



https://www.cso.ie/en/releasesandpublications/ep/p-hes/hes2015/aiw/


They were able to buy houses for a song, interest rates were high but so was wage growth.

1980s was a decade of recession, unemployment and emigration. Dublin was a kip half if it was derelict with genuine no go crime areas. That's why it was cheap.

The original trainspotting book that the movie is based on is set in the late 80s.

Flinty997

Flinty997 wrote: »

1980s was a decade of recession, unemployment and emigration. Dublin was a kip half if it was derelict with genuine no go crime areas. That's why it was cheap.

The original trainspotting book that the movie is based on is set in the late 80s.

Correct, but its not the reason houses were cheaper. Houses were cheaper across the western world in terms of earnings to price ratio.

There was a heroin pandemic in most western countries at the time, Dublin was hit very hard and was an ugly place as a result.

Its amazing that with such a high unemployment rate they still had massive growth in wages. Amazing that you could buy a house on half the amount of work than today with such a weak economy

...Ghost...

Zaney wrote: »

May have been mentioned. But owning a house costs more than just the mortgage. Any appliance breaks cost to you. Storm damage, cost to you, water leak, cost to you.

House maintenance costs money in the short or long run.

If an appliance breaks (out of warranty) you don't have to wait for the landlord to sort it out with a cheap POS which will probably break down as soon as the warranty is out.

Storm damage....that's on the insurance you should have if you have a mortgage. Same with water leak, unless it's minor and you get a plumber to sort out a leaky pipe. Of course the home owner has the LPT too, which a renter doesn't.

There are pros and cons to both. I'd personally prefer the mortgage, because at the end of it all, I have a house (all going well). Negative equity is something many people are still suffering with, but a homeowner doesn't have to wonder if the LL is going to sell the house in a few months.

Flinty997

[Deleted User] wrote: »

Correct, but its not the reason houses were cheaper. Houses were cheaper across the western world in terms of earnings to price ratio.

There was a heroin pandemic in most western countries at the time, Dublin was hit very hard and was an ugly place as a result.

Its amazing that with such a high unemployment rate they still had massive growth in wages. Amazing that you could buy a house on half the amount of work than today with such a weak economy

Dublin was not a desirable location compared to other European cities at the time. Pretty much no immigration just lots of emigration. We had lots of social housing and some still being built. There wasn't the pressure on housing, no demand and no supply issues and it was undesirable city. Same all over. There just wasnt the same obsession about housing there is now. It's wasnt seen as an investment. Most families were one income and one car.

Yes housing was much cheaper relative to wages. But people weren't cash rich. Wages increased because they had been so low.

Flinty997

There's no doubt wages fell far behind the cost of housing.

Zaney

...Ghost... wrote: »

If an appliance breaks (out of warranty) you don't have to wait for the landlord to sort it out with a cheap POS which will probably break down as soon as the warranty is out.

Storm damage....that's on the insurance you should have if you have a mortgage. Same with water leak, unless it's minor and you get a plumber to sort out a leaky pipe. Of course the home owner has the LPT too, which a renter doesn't.

There are pros and cons to both. I'd personally prefer the mortgage, because at the end of it all, I have a house (all going well). Negative equity is something many people are still suffering with, but a homeowner doesn't have to wonder if the LL is going to sell the house in a few months.

Yes there is insurance, but that comes with excesses, admin costs (personal time if your own house, agent fees or company staff costs if a landlord) to process claims, increases in future insurance costs. I made a mistake of making two minor claims on my own house insurance and then couldn’t get quotes from other insurers for 5 years, meanwhile my existing insurer hiked up premiums.

Houses cost more than just the mortgage. Banks will want to make sure you can absorb those costs.

markodaly

JizzBeans wrote: »

I didn't suggest they couldn't, it just doesn't equate to mortgage eligibility.

So what in your opinion should determine mortgage eligibility?

I presume the ability to repay should be number one, so if one is paying rent at 1300 a month and the mortgage would cost them 700 a month, that one is knocked out of the park....

What else?

The other stuff like a deposit, stamp duty, legal fee's, etc. is small-time stuff that is a once-off.

