Getting a mortgage in the bust

Saskia

Has anyone tried in the past month and how tricky was it? I think its time to fly the nest.

Raskolnikov

Are you earning over €40k? Is €290k enough for you to buy a place? Well you're guaranteed to get a government mortgage.

http://www.homechoiceloan.ie/

OhNoYouDidn't

In theory it should actually be easier as banks are limited in where else they can get funding. In reality they will still be lending but a lot tighter (or what they should actually have been doing the whole time) on earnings and documentation.

The show rolls on regardless.

bangersandmash

Raskolnikov wrote: »

Are you earning over €40k? Is €290k enough for you to buy a place? Well you're guaranteed to get a government mortgage.

http://www.homechoiceloan.ie/

If the OP has to resort to using this scheme, it suggests that they are not in very suitable position for purchasing a property. OP if you do intend to look at this scheme I'd suggest you read about it in detail:

Given the improvement in the credit markets there really can be only two reasons why the banks would reject a first-time buyer in this environment.
The first is that they don't think you are going to be able to meet your repayments, most likely because of the nature of your job and the current economic environment.
The other reason is that they do not think the property its worth what you are prepared to pay for it, which is a pretty good call in a market where prices are falling by 1 per cent a month.

OP if flying the nest is your top priority, would you not consider renting for a while? Rents are dropping and there is a significant over-supply of rental properties. Take a look at daft.ie and you'll find that in most locations you'll get far more for your money if you choose to rent.

In the end the major factor that will dictate your options will be whether you have saved a substantial deposit. If that is the case and you have a permanent job, banks will still look favourably on you. If not, you'll probably have some saving to do over the next few years.

raido9

If you have a large deposit you should have little trouble getting a mortgage.

They are still giving them out. The better your LTV retio is, the easier it will be.

Get saving!!

Serge

But for example if I have 32k pa, but i got saving 20k, what i can expect? I am not eligible for new goverment scheme

Affordable house only?

gurramok

Yeh, or find a loan free, secure job, big savings partner!

Singletons were by and large priced out of the boom for the last 5yrs i reckon so don't feel too disheartened when prices are falling due to developers running out of couples to sell to

JuliusCaesar

Serge wrote: »

But for example if I have 32k pa, but i got saving 20k, what i can expect? I am not eligible for new goverment scheme

Affordable house only?

You might ask this on askaboutmoney.com.

Can you prove the amount that you've been saving on a regular basis?
Have you been paying rent at the same time?
Could you save a little more? (this might give you an idea of the kind of mortgage repayments you can afford.)
Do you have any loans outstanding? Pay them off quick!

32K X 4 = 138K + 20K savings = 158K - so if you want more, you'll have to prove you can pay more on a monthly basis. Or save like hell - get a Saturday job - to increase your initial deposit.

Also, don't forget, you'll need money upfront for
surveyor's report
solicitors fees
stamp duty if applicable

And how would you furnish the house?
Are you any good at DIY? Could you buy a fixer-upper?

What you can buy depends on your location, with Dublin and Galway cities the most expensive.

HTH

Serge

Thanks lads

Anyway they are only my incomes, my girlfriend has 25 k. So i think it is possible to get around 180 - 190 k

But I am not considered to buy exactly now but in the end of next year

Firetrap

Saskia wrote: »

Has anyone tried in the past month and how tricky was it? I think its time to fly the nest.

Why do you need a mortgage in order to fly the nest? Just wondering..

Saskia

Firetrap wrote: »

Why do you need a mortgage in order to fly the nest? Just wondering..

Cos rent money is dead money.

Raskolnikov

Saskia wrote: »

Cos rent money is dead money.

Oh, if you don't qualify for the Home Choice Loan scheme, you could try going to EBS. They are still offering 92% loans and will probably lend you the most.

Firetrap

Saskia wrote: »

Cos rent money is dead money.

