Help! I want to get a mortgage!

miss luce

hi. myself and my fiance have been renting for years. we've always said that we'd buy, but we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
what we'd love to know is what we need to do. here is the situation............my partner is self employed, we have car loan, credit union loan, and small bit of credit card debt. i dont work, im a stay at home mom to our 2 yr old. we dont have any savings, but we've never been late with rent repayment once. we have life assurance policies alright. hope that might make us seem some bit sensible to bank!!!!
obviously we need to save for deposit for house, but just want to know, would a bank manager actually fall round the place laughing at us, if we went about getting a mortgage??
we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...
i prob sound stupid, but any advice would be much appreciated:o

John Mason

you need to completely clear your debt

and save your deposit aim for 30k (to cover fees and furniture)

your partner as self employed will have to show his accounts for 3 years, i think, dont quote me on that

miss luce

thanks for reply, guess its bread and water from here on in!!! ha!!!

Treehouse72

miss luce wrote: »

hi. myself and my fiance have been renting for years. we've always said that we'd buy, but we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
what we'd love to know is what we need to do. here is the situation............my partner is self employed, we have car loan, credit union loan, and small bit of credit card debt. i dont work, im a stay at home mom to our 2 yr old. we dont have any savings, but we've never been late with rent repayment once. we have life assurance policies alright. hope that might make us seem some bit sensible to bank!!!!
obviously we need to save for deposit for house, but just want to know, would a bank manager actually fall round the place laughing at us, if we went about getting a mortgage??
we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...
i prob sound stupid, but any advice would be much appreciated:o

1. It is exceptionally difficult nowadays for a self-employed person to get a mortgage. Exceptionally.
2. Banks will take a very harsh view of your existing debt when assessing your application. I would think the 3 types of debt you already have would be deal-breakers straight away.
3. Banks are looking for a record of saving in assessing whether to give you a loan. You have said you have no saving history.
4. Banks will require you to have the deposit you mention - the old days of 100% mortgages are gone. So there is likely no alternative to saving that €25,000.
5. Banks now require that you have a minimum amount left over after your mortgage payment. I have seen this figure quoted at €2500 for a couple after the mortgage is paid:
http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html
If you have a child that article says you would need €3,000 left over after your mortgage is paid.
6. You mention a €25,000 deposit, suggesting you want a €250,000 mortgage. At 4% over 30 years this is about €1,200 pm.
http://www.bankofireland.ie/personal/borrowing/mortgages/repayments.html
To have €2,500 left over, that means you'd need an income of €3,700 - €4,000....that's at least a pre tax salary of €70,000.
http://www.deloitte.ie/tc/Results.aspx
Perhaps I am being too conservative there, so I might stretch that guesstimate back to c. €50,000.



My advice. Wait till property is 30%+ cheaper in the next 3-5 years. At that point, a €40,000 salary would do all of the above for the same property.

sambuka41

Treehouse72 wrote: »

1. It is exceptionally difficult nowadays for a self-employed person to get a mortgage. Exceptionally.
2. Banks will take a very harsh view of your existing debt when assessing your application. I would think the 3 types of debt you already have would be deal-breakers straight away.
3. Banks are looking for a record of saving in assessing whether to give you a loan. You have said you have no saving history.
4. Banks will require you to have the deposit you mention - the old days of 100% mortgages are gone. So there is likely no alternative to saving that €25,000.
5. Banks now require that you have a minimum amount left over after your mortgage payment. I have seen this figure quoted at €2500 for a couple after the mortgage is paid:
http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html
If you have a child that article says you would need €3,000 left over after your mortgage is paid.
6. You mention a €25,000 deposit, suggesting you want a €250,000 mortgage. At 4% over 30 years this is about €1,200 pm.
http://www.bankofireland.ie/personal/borrowing/mortgages/repayments.html
To have €2,500 left over, that means you'd need an income of €3,700 - €4,000....that's at least a pre tax salary of €70,000.
http://www.deloitte.ie/tc/Results.aspx
Perhaps I am being too conservative there, so I might stretch that guesstimate back to c. €50,000.



My advice. Wait till property is 30%+ cheaper in the next 3-5 years. At that point, a €40,000 salary would do all of the above for the same property.

GOOD GOD!!! :eek: Wow how will anyone ever buy a house again!!!!Im all about being responsible and I've accepted to get a house I'll have to sweat for that deposit but really thats very restrictive esp in this current job climate. Who is making that kind of money?? I've taken a pay cut and even with that I think i live comfortably,but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

Victor

Property prices need to come more in line with incomes.

sambuka41 wrote: »

really thats very restrictive esp in this current job climate.

Do you expect them to be loose in the current market?

but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

Realise that you won't need to pay rent when you are paying a mortgage.