Potential-Monke

I thought I was one of those people, paying x amount per month and it more than my colleagues mortgages. So I eventually got one. Don't think I should have, but apparantly being a Garda is considered a good job so that helped somewhat. I found out within 5 years there's far more to owning a house than people think. I lived by myself, but the mortgage was initially €200 p/m cheaper than the 1 bed apartment I had. Thought it was a no brainer. Within 4 years it had nearly doubled, thank you interest rates and going from fixed to variable as per the contract I signed (pretty sure it was on one of those hundreds of pages you get to read in the whole process).

Then add on that you literally have to pay to fix everything, something people really take from granted when renting. By the end of the 5th year, and after attempting to have people rent a room, which defeated the purpose of having my own house to begin with, I had to sell at a 20k loss and I will never get a mortgage again by the looks of it. Not that I want one.

We need to sort the rental market to keep it fair, and stop putting so much on owning a house. I recommend people against it. You'll rarely get what you spent back from it if you sell, unless there's another boom/crash/whichever one puts up house prices. It'll never be "right", and this is especially true for couples. And you're tied down to one place for 20-40 years, and paying back a crazy amount of interest over the term. Renting is the way forward imo, but it needs to be managed better.

Wanderer78

Potential-Monke wrote:

We need to sort the rental market to keep it fair, and stop putting so much on owning a house. I recommend people against it. You'll rarely get what you spent back from it if you sell, unless there's another boom/crash/whichever one puts up house prices. It'll never be "right", and this is especially true for couples. And you're tied down to one place for 20-40 years, and paying back a crazy amount of interest over the term. Renting is the way forward imo, but it needs to be managed better.

Both markets need a major overhaul, as both are a critical need for a functioning society and economy, you can be damn sure it ain't gonna be solved soon, or by ffg

ineedeuro

Wanderer78 wrote: »

Both markets need a major overhaul, as both are a critical need for a functioning society and economy, you can be damn sure it ain't gonna be solved soon, or by ffg

How can any politcial party sort out the mess when they are reacting to what the people want?

They brought in companies to provide long term lease and to move away from people buying houses. Now everyone is losing the plot over those companies. Everyone was told to stop going mad about buying a house, now they want a "housing crisis" announced and you have clowns crowing on the tv/radio everyday about buying houses.

The answer it seems is build more houses?

Wanderer78

ineedeuro wrote: »

How can any politcial party sort out the mess when they are reacting to what the people want?

They brought in companies to provide long term lease and to move away from people buying houses. Now everyone is losing the plot over those companies. Everyone was told to stop going mad about buying a house, now they want a "housing crisis" announced and you have clowns crowing on the tv/radio everyday about buying houses.

The answer it seems is build more houses?

its flawed ideologies that has got us here, and we re hell bent of pursuing them further, just to see how wrecked we can make this, yes we need more houses and other types of accommodation, and no, the market is not going to do it, our politicians are lost, theyve no clue whats going on, or what to do.....

...Ghost...

Zaney wrote: »

Yes there is insurance, but that comes with excesses, admin costs (personal time if your own house, agent fees or company staff costs if a landlord) to process claims, increases in future insurance costs. I made a mistake of making two minor claims on my own house insurance and then couldn’t get quotes from other insurers for 5 years, meanwhile my existing insurer hiked up premiums.

Houses cost more than just the mortgage. Banks will want to make sure you can absorb those costs.

When you pay the lowest quote, you pay the most. Having to pay an excess of €300 for a job costing under 1k is ridiculous. When it comes to home insurance, pay the extra 50 or so quid and get your excess to zero. As a general rule, I would say never claim for something under 500 because your premium is going to be hit for ANY claim, so make it worthwhile if you do need to claim. The admin you speak of shouldn't take more than a few minutes of your time for the majority of claims, most of which a tenant would have to spend too for the inspection and phone calls. The homeowner spends 10 minutes extra filling out the claim form.

Banks are full of sh!t. Any renter paying for a property today in the area they want to buy can afford the mortgage, but the banks make it so difficult for anyone to buy. They want 2 people on the hook, so single people have almost no chance of buying.

Potential-Monke wrote: »

I thought I was one of those people, paying x amount per month and it more than my colleagues mortgages. So I eventually got one. Don't think I should have, but apparantly being a Garda is considered a good job so that helped somewhat. I found out within 5 years there's far more to owning a house than people think. I lived by myself, but the mortgage was initially €200 p/m cheaper than the 1 bed apartment I had. Thought it was a no brainer. Within 4 years it had nearly doubled, thank you interest rates and going from fixed to variable as per the contract I signed (pretty sure it was on one of those hundreds of pages you get to read in the whole process).