Depends what you define as dead money. Personally, I'd call buying a house now that's almost guaranteed to be worth less in 12 months time a case of throwing good money after bad. Be warned as well that if you do get mortgage approval now, there's often a tighter time limit on it than there used to be.

Curlypinkie

Saskia wrote: »

Cos rent money is dead money.

Even if it's cheaper to rent than buy? I don't get it....

JuliusCaesar

Firetrap wrote: »

Depends what you define as dead money. Personally, I'd call buying a house now that's almost guaranteed to be worth less in 12 months time a case of throwing good money after bad. Be warned as well that if you do get mortgage approval now, there's often a tighter time limit on it than there used to be.

Well, if you buy a house, at a good price, that you intend to stay in for the next 10 years, then negative equity for a couple of years may not bother you.
Houses that will retain value are those with good transport links, near to the city centre or a large hospital or a university.

The houses that will suffer most are those in the outer commuter belt, those with no facilities nearby (transport, schools, workplaces, playgrounds etc etc)......and apartments, many of which are gerry-built.

astrofool

Curlypinkie wrote: »

Even if it's cheaper to rent than buy? I don't get it....

It'll almost always be cheaper to rent than buy, however, when buying, the gain (monetarily) is from mortgage payments staying steady, while rental prices will generally go up with inflation.

That's not true in the current market.

Firetrap

JuliusCaesar wrote: »

Well, if you buy a house, at a good price, that you intend to stay in for the next 10 years, then negative equity for a couple of years may not bother you.
Houses that will retain value are those with good transport links, near to the city centre or a large hospital or a university.

The houses that will suffer most are those in the outer commuter belt, those with no facilities nearby (transport, schools, workplaces, playgrounds etc etc)......and apartments, many of which are gerry-built.

Getting the house at a good price is the thing. It's all well and good to say being in negative equity for a couple of years isn't a bad thing if you don't intend to sell. However, in this current climate house prices are falling and could well fall quite a bit further. Would it not be better to hold on for a year, then buy your house at a cheaper price and end up saving thousands of euros on mortgage repayments?

There are plenty of cases where people have bought houses identical to their neighbours for tens of thousands of euros less. That must warm the cockles of their hearts every month when the mortgage payment is made.

faceman

Firetrap wrote: »

Getting the house at a good price is the thing. It's all well and good to say being in negative equity for a couple of years isn't a bad thing if you don't intend to sell. However, in this current climate house prices are falling and could well fall quite a bit further. Would it not be better to hold on for a year, then buy your house at a cheaper price and end up saving thousands of euros on mortgage repayments?

There are plenty of cases where people have bought houses identical to their neighbours for tens of thousands of euros less. That must warm the cockles of their hearts every month when the mortgage payment is made.

While i agree in principal, the difficulty is making the judgement call on the right time to buy. An individual's circumstances must also be considered.

Although personally, Id wait until next summer if i was the OP and had the option.

Gone West

Saskia wrote: »

Cos rent money is dead money.

Are you familiar with the concept of negative equity?

faceman

FuzzyLogic wrote: »

Are you familiar with the concept of negative equity?

Im rhesus A positive myself.

SimpleSam06

JuliusCaesar wrote: »

Houses that will retain value

If you're buying a house any time over the next three or so years, you can forget about value, holding its price or whatever, more or less permanently. Whatever financial gains you make eventually will have long since been wiped out by inflation.

Renting at this point in time, and again for the next few years, makes perfect sense in that you will probably be paying less in rent than you would in interest payments for the same location, which is every bit as dead. An additional bonus is that you can save the difference in a high interest account, thus having a much larger deposit for when you do eventually buy, which further reduces the interest payments you will need to make over the lifetime of the mortgage.

Renting also makes sense in the context of uncertain economic times ahead, mobility will be a distinct advantage to keeping your head above water, I feel. If you can't repay your mortgage however, you are permanently screwed, plain and simple.