Treehouse72

sambuka41 wrote: »

GOOD GOD!!! :eek: Wow how will anyone ever buy a house again!!!!Im all about being responsible and I've accepted to get a house I'll have to sweat for that deposit but really thats very restrictive esp in this current job climate. Who is making that kind of money?? I've taken a pay cut and even with that I think i live comfortably,but I certainly dont have 2,500 left after i pay rent let alone a mortgage payment!!!

sambuka41, there is a very obvious answer to your question that you are ignoring: all of this changes utterly if house prices fall. Simple.

The reason the above criteria seem so absurd - and they are absurd - is because property prices are still so bubbly. It is IMPOSSIBLE that the scenario I set out above can continue. IMPOSSIBLE. So what will give? Asking prices. Take it to the bank - it is as certain as the sun rising tomorrow.

dolliemix

I'm in the same boat Sambuka.

During the boom. no way could I afford the deposit and mortgage repayments so I didn't, well couldn't buy.

Now I've noticed property prices are falling and I can afford a one bedroom somewhere. I could manage the 10 % deposit and the mortgage repayments. I have a permanent job, teaching for ten years so my salary is quite good at the moment, compared to others.

But now it looks like I need to stretch even further! It's unlikely I'll get a mortgage right now. But I'm going to save my ass off for 12 - 15 months. Hopefully prices will have come down even more by then as well.

This is all so frustrating! I'm sick of sharing with people. The people I'm with are nice but I've been sharing for over 10 years now. If I rent somewhere on my own I wouldn't be able to save. Im 35 on Monday and sometimes I feel like people don't treat me like a proper grown up because I don't have a mortgage to pay and I'm still living in shared accomodation.

I guess it's not supposed to be easy......

miss luce

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

Treehouse72

dolliemix wrote: »

This is all so frustrating! I'm sick of sharing with people. The people I'm with are nice but I've been sharing for over 10 years now. If I rent somewhere on my own I wouldn't be able to save. Im 35 on Monday and sometimes I feel like people don't treat me like a proper grown up because I don't have a mortgage to pay and I'm still living in shared accomodation.

I guess it's not supposed to be easy......

Only last week I had a friend lecturing me about responsibility because I don't have a mortgage. Meanwhile, we have another mutual friend with a young family and every month he sees written on his mortgage slip: Final payment date 2037, Monthly repayment €1800. AND he has an investment property that must be hugely in NE by now. Apparently this guy is responsible but I'm not. Sheesh.

It's pretty clear to me that we have learnt nothing in this country. People still think that massive debt is the same as massive wealth. It really is mind boggling and a testament to how powerful bubble psychology is.

Property prices will be 30% - 40% lower in 5 years. Nothing can stop this absent Ireland striking oil.

Del2005

Treehouse72 wrote: »

Only last week I had a friend lecturing me about responsibility because I don't have a mortgage. Meanwhile, we have another mutual friend with a young family and every month he sees written on his mortgage slip: Final payment date 2037, Monthly repayment €1800. AND he has an investment property that must be hugely in NE by now. Apparently this guy is responsible but I'm not. Sheesh.

Of course he's responsible. For 2 huge debts.....:D

The_Conductor

miss luce wrote: »

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

The EUR2500 over after a mortgage- would be for a couple, its EUR1500 for a single person.

Banks have pretty much stopped lending altogether- despite the marketing and advertising you hear. They want to appear to be in business- when in fact they're on life support......

If you have any o/s debt of any sort- you are almost certain to be turned down for a mortgage- and the list Treehouse72 quoted above, is pretty accurate.

If you really want a mortgage- clear all debt- absolutely everything- and save a deposit equal to 15-20% of the mortage you require, and then give it a shot. I wouldn't even bother trying at the moment- you need to clear that debt........

CamperMan

I am self employed, showed the bank 3 years healthy accounts, I have NO DEBTS, I had a big deposit, cash in the bank, I had land that I could have used as security, and the bank still turned me down for a small mortgage.

The_Conductor

CamperMan wrote: »

I am self employed, showed the bank 3 years healthy accounts, I have NO DEBTS, I had a big deposit, cash in the bank, I had land that I could have used as security, and the bank still turned me down for a small mortgage.

I've a friend who is a civil servant, has a 30% deposit saved with his fiance (who is a staff nurse), no debts whatsoever- and they would meet Treehouse72's income criteria (above). They were also turned down recently.

The banks/lending institutions are not lending as far as I can tell. They have the appearance of being open for business- but appearances can be deceptive......

iguana

smccarrick wrote: »

I've a friend who is a civil servant, has a 30% deposit saved with his fiance (who is a staff nurse), no debts whatsoever- and they would meet Treehouse72's income criteria (above). They were also turned down recently.