Then add on that you literally have to pay to fix everything, something people really take from granted when renting. By the end of the 5th year, and after attempting to have people rent a room, which defeated the purpose of having my own house to begin with, I had to sell at a 20k loss and I will never get a mortgage again by the looks of it. Not that I want one.

We need to sort the rental market to keep it fair, and stop putting so much on owning a house. I recommend people against it. You'll rarely get what you spent back from it if you sell, unless there's another boom/crash/whichever one puts up house prices. It'll never be "right", and this is especially true for couples. And you're tied down to one place for 20-40 years, and paying back a crazy amount of interest over the term. Renting is the way forward imo, but it needs to be managed better.

On the fixed and variable rates....when you have a fixed rate which expires, you automatically go onto a variable rate unless you sign up for another fixed term. If you don't choose a fixed rate, you usually pay more on the variable.

You say all this happened in 5 years. Well, here's a true comparison of 2 couple I know who lived in the same area in Dublin. Couple R rented, Couple M had mortgage.

Couple M consist of a common civil servant and a private sector worker with a combined income of under 100k at time of mortgage. Couple M got a mortgage at the end of the boom when prices were highest. This was in 2008 and mortgage was about €1700. Mortgage cost was still €1700 after reductions in 2010. 5 years later in 2015, the mortgage was around €1600 and another 5 years later, around €1500.

Couple R could not afford rent of €2000 in 2008 and lived separately. In 2010, the rental market was on its knees and they rented a 3 bed house for €800. An increase to €1000 in 2009 with no improvements to the uninsulated property encouraged the couple to move to 2 bed apartment a little further from city for €900. Meanwhile, the rental price for the houses in the area were around €1800 on average in 2015, so an increase of 120% in 5 years! In 2020, the same houses averaged €2100 to rent. The renting couple still live in a 2 bed apartment near to the area and are pay over €2000 per month. They can't get a mortgage with a combined private sector income in the region of 100k.

As I see it, the renters had a couple of good years paying cheap rent, but they had to move twice because of rent hikes in the first 5 years. They now pay at least €500 more on rent than they would on a mortgage for the same property and while they have the freedom to move easily, they have no stability and haven't started a family partly because it will destroy their chances of securing a mortgage. Banks don't want families...they want professionals who eat avacados by the bucket load.

The op's argument is somewhat flawed in its very basis. Ability to pay rent is very much so considered for mortgage approval. Regular saving matters too etc but depending on rent cost, they matter less so. If for example you have a rent cost of 1250, a mortgage of one thousand per month would likely stress test pretty okay even if savings levels are pretty low. Of course you need to have the one time costs of deposit etc available but you'd get the mortgage in that scenario.

There's also another factor in terms of deposits etc. A fair proportion of people of people do have parents or family members etc who provide a fair proportion of the deposit. So there's plenty who have high rents, average savings records but will find it far easier to buy a house than a person who is good at saving etc.

This would not have mattered so much two decades ago as houses cost less and rents were far fairer. Now it's not so evenly balanced. The market is frankly mental too. Eg I'm lucky enough to be in a good position and to be able to buy as a single person. Then if you're a nurse and in a high rent zone, the likelihood of ever buying is low. They realistically could have and did buy two decades ago. That's incredibly inequitable, some incredibly important parts of society are just in a far weaker position by default.

Flinty997

Wanderer78 wrote: »

its flawed ideologies that has got us here, and we re hell bent of pursuing them further, just to see how wrecked we can make this, yes we need more houses and other types of accommodation, and no, the market is not going to do it, our politicians are lost, theyve no clue whats going on, or what to do.....

It's not ideologies it's economic policies. They are driven by politicians. They are pursuing investment and fuelling the economy. But do not have the vision to see it needs a more balanced approach.

Wanderer78

Flinty997 wrote: »

It's not ideologies it's economic policies. They are driven by politicians. They are pursuing investment and fuelling the economy. But do not have the vision to see it needs a more balanced approach.

tis all ideologically based, all policies are, and its clearly obvious, the ones we ve been following, and for a very long time, are completely bullsh1t, of invisible people guiding us around, or something, ffs! the fire(finance, insurance and real estate) sectors dont fuel economies, they extract from it!

Flinty997

I doubt anyone could tell you what political ideology the main parties in the last 4 govts were pursuing. I doubt they could tell you themselves.

...Ghost...