People really need to stop seeing houses as fat sacks of cash; that time is gone, and it was only barely that when it was the case, unless you were a developer or a flipper. You aren't locking in value, you aren't making your money work for you, you aren't doing the best you can to leave something to your children, you're making a lifelong commitment to pay enormous sums of money to put a roof over your head, end of story.

If you want to see it as money, deal with it as money, not an ephemeral "investment". And don't get me started on the joke that is the affordable housing scheme or other government incentives.

I find it hard to believe that anyone needs to buy at any given time.

JuliusCaesar

SimpleSam06 wrote: »

If you're buying a house any time over the next three or so years, you can forget about value, holding its price or whatever, more or less permanently. Whatever financial gains you make eventually will have long since been wiped out by inflation.
..........
I find it hard to believe that anyone needs to buy at any given time.

The price of a house is set by the market; the value of a house is its value to YOU. If you find a dream house in the location you are pretty sure you will be staying in, and you can afford the price, then it's up to you. Not everyone looks at buying a house as a profit-making opportunity! For some of us, it's somewhere to live.

Families with children may want the stability of a house they OWN rather than the instability of renting.

SimpleSam06

JuliusCaesar wrote: »

If you find a dream house in the location you are pretty sure you will be staying in, and you can afford the price, then it's up to you.

I find it hard to escape the fact that your dream house will be a good deal cheaper in two years however, which will likely save you six figures over the course of the mortgage, in addition to the advantages outlined above.

Firetrap

There will always be people who want to buy for perfectly valid reasons regardless of the economic climate. They're entitled to do so and to pay what they think is a fair price. Wouldn't we all love it if a bell sounded when the bottom of the market is reached

The OP though, I get the impression (from the 'I need to fly the nest' comment) is a youngish person who's decided that it's time they moved out from the parental home. I wouldn't have thought that that automatically leads to needing to own a house/apartment due to a need for stability. However, we don't know the OP's circumstances. Maybe they've seen a place that they want and they like the price. For some people, money is no object.

Lexus1976

Saskia wrote: »

Has anyone tried in the past month and how tricky was it? I think its time to fly the nest.

Think you'd want to be on very strong medication to buy anything at the moment.............i.e. Mortgage 300k value of property 200k

okmqaz42

OP-Have you really considered the renting option. I have never understood the "dead money" point of view. If you look into it you might find that you can afford to rent a house exactly where you want, but to buy you may have to compromise.

If you want to fly the nest you are more than likely on the young side. You should rent near a city. If you buy with the loans a bank are willing to give you, its a life of suburban deserts. It looks good on paper but will you be happy. If you just fancy a roof-rent.

JuliusCaesar

Firetrap wrote: »

Wouldn't we all love it if a bell sounded when the bottom of the market is reached

Confucius he say:
He who try to pick bottom end up with smelly finger. :P

aquascrotum

In response to the OP's original question as to how easy it is to get a mortgage...myself and partner are potential FTB's. We went to an open viewing down the road on Sunday just to evaluate what the story was at present. When we told the FA/mortgage broker that we were FTB's, 30k deposit in hand, income of 70kish combined, the eyes popped out of his head and he nearly fell overhimself doing the hard sell. So I'm hopeful enough that when the time come's it'll be easy enough to get a mortgage.

In fairness though (and viewings on Sunday reinforced this) theres no hope in hell I'll be buying for the forseeable future. I'd reinforce other posters in what they're saying about rent - it's dead money, but if you lose your job (which at the mo could be perilously close for any of us) at least you aren't in the situation of trying to flog a house in a crashing market to set yourself up with an unknown amount of negative equity. I'd rather give up a rental property and go home to the folks tail between my legs than wind up in court on bankruptcy proceedings.