The banks/lending institutions are not lending as far as I can tell. They have the appearance of being open for business- but appearances can be deceptive......

Are people being turned down initially or only when they seek to draw down the loan they had approval for?

giveityourbest

have read the previous comments with interest & concern... So, would the general consesus be, that we should all hold off buying for another 18-24 months at least, and just keep saving, saving, saving?!
I myself am also self employed, small car loan.. no other debts, 25k saved with partner who is in full time employment - am feeling pretty despondant about ever getting our own home at this stage....:(

Actually just found Miss Luces other thread about prices reducing, - i think this thread answers my questions!...

The_Conductor

iguana wrote: »

Are people being turned down initially or only when they seek to draw down the loan they had approval for?

Approval is now only valid for a very short period of time (between 3 and 5 weeks depending on the institution) and approval in principle- means absolutely nothing these days. Many people who have (or had) approval in principle- are finding that when they come to draw down the mortgage that they are being told their original offer is no longer valid- some are facing a refusal- others more usually are given a fresh demand for a lower LTV ratio.

The days of easy credit are well and truly in the past.

iguana

smccarrick wrote: »

Many people who have (or had) approval in principle- are finding that when they come to draw down the mortgage that they are being told their original offer is no longer valid- some are facing a refusal- others more usually are given a fresh demand for a lower LTV ratio.

That's what I've been wondering about. I've heard lots and lots of anecdotal evidence of people getting fairly generous mortgage approval but not too much about people actually drawing down these loans. Yet it seems strange that banks would waste everyone's time by giving approval in principle for a loan that will never be given. What would be the point of that?

shayser

Joint income €50k pa. Both private sector. No history of saving. Deposit by way of gift from family member. No real outstanding debt. Good credit history. Mortgage approved and drawn for 228,000 on a 240,000 house. I'm guessing what they looked at was the 5-year loan (coming to it's end) + rent = approx. mortgage repayments, and maybe that the cc was paid off in full each month. I don't know though.

The_Conductor

iguana wrote: »

That's what I've been wondering about. I've heard lots and lots of anecdotal evidence of people getting fairly generous mortgage approval but not too much about people actually drawing down these loans. Yet it seems strange that banks would waste everyone's time by giving approval in principle for a loan that will never be given. What would be the point of that?

Approval in principle can be given at branch level- actual draw down has to go via credit control (and they seem to vary in their requirements almost on a day to day basis).

S.

miss luce

this is not sounding good atall!!! im by no means experienced in this side of things, but it just doesnt make sense when the bank are turning nearly everybody down!!! i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????
if we all wait another 4 or 5 years to buy, then not much is going to change in the next few years mortgage wise either. maybe lots of other european countries have the right idea by everybody just renting!!!

hinault

miss luce wrote: »

this is not sounding good atall!!! im by no means experienced in this side of things, but it just doesnt make sense when the bank are turning nearly everybody down!!! i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????
if we all wait another 4 or 5 years to buy, then not much is going to change in the next few years mortgage wise either. maybe lots of other european countries have the right idea by everybody just renting!!!

Don't depair : continue to save your money and clear your credit card on time.

House prices will continue to fall for at least the next 12-24 months.
In that time the banks will start to re-open for business.

The reason the banks are not granting loans now is because the banks
have huge level of debts on their books and, even when they transfer loans to NAMA, they will be cautious.
But it won't remain that way for ever.

12-24 months time, they will begin to make loans again : if you've got a good record and have sufficient savings, house prices will have dropped to meet your budget.

iguana

miss luce wrote: »

i mean, good savers with no debt,are exactly what the housing market needs to get back up again, which will in turn kickstart everything again????? am i right????

Not really. You're missing two important things. The first is that I don't believe the banks are refusing mortgages out of choice, but because they can't. They literally do not have the funds to give out many mortgages and so will only give the few they can to the very best applicants.

The other is that things can't be kick-started. It's neither possible nor desirable. The country is in the middle of an awful mess because of the way things were. We never, ever want to go back to that even if that was possible. But it isn't possible, there is rising unemployment and no way to turn that around. There are also nearly €350k empty housing units in the country. Houses in Ireland may have fallen by close to half, but they are still ludicrously high. Until the prices fall to reasonable levels the market will remain in the doldrums and even then there will be the oversupply to deal with.

But don't despair. Things are good for you. Seriously would you rather hold a mortgage on a small 2 bed flat in the likes of The Grange which is worth half of what you owe and falling fast while the rest of the building becomes social housing. You are in a good position. You just need to clear your debts and save like crazy for a few years (just like our parents did). In the mean time prices will keep falling and when you have your deposit together you will have a great big market to choose from, with you in the driver's seat.

