Anyone getting a mortgage

meltdown01

We are trying to get a mortgage to build a new home. We have a small mortgage currently and plan to build on our own property. Single income family. I have a secure management level job in health sector. What is the secret to getting a mortgage? Anyone out there that has received a mortgage lately how did you do it? Any advice appreciated.:rolleyes:

Drumpot

meltdown01 wrote: »

We are trying to get a mortgage to build a new home. We have a small mortgage currently and plan to build on our own property. Single income family. I have a secure management level job in health sector. What is the secret to getting a mortgage? Anyone out there that has received a mortgage lately how did you do it? Any advice appreciated.:rolleyes:

According to bank officials they are accepting 4 out of 5 applications!:eek:

I dont think this is accurate in any regards (nearly got into an arguement with a bank official on radio when they said that!).

That said, it really depends on the strength of your application.

If you are in permanent employment in the Civil Service, straight away you are in a very strong position to apply for money.

Mortgage Lenders will work off your ability to repay the loan. So they look at your outgoings (personal loans, overdrafts, credit cards etc) and take your monthly costs into consideration.

I have gotten some cases accross the line for some clients, but believe me Mortgage companies will make you jump through hoops to get the money.

At this stage as a very very rough guide you would want:

• Min 1 year in employment, now full time permanent
• Deposit min of 10% - 20%
• Property near a town increases strength of your application
• Strong permanent job helps

As far as self build goes:

• Up to 100% cost of building
• up to 80% of cost of site (so owning the site already helps alot!)
• Some will want you to have some savings in event of overruns

Just a GUIDE by the way . . Nothing is guaranteed in this industry!!

Good luck . .

BuffyBot

nayorleck, this isn't After Hours.

If you don't have something constructive to say, don't post.

meltdown01

Thanks Drumpot for that info - really helpful

One more question: We have no loans, no overdraft and small credit card bill. However we do not have savings. Would the banks take into consideration that the land we have is worth about 130,000 euro (according to valuer) in current climate. this doesn't include the house currently on it as this has to come down as part of the planning decision We owe about 50,000 euro on it.
Just looking for a guide. I surely know that nothing is quaranteed!! Things have really turned upside down.

TheUnicorn

Nothing's guaranteed, because lack of savings may put banks off really. However best thing is to talk to a broker and provide proper information to get more details. I would try place like Mortgage Deals or something like that - get some broker and let them answer your questions, in addition get some numbers as well.

Drumpot

meltdown01 wrote: »

Thanks Drumpot for that info - really helpful

One more question: We have no loans, no overdraft and small credit card bill. However we do not have savings. Would the banks take into consideration that the land we have is worth about 130,000 euro (according to valuer) in current climate. this doesn't include the house currently on it as this has to come down as part of the planning decision We owe about 50,000 euro on it.
Just looking for a guide. I surely know that nothing is quaranteed!! Things have really turned upside down.

Ok, so Land worth €130,000.

House on it worthless.

Current mortgage on that property €50,000 so in theory you have €80,000 free capital (as of now).

Mortgage lenders work off offering the likes of 80% of the cost of site and 90% - 100% cost of building.

In your case you own 58% of the site which is a plus.

The real clincher could be what the property value estimate will be on completion. If the value is going to mean that you will have a mortgage with a loan to value less then 75%, then you have a good chance of getting this through.

E.g

Current mortgage : €50,000
Current Value: €130,000

On Completion:

Revised Value: €400,000
Revised Mortgage: €320,000 (80% of €400,000)

On this example it is just within the guidelines of what will generally be accepted. This doesnt factor in your credit rating, age, full employment details, salary details etc.

It sounds like you have the start of a good application. As you know, this is not a guaranteed case, this is simply a guideline.