I'll only be buying if I'm confident my job is secure for the next few years, the house is somewhere I'll be happy to live for the forseeable future and is exactly what I want and where I want it, and that it represents reasonable value. None of those boxes are ticked at the mo.

gurramok

aquascrotum wrote: »

In fairness though (and viewings on Sunday reinforced this) theres no hope in hell I'll be buying for the forseeable future. I'd reinforce other posters in what they're saying about rent - it's dead money, but if you lose your job (which at the mo could be perilously close for any of us) at least you aren't in the situation of trying to flog a house in a crashing market to set yourself up with an unknown amount of negative equity. I'd rather give up a rental property and go home to the folks tail between my legs than wind up in court on bankruptcy proceedings.

Rent ain't dead money. Its cheaper to live by renting in a city than buying, thats a fact. Its ideal to rent to avoid a long commute and paying exhorbant interest on a mortgage for 35yrs to a bank.

Its a lifestyle choice at the end of the day.

At least you know your stuff regarding the risk of mortgages with regard to defaulting in this country

aquascrotum

gurramok wrote: »

Rent ain't dead money. Its cheaper to live by renting in a city than buying, thats a fact. Its ideal to rent to avoid a long commute and paying exhorbant interest on a mortgage for 35yrs to a bank.QUOTE]

In my experience thats not entirely true - whilst not in the city, properties I viewed on Sunday were cheaper on a month to month basis (admittedly after FTB mortgage relief) for us as a couple than comparable properties to rent in the area.

The apartments next door were 900/month to rent, after mortgage relief on a 35yr mortgage we'd have been out (ballpark) 800/month. Though that's taking our over-enthusiastic mortgage advisor at face value, and I'd be aspiring to a 25-30yr max mortgage in the event I take the plunge.

My primary concern is the prospect of job insecurity coupled with negative equity.

gazzer

aquascrotum wrote: »

gurramok wrote: »

Rent ain't dead money. Its cheaper to live by renting in a city than buying, thats a fact. Its ideal to rent to avoid a long commute and paying exhorbant interest on a mortgage for 35yrs to a bank.QUOTE]

In my experience thats not entirely true - whilst not in the city, properties I viewed on Sunday were cheaper on a month to month basis (admittedly after FTB mortgage relief) for us as a couple than comparable properties to rent in the area.

The apartments next door were 900/month to rent, after mortgage relief on a 35yr mortgage we'd have been out (ballpark) 800/month. Though that's taking our over-enthusiastic mortgage advisor at face value, and I'd be aspiring to a 25-30yr max mortgage in the event I take the plunge.

My primary concern is the prospect of job insecurity coupled with negative equity.

Dont forget that you also have to factor in management fees and life insurance payments to be added to your mortgage payment.

SimpleSam06

It was cheaper by 100 euros a month to pay a mortgage plus interest rates, with a €30k deposit, than to rent in the area? Where exactly is the area?

aquascrotum

SimpleSam06 wrote: »

It was cheaper by 100 euros a month to pay a mortgage plus interest rates, with a €30k deposit, than to rent in the area? Where exactly is the area?

Bettystown. Mini disclaimer - I'm going only on figures given by a mortgage broker in full sales pitch mode.

Climate Expert

aquascrotum wrote: »

Bettystown. Mini disclaimer - I'm going only on figures given by a mortgage broker in full sales pitch mode.

3 bed semi in Northlands

Rent: 1100pm
www.daft.ie/2600213

Buy: 250K
www.daft.ie/1413352

30 year mortgate with 30K deposit works out at €1,298.71 with Bank of Ireland on a variable 5.6% APR.


I'll admit that is one of the closer mortgage to rental areas but still far short of being cheaper to buy.

aquascrotum

Climate Expert wrote: »

3 bed semi in Northlands

Rent: 1100pm
www.daft.ie/2600213

Buy: 250K
www.daft.ie/1413352

30 year mortgate with 30K deposit works out at €1,298.71 with Bank of Ireland on a variable 5.6% APR.


I'll admit that is one of the closer mortgage to rental areas but still far short of being cheaper to buy.