In the mean time the rental market is falling too. If you aren't satisfied with where you live spend some time looking for a nicer place. Even an unfurnished place that you can furnish yourself to make more your own. And even if you do like where you live now you should investigate the new market rent and see if you can negotiate a discount.

NewDirection

All the anecdotal evidence for or against banks giving mortgages makes me laugh.

The banks are lending, when it makes sense to lend. If they wont give you a mortgage there is a reason. Ask the bank what the problem is, and rectify it.

They are a business, and their bread and butter is loans and deposits. They have been stung recently so will understandably be alot more picky with who they loan money to. I'm sure anyone who is posting an anecdote about not getting a loan, has left out some essential piece of evidence as to why the bank doesn't want their business.


Now to the OP, as has been said by other posters, you will need to pay off your outstanding debt and save a deposit before even thinking about applying for a mortgage. Simple as that. When you have a strong enough financial situation, the bank will loan you the money.

D3PO

Totally agree with the last post. Clearly their are more stringent criteria to get approval but banks are lending. I know 5 people that have drawn down this year and only 2 people that have been refused mortgages.

Quite frankly if I was underwriting the loans I wouldnt have approved the 2 people that got refused either, in fact 1 of the people I know that did get approved I wouldnt have approved. The same way I wouldnt approve the OP on this thread, debts, no savings record, 1 person self employed.

I think rather than people complaining about getting refused they should actually take a look at their credit situation.

I only know 1 person first hand who was refused a mortgage unjustly in the past year. (Bank said they didnt accept their record of saving in the credit union as they used to withdraw from the atm and lodge into the CU rather than transferring directly fomr their account) The bank contended that the "savings" in the CU could have been a gift rather than genuine savings. Now given the lodgements were the same amount every month for 4 years thats a little rediculous but thats the only example of banks making a wrong decision in relation to mortgage approval that Im aware of.

Hellrazer

Anyone know how banks are regarding people trading up (Well technically trading up to a bigger house but a lot smaller mortgage)

We`re looking at moving out a bit further from Dublin and if everything adds up we`ll have approx somewhere between 80-100k going into the new property.

New property is 200k so the max mortgage I`ll be looking at is around 130 or so.

Repayments will drop by a third over 10 years less.

D3PO

Hellrazer wrote: »

Anyone know how banks are regarding people trading up (Well technically trading up to a bigger house but a lot smaller mortgage)

We`re looking at moving out a bit further from Dublin and if everything adds up we`ll have approx somewhere between 80-100k going into the new property.

New property is 200k so the max mortgage I`ll be looking at is around 130 or so.

Repayments will drop by a third over 10 years less.

Sounds like a dream scenario to me if I was a bank.

Hellrazer

D3PO wrote: »

Sounds like a dream scenario to me if I was a bank.

It does doesnt it.But yet some of the lenders Ive approached are apprehensive about lending me and heres a quote "that small an amount over that short a period"

I`d have a better chance of borrowing a few million.

To me its a no brainer--all debts cleared and a new mortgage that I could pay even if I lost my job tomorrow and over only 10-15 years.

D3PO

yeah well i think BOI have a min drawdown of 150k.

Theres obviously a threshold of which a mortgage under that threshold is of little or no benefit to the bank due to the costs associated with the mortgage from their end. Perhaps thats why your getting the comments your getting.

I would assume if its the same bank your current mortgage is with would be in a different position. Essentially they wouldnt be funding from the markets to facilitate your mortgage, it wouldnt be little more than an accounting excercise their side.

shoegirl

miss luce wrote: »

1. we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
2. my partner is self employed
3. we have car loan, credit union loan, and small bit of credit card debt.
4. i dont work - im a stay at home mom to our 2 yr old
5. we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...

Ok you kind of put up a fairly good picture here. You're not on a big income obviously, and managing to make ends meet, but don't really have anything left over - which more or less explains why you don't have savings. (Don't be ashamed of that by the way, lots of people cannot afford to save for a variety of reasons). You've a few small loans - probably to manage your cash flow, which you can afford, but not having savings or cash gifts or equivalents, you're paying your own way and probably managing ok.

The fact that your partner is self-employed could make things difficult in terms of borrowing. Even if his business doesn't have borrowings, they might want extra security. Secondly, in the event of the business going, your welfare entitlements are reduced. The fact that you don't work means you're being disadvantaged by a tax system that favours working couples BUT on the other hand you're probably saving on childcare, and can probably return to work in the future.

You'd definitely need to clear your existing loans. Maybe consider a little part time work yourself?

Last suggestion is that some of the rent-to-buy schemes might suit you? At least you don't have to commit up front.