Deleted User wrote: »

Then if you're a nurse and in a high rent zone, the likelihood of ever buying is low. They realistically could have and did buy two decades ago. That's incredibly inequitable, some incredibly important parts of society are just in a far weaker position by default.

This exactly. It's far more difficult to buy now. In the 1980s, someone working in a menial job could knuckle down, save and get a mortgage on a house even if it was in Dublin City Centre. At the turn of the century, it pretty much became a requirement that 2 people had to apply. 10 years later and after the crash, unless you are very lucky, you need to be a professional couple earning well over 100k to buy in Dublin.

As a parent, I can't encourage my kids to consider anything that won't give them the best possible chance at buying a home in Dublin...where they live. It's a disgrace that parents have to leave their children into a creche or that they have to consider how having children will impact their chances of buying, or even moving in the future. Having purchased a number of years ago, changing vocation and having kids, the banks refused to let us move because we would have been taking out a new mortgage (same value, same repayment), but now they would account for the kids which locked us into our current location. Ridiculous carry on.

Wanderer78

Flinty997 wrote: »

I doubt anyone could tell you what political ideology the main parties in the last 4 govts were pursuing. I doubt they could tell you themselves.

very true, but its largely free market economics, or so called neoliberal/neoclassical, its clearly a train wreck, but they wont let go of it, and by the looks of it, it ll also cause their own downfall

ittakestwo

The housing crises is manifesting in too much immigration. Why so much immigration here? Because our economy is a tax heaven full of money and jobs. When we lose this advantage and it now it seems to be in the no so distant future the foreign investment here will slow. Some of the big multinationals will pull out and then the housing crises will ease.

Wanderer78

ittakestwo wrote: »

The housing crises is manifesting in too much immigration. Why so much immigration here? Because our economy is a tax heaven full of money and jobs. When we lose this advantage and it now it seems to be in the no so distant future the foreign investment here will slow. Some of the big multinationals will pull out and then the housing crises will ease.

no its not, its flawed economic and political ideologies based, we ve turned our economy into a fire sector lead approach, which has just significantly raised the price of assets, primarily property and land, and turned the whole thing into a sh1t show! mnc's arent going anywhere, in fact, we may see further investment from them, particularly is we get a handle on our property markets

ittakestwo

Wanderer78 wrote: »

no its not, its flawed economic and political ideologies based, we ve turned our economy into a fire sector lead approach, which has just significantly raised the price of assets, primarily property and land, and turned the whole thing into a sh1t show! mnc's arent going anywhere, in fact, we may see further investment from them, particularly is we get a handle on our property markets

But why are MNC's here and not lets say Poland where wages are fraction of ours. Is because of our cooperation tax. when that goes so will they.

Wanderer78

ittakestwo wrote: »

But why are MNC's here and not lets say Poland where wages are fraction of ours. Is because of our cooperation tax. when that goes so will they.

taxation is only one aspect of why theyre here, even though a significant one, others being direct access to european markets, educated workforce, long history of being here, etc etc etc. its important to also remember, the taxation situation is only starting, it has a long way to go before any changes, if even any occur at all, dont be surprised if at the end of this process, it results in little or no changes, since 15% is the current proposal, i cant see much change happening at all. its also important to remember, irelands rate actually isnt the lowest, and they dont seem to be running off to these countries anytime soon....

ittakestwo

Wanderer78 wrote: »

taxation is only one aspect of why theyre here, even though a significant one, others being direct access to european markets, educated workforce, long history of being here, etc etc etc. its important to also remember, the taxation situation is only starting, it has a long way to go before any changes, if even any occur at all, dont be surprised if at the end of this process, it results in little or no changes, since 15% is the current proposal, i cant see much change happening at all. its also important to remember, irelands rate actually isnt the lowest, and they dont seem to be running off to these countries anytime soon....

Taxation is the only reason.Ireland is a tax heaven. But its days are numbered. People can delude themselves that MNC's are for other reasons but they're not.

Wanderer78

ittakestwo wrote: »

Taxation is the only reason.Ireland is a tax heaven. But its days are numbered. People can delude themselves that MNC's are for other reasons but they're not.

once again, irelands tax rate is actually not the lowest, i believe some even have a zero rate, or near zero, so..... yes id agree with you, ireland is a form of tax haven, and again, we may in fact see little or no change to our rate, post review, so our position in regards mnc's is far from numbered