Hope this helps. .

meltdown01

Thanks again Drumpot

It is great to know something about how all this works. I have much food for thought now. First thing, I think, for me to do is to put some money in savings (loan from family or otherwise!!) and top this up for a while. Then submit an application. Then with everything I might have a chance. I am hoping by year end that the prices of labour have reduced to an acceptable level also so that we will not end up in negative equity. I have also heard where a bank stopped a mortgage on a self buiding when house was only half built. The bank said that the house was no longer worth the money that had already been spent. Dreadful stuff!!

Drumpot

meltdown01 wrote: »

Thanks again Drumpot

It is great to know something about how all this works. I have much food for thought now. First thing, I think, for me to do is to put some money in savings (loan from family or otherwise!!) and top this up for a while. Then submit an application. Then with everything I might have a chance. I am hoping by year end that the prices of labour have reduced to an acceptable level also so that we will not end up in negative equity. I have also heard where a bank stopped a mortgage on a self buiding when house was only half built. The bank said that the house was no longer worth the money that had already been spent. Dreadful stuff!!

You are better off having a fund in place for any over runs of costs, aswell as obviously factoring in reduction in the value of your home.

If you want to be super cautious, you could factor in perhaps something like a potential 5% drop in the original valuation of the completed property (assuming that construction would be completed within 6 months).

Either way, good luck with your savings . .

bistro

After reading an article in Independent today - see here about the banks not lending on low cost homes, i may add one thing to this thread - THE BANKS ARE FULL OF CRAP!
They are not wanting to lend on anything or to anyone that doesnt meet the following 'criteria'
1) A joint application (2 full time guards) 100k+ per annum
2) Minimum house value -150k
3) House to be located in a town or city only

If you are any of the following, best of luck
1) Self employed for less than 6 years
2) Buying in the country side
3) Single applicant
4) Home value under 150k
5) Not in a permanent 'contracted' job
6) Have a 15% (in my case 17k) deposit, in cash, ready to use.

Boi told me they would not lend on anything under 150k. Aib said (after some persuasion for a heads up answer) they refused my application because "i was self employed and in the current economic state, thats the worst situation you can be in!"

As metioned in the Independent article, this really is a case of the shopper keeper not selling his goods so he can super inflate the value of them.

meltdown01

Actually now that you bring this up. It is obvious why the Irish banks are not bringing the developers to task like ACC bank. They are afraid there will be a fire sale of property by liquidators and a complete collapse of the property market. Sure! NAMA, in otherwords taxpayers, are going to pay a high price for property so that the banks can continue to profit. So why wouldn't they wait in the wings.
Maybe we are better off without NAMA so that the property market can come back to reality

Toots

bistro wrote: »

After reading an article in Independent today - see here about the banks not lending on low cost homes, i may add one thing to this thread - THE BANKS ARE FULL OF CRAP!
They are not wanting to lend on anything or to anyone that doesnt meet the following 'criteria'
1) A joint application (2 full time guards) 100k+ per annum
2) Minimum house value -150k
3) House to be located in a town or city only

If you are any of the following, best of luck
1) Self employed for less than 6 years
2) Buying in the country side
3) Single applicant
4) Home value under 150k
5) Not in a permanent 'contracted' job
6) Have a 15% (in my case 17k) deposit, in cash, ready to use.

Boi told me they would not lend on anything under 150k. Aib said (after some persuasion for a heads up answer) they refused my application because "i was self employed and in the current economic state, thats the worst situation you can be in!"

As metioned in the Independent article, this really is a case of the shopper keeper not selling his goods so he can super inflate the value of them.

I'm assuming these are criteria you've made up yourself? Obviously the banks are going to want make sure you've got a stable job and good income. That bit about €100k+ on joint incomes is total rubbish. I know at least 3 couples who've bought recently and I can tell you their joint income isn't anything close to that. Unfortunately a lot of banks have a 'minimum loan amount', I'm not exactly sure why this is though. I remember chatting to someone in work about it (after a customer we were trying to organise a mortgage for was declined for this reason) and we reckoned that it might be something to do with the profit being too small or something, but that was just us speculating.

Davy

They are lending to single applications aswell, and needless to say with a smaller income of 100k. They are focusing on FTB's though.