By the way 30 is still fairly young to buy a home today, a lot of people esp singles and single income couples in their late 40s are completely priced out of the market. There are 6 of us working here together on my team, ages ranging from 31 to 38, mostly 35-36, some married or separated with children, all on about 1/3 more than the average wage, and only 1 owns their own home - I think!!

shoegirl

miss luce wrote: »

:eek::eek::eek:whoah!!! have 2500 left EVERY month after we pay our mortgage!!!! am i being extremely naive,or would ANYBODY apart from lotto winners have that at end of month???? seriously!!!! how do they expect this whole thing to blow over, when nobody is going to be able to actually afford a mortgage!!! im all for banks not giving out loans and mortgages willy nilly anymore, but this is the other extreme!!!!

2500 a month is a couple of hundred more than a so-called "average industrial wage" earner would take home after tax.

D3PO

shoegirl wrote: »

By the way 30 is still fairly young to buy a home today, a lot of people esp singles and single income couples in their late 40s are completely priced out of the market.

Especially with pensionable age being pushed up form 65 to 68. It may take some time but eventually this will be reflected in regards to lending criteria and terms avaiable to people of certian ages.

shoegirl

Thats a good point D3PO. A lot of single childless people in that age group might be quite happy to buy up cheap 1 or 2 bed apartments in a year or two if and when they reach price levels suited to somebody on a single average income.

Another option I didn't think of is county council loans and Homechoice loans. They work similarly to mortgages, but you have to have been rejected by the banks in order to be accepted. I would presume they are stringent are probably a good option for somebody with good credit, a steady income, and a 15% deposit, who might have qualified easily before the credit crunch, but cannot get anything now, despite on paper seeming to meet criteria. Where you get the mortgage from doesn't matter, its if you find a place you like, that you'd like to live in long term and in a suitable location for work and at an affordable mortgage.

You have to remember too that rents in many cases still exceed what the mortgage would be for the same place, you cannot expect people to pay more for a place that is still very often poorly maintained (if not substandard) and be happy about it - which is a lot of the reason why renting is regarded as the poor relation.

I do think by the way there is a huge need for hybrid rental/buying models that would help people on lower incomes rent at a fair price (perhaps with longer leases) as from what I can see most people who rent do so mainly because they cannot afford to buy (or could only afford if they purchased 60 miles away in a dark country lane!) The rent-to-buy model is not a bad idea - its long term and benefits both parties. Also maybe medium term leasing? There are lots of people falling in between the cracks who need more help than they are getting right now.

The_Conductor

shoegirl wrote: »

Thats a good point D3PO. A lot of single childless people in that age group might be quite happy to buy up cheap 1 or 2 bed apartments in a year or two if and when they reach price levels suited to somebody on a single average income.

The only reason a lot of childless couples are happy to buy cheap 1 or 2 bed apartments- is an assumption that they can trade up to a more suitable alternate, if/when their circumstances change. Its rapidly becoming the case that the vast bulk of the demand in the market- is not for apartments- full stop. Its for freehold property- notably homes with gardens.

There are a lot of folk out there who bought over the past few years- who are now living in wholly unsuitable property- often in massive negative equity- and have no possibility of moving, regardless of how their circumstances change.........

shoegirl wrote: »

Another option I didn't think of is county council loans and Homechoice loans. They work similarly to mortgages, but you have to have been rejected by the banks in order to be accepted. I would presume they are stringent are probably a good option for somebody with good credit, a steady income, and a 15% deposit, who might have qualified easily before the credit crunch, but cannot get anything now, despite on paper seeming to meet criteria. Where you get the mortgage from doesn't matter, its if you find a place you like, that you'd like to live in long term and in a suitable location for work and at an affordable mortgage.

You are assuming that the ideal situation is to buy. If you find a nice place that you'd like to live in longterm, and in a suitable situation for work- the better course of action might be to rent for all manner of reasons.

Very few people have any reasonable expectation of working longterm in any location any more- the previous model of spending 35-40 years going in and out of the same office, is as dead as the dodos. The stated aim of the Irish government is to encourage a 'knowledge economy' with greater mobility for skilled workers. Tying yourself down to a particular location- might be a very bad idea (ask any civil servant!!!)

shoegirl wrote: »

You have to remember too that rents in many cases still exceed what the mortgage would be for the same place, you cannot expect people to pay more for a place that is still very often poorly maintained (if not substandard) and be happy about it - which is a lot of the reason why renting is regarded as the poor relation.