My original post made it clear that the claim "cheaper to buy" was based on a FTB couple claiming mortgage relief, in this instance (apologies if the info given to me is wrong) in the region of 350/month, hence bringing the monthly outgoing to nearer the 900/month mark based on your mortgage calc.

Climate Expert

aquascrotum wrote: »

My original post made it clear that the claim "cheaper to buy" was based on a FTB couple claiming mortgage relief, in this instance (apologies if the info given to me is wrong) in the region of 350/month, hence bringing the monthly outgoing to nearer the 900/month mark based on your mortgage calc.

I didn't read your earlier post. In any case interest relief is not that much and you have to pay maintenance fees as well. Renters also get some form of tax relief but its not as much.

There are still very few places like Bettystown. My last place was probably selling for about 250k but we were renting it for 680 a month. In these situations you'd be crazy to buy. And you'd tell me the thousands I have saved (50K, 100K?) in the last few years is dead money?

CiaranC

aquascrotum wrote: »

My original post made it clear that the claim "cheaper to buy" was based on a FTB couple claiming mortgage relief, in this instance (apologies if the info given to me is wrong) in the region of 350/month, hence bringing the monthly outgoing to nearer the 900/month mark based on your mortgage calc.

There is also the small matter of the 30k deposit youd still have for investment if you rent...

aquascrotum

Climate Expert wrote: »

I didn't read your earlier post. In any case interest relief is not that much and you have to pay maintenance fees as well. Renters also get some form of tax relief but its not as much.

There are still very few places like Bettystown. My last place was probably selling for about 250k but we were renting it for 680 a month. In these situations you'd be crazy to buy. And you'd tell me the thousands I have saved (50K, 100K?) in the last few years is dead money?

Firstly, I'm 100% with you on the fact that it's crazy to buy - I was relating a sales pitch that was given to me last weekend for the purposes of the OP, as his query related to how easy or otherwise it is to get a mortgage currently. I wouldn't touch the property market with a barge pole at present (also as outlined in my original post).

Secondly AFAIK maximum tax relief per annum for a FTB couple as of 1/1/08 is 20k - or E333.33/month?

To CiaranC, I'm inclined not to lock my deposit up in a high yield scheme as I may need it if my job goes t*ts up.

ZYX

Climate Expert wrote: »

3 bed semi in Northlands

Rent: 1100pm
www.daft.ie/2600213

Buy: 250K
www.daft.ie/1413352

30 year mortgate with 30K deposit works out at €1,298.71 with Bank of Ireland on a variable 5.6% APR.


I'll admit that is one of the closer mortgage to rental areas but still far short of being cheaper to buy.

In fairness the one for rent has one bathroom, the house to buy has 3 bathrooms. Also you should not count loan repayments only interest payments when comparing the 2. You should also ignore the deposit and pretend entire amount is borrowed.
So at 5.6% the cost per year of buying is €14,000 per year less interest relief. Cost of renting is 13,200.

SimpleSam06

ZYX wrote: »

Also you should not count loan repayments only interest payments when comparing the 2. You should also ignore the deposit and pretend entire amount is borrowed.

Very true.

When buying as a whole is cheaper than renting, it enters a different ballgame, whereby if you find yourself unemployed or need to move in order to get gainful employment, you can rent the entire house and pay the mortgage that way. Of course that doesn't take into account fluctuations in the rental rate, empties, taxation on rental income or how that might affect the benefits accrued by FTB status, but worst case scenario you'll be paying €120 a week between the two of you and the rent for wherever you are living, assuming rents stay the same.

Also its worth bearing in mind that interest payments are front loaded by the banks in repayments, so the longer you have it the more sense it makes.

Its still not great value by my reckoning, needs to lose around €60k, but you might get most of that for the asking. Doable, really, if the area isn't a burned out car warzone. I'd expect to see more properties making sense in this kind of equation as time goes on.