Rents may exceed mortgages- however, a mortgage is only one cost related to property ownership, and indeed, rent normally isolates you from many of the costs associated with property. To simply look at the headline mortgage rate, and compare it to the prevailing rent level- is dangerous, and misleading. Aside from anything else- interest rates are at historically low levels- rates between 6 and 7% would be 'normal'- were you to compare a mortgage at these levels, to rent levels (allowing for inflation- or deflation)- the story would almost certainly be entirely different.

shoegirl wrote: »

I do think by the way there is a huge need for hybrid rental/buying models that would help people on lower incomes rent at a fair price (perhaps with longer leases) as from what I can see most people who rent do so mainly because they cannot afford to buy (or could only afford if they purchased 60 miles away in a dark country lane!) The rent-to-buy model is not a bad idea - its long term and benefits both parties. Also maybe medium term leasing? There are lots of people falling in between the cracks who need more help than they are getting right now.

I really don't understand the Irish pre-occupation with property ownership. You are making an automatic assumption that the main reason people rent is because they can't afford to buy. Medium term leasing- is already catered for- and with far greater tenants rights than on the continent after last years 2009 Housing Act. You most certainly do not have landlords out mowing lawns in Germany or Holland when people take out a longterm lease on a property........

When you say there are lots of people falling through the cracks right now- what do you mean? People who are renting- who want to buy- or people sleeping in doorways who are homeless?

Also- why should there be a scheme to give a house to every couple in the country? We have this fascination with owning property that got us all into this mess in the first place........

There is so much here that doesn't make sense!

shoegirl

So what happens then when you retire, on perhaps 1/3 of your then salary, and suddenly find that your rent exceeds your entire income, never mind an unsustainable proportion?

The current rents for small units even outside of Dublin are about the same as the entire old age pension. Somebody single of pension age retiring without a very generous private pension in addition to the state pension will be in an immediate housing crisis in the current situation.

Which is why I think most people tend towards home ownership. How many 50 or 60-something tenants do you see aside from those who may have decided to cash in on high prices a few years ago? Not many. The current rented market in no way caters for pensioners even on the full rate. 230 euros a week will not pay for much in Dublin.

There is a massive housing time bomb that accompanies the pension time bomb that the current housing regime doesn't account for. We haven't seen the kind of poverty that will ensue when the current property-less adults hit pension age because right now pensioners tend to either own their own homes or are social housing tenants. There are very few adults hitting pensionable age who are hitting this situation at present, but if the current levels of ownership fall as they have done, and if rents don't drop relative to incomes, we could have a severe housing problem for older people in as little as 20 years time.

For that reason I don't entirely dismiss the desire to own property - it is seen as part of the same system of long term security which is I think why far more people buy a home than take out a pension. You at least have the option of a modest state pension. There is no automatic housing for over 65s who retire without a private pension.

twowheelsonly

Can any of the banking people on here tell me if your rent is taken into account when applying for a mortgage?

I'm in the same boat as a lot of others. I have a substantial portion of a deposit saved, over 12 months or so, on a decent enough Public Service wage with a decent pension to look forward to (At the moment!!!) and less than 5k in loans/debt outstanding with a decent enough credit rating. Married with kids BTW.

I recently had a chat in the bank about getting a mortgage and the girl told me that they don't take into account the fact that I woon't be paying rent. I currently pay €210 per week rent, which works out at €910 per month which IMO is a long way towards paying for a mortgage - but they don't see that!!

I haven't actually applied yet, I still want to save a few more quid and I also believe that prices will drop another significant amount. At the moment I'm basing my 'dreams/plans' on a place that I've seen for €280k and budgeting accordingly. However the fact that she has told me this has me wondering. Can anybody clear it up for me??

The_Conductor

shoegirl wrote: »

So what happens then when you retire, on perhaps 1/3 of your then salary, and suddenly find that your rent exceeds your entire income, never mind an unsustainable proportion?

Two options- plan for your retirement in an appropriate manner (the current proposals are that employers and the government will match your contributions to certain max levels, and your contributions are tax free @ 30%)

If you haven't planned- and your income is below a certain level- then you qualify for various supports- such as rent allowance. Its not ideal- but there are lots of people of working age in this boat- so why should you suddenly wave a magic wand at age 68?

shoegirl wrote: »

The current rents for small units even outside of Dublin are about the same as the entire old age pension. Somebody single of pension age retiring without a very generous private pension in addition to the state pension will be in an immediate housing crisis in the current situation.

Not if you factor other entitlements into the equation. In any case- the current proposals are to freeze the state pension at current levels indefinetly- and make everyone purchase either a pension, or annuities, as appropriate.

shoegirl wrote: »

Which is why I think most people tend towards home ownership. How many 50 or 60-something tenants do you see aside from those who may have decided to cash in on high prices a few years ago? Not many. The current rented market in no way caters for pensioners even on the full rate. 230 euros a week will not pay for much in Dublin.

You're talking about Dublin. Look at Berlin/Paris/Brussels/Madrid/Rome etc- only a very small minority of pensioners own their own apartment/house. And they almost universally avail of schemes not dissimilar to the Rent Allowance Scheme (along with a raft of other schemes). Retirement brings with it- entitlement to a raft of allowances- including housing.

shoegirl wrote: »

There is a massive housing time bomb that accompanies the pension time bomb that the current housing regime doesn't account for. We haven't seen the kind of poverty that will ensue when the current property-less adults hit pension age because right now pensioners tend to either own their own homes or are social housing tenants. There are very few adults hitting pensionable age who are hitting this situation at present, but if the current levels of ownership fall as they have done, and if rents don't drop relative to incomes, we could have a severe housing problem for older people in as little as 20 years time.

Why? Its not an issue in other European countries- its simply incorporated into a scheme of allowances. We have the structure in place to deal with it. For those who do own property- we now propose to make their estate pay for any nursing home charges- its a simple leap to add other benefits to the equation. Its how its functioned elsewhere for hundreds of years (notably France)- we seem to be going down that road come what may.

shoegirl wrote: »

For that reason I don't entirely dismiss the desire to own property - it is seen as part of the same system of long term security which is I think why far more people buy a home than take out a pension. You at least have the option of a modest state pension. There is no automatic housing for over 65s who retire without a private pension.

The Irish desire to own property- is almost unique- there is no comparison elsewhere in the world. A certain degree of this desire can be reconciled with how we were historically dispossed by the Brits- however we really take this to the limits.......

The modest state pension is to be raised to 68- and eligibility criterion tightened significantly- with the onus on people to provide for their own retirements.

There may not be automatic housing schemes for those who retire at 65 (or later) without a private pension- we certainly do have schemes in place for those who request them though (such as sheltered housing schemes with oncall assistance as required etc). It may not be a 5 star hotel- but it caters to what people actually need- and is ringfenced for pensioners. They also have the meanstested option of applying for Rent Allowance and other benefits- akin to any other citizen........

Most people who have purchased property since 1995 are going to find their investment costs significantly more than they pay for it, its not tax deductable- and hinders mobility. Traditionally the Irish have been mobile- youngsters didn't buy property- they inheritted it from their parents. We are already eating into this model with major revisions of inheritance rights, and charging for nursing home care by way of putting a charge on a person's estate. You could argue that this means a person's house is paying for their care- and so it is, but this is not about security- nor is it about provision of accommodation- its an illiquid asset with a charge against it.

We also have a hand-out culture here in Ireland. Once the ownership of a PPR is added into the means test for a pension (its excluded at present- but other assets are included)- ownership of a property may in fact be viewed more as a bother, than anything else.........

del046

Hello Miss Luce,
Where do you want to live ..... present location or other?
Suggest you look at inslovencyjournal.ie and find out what properties are being sold for their true market value e.g. 4 bed detached near rooskey co. roscommon sold by liquidator for E100k. Might be worth keeping tabs on while clearing debts and saving deposit.

miss luce

hi del046,
we want to buy in cork, in fermoy area. were renting for now, and love the area we're in, but prices are too dear for us. but our main problem is our debt, not huge, but holding us back!!!!

WaltKowalski

Price of house I love has fallen from 550k to 150k (Builders finish).
Great house in great location.
I've debt of €26k, savings of €15k.
I work in the public sector.
I really can't see the price falling any lower.
I really feel like I'll miss out on the opportunity of a lifetime if I can't buy this house.
Am I wasting my time approaching a bank looking for a mortgage??

Also my fella is unemployed - can't imagine that he'd help my application - though he hopefully won't always be unemployed.

D3PO

26k in debt then forget about it your wasting your time

WaltKowalski

D3PO wrote: »

26k in debt then forget about it your wasting your time

Thanks for the reality check. I can't help but feel disappointed though.

D3PO

WaltKowalski wrote: »

Thanks for the reality check. I can't help but feel disappointed though.

yep that sounds like some bargain. who knows it may keep on the market

what i would say to you however is get that debt paid off asap. I would assume your paying at least 7% on the loan and i doubt your getting that from the savings you have.

you need to put those savings off the debt now its a far more efficent way and makes much more financial sense than having savings with this debt hanging over you

WaltKowalski

D3PO wrote: »

you need to put those savings off the debt now its a far more efficent way and makes much more financial sense than having savings with this debt hanging over you

But then I'll have nothing.

If I had no debt, I'd probably get a mortgage for the amount I need now plus the amount of my debt.

It's very frustrating. All my own fault - I know! I enjoyed myself for far too long - and I'm paying the price now.

D3PO

WaltKowalski wrote: »

But then I'll have nothing.

.

on paper you have nothing. (dont mena to be harsh here) you can build savings up again when your debt is paid off. I understand you might want some rainy day money but until you clear that debt house ownership is out the window so why not pay it off as quick as you can and also in the most effiecent way

if your getting 2% interest and paying 7% on your loan your losing out on 5% of your savings annually (a little more if you take dirt into account) thats not efficent money management and will slow down your progress in terms of eventually becoming a home owner

Moonbeam

Personally I don't understand why people with huge debts are wanting mortgages and don't understand why they are not getting them.
I don't think the banks wanting you to have 1500k left in the bank after your mortgage every months is a crazy amount to ask.
Interest rates are at their lowest ever if they go up 3-4% you still need to make the repayments and be able to live with out getting in to debt.
Work out how much you need ot live every month with food,heating,phone,electricity,social life,kids etc and then taken in to account if mortgage rates did go up.
I think it is just sensible.

Treehouse72

Yes, people should understand that the bank requiring a certain amount left over after mortgage payments is a de facto stress test for higher interest rates. In fact, I think that is probably the entirety of the reason for it.

Shayman

OP, you have a credit history with the Credit Union. Have you not discussed the mortgage with them?

cynder

did you try the council. the afffordable housing scheme, or shared ownership?

the affordable housing only requires a 5% deposit.


http://www.affordablehome.ie/My-Local-Authority/Cork-County-Council.aspx

Affordable homes are provided by Cork County Council to help people who want to buy a home in Cork but cannot afford to buy on the open market. There are three divisions in Cork, which manage applications for affordable homes in Cork County:

North Cork - Office in Annabella, Mallow
South Cork - Office in Cork County Hall, Cork City
West Cork - Office in Clonakilty
If you want to apply, check that you meet the criteria below, download the application form available on this page and return it to the relevant council division. The contact numbers are on the top right hand corner of this page.


To qualify for an affordable home
You should

be a first time buyer (certain exceptions apply)
be in full time employment for at least 12 months or self employed for at least 1 year
As a guide, earn between €25,000 and €58,000 if you are applying on your own and up to €75,000 between both of you if you are applying with someone else. These are the approximate limits only – lower and higher income limits may apply depending on the type of scheme.






this? AREA 2 - GLANMIRE South Cork

From €150,000 to €200,000
How can I buy this? AREA 3 - BALLINCOLLIG South Cork

From €150,000 to €200,000
How can I buy this? AREA 4 - CARRIGALINE South Cork

From €150,000 to €200,000
How can I buy this? AREA 5 - MACROOM WEST South Cork

From €150,000 to €200,000
How can I buy this? AREA 6- MACROOM EAST South Cork

From €150,000 to €200,000
How can I buy this? AREA 7 - OVENS South Cork

From €150,000 to €240,000
How can I buy this? AREA 8 - BANDON South Cork
Bandon
From €150,000 to €200,000
How can I buy this? AREA 9 - KINSALE South Cork

From €150,000 to €200,000
How can I buy this? AREA 10 - MIDLETON South Cork

From €125,000 to €200,000
How can I buy this? AREA 11 - YOUGHAL South Cork

From €150,000 to €200,000
How can I buy this?

West Cork Affordable Homes
Tir na Greine
Enniskeane
From €150,000
How can I buy this? Cluain Carrigeach
Eyeries
From €150,000
How can I buy this? Ard na Greine, Sheskin,
Bantry
From €150,000
How can I buy this? Cluin Court
Allihies, Beara
From €150,000
How can I buy this? The Courtyard
Castletownbere
From €150,000
How can I buy this?

Homes Available in North Cork
Meadowside
Dromina
up to €157,500
How can I buy this? Baile Glais
Lombardstown
From €150,000 to €154,500
How can I buy this? Pairc na gCapaill
Kilworth
From €188,000 to €198,000
How can I buy this? Berry Hill
Castlelyons
From €150,000
How can I buy this? Allow Hill
Freemount
From €193,000
How can I buy this? Orchard Heights
Charleville
From €150,000
How can I buy this? Brindle Hill
Charleville
From €193,000
How can I buy this? Pairc na gCrann
Glanworth
From €150,000
How can I buy this? Dun an Oir
Kanturk
From €135,000
How can I buy this? The Beeches, Watergrasshill
Ard Cashel, Watergrasshill
From €170,000 to €180,000
How can I buy this? Town Heights,
Buttevant
From €135,000 to €144,000
How can I buy this? Hazelbrook, Spa Glen,
Mallow, North Cork
From €206,000
How can I buy this? Clonmore, Ballyviniter, North Cork

From €188,000 to €190,000
How can I buy this? Bearna Deara, Kildorrery, North Cork

From €149,000 to €162,000
How can I buy this? Droimneach, Bweeng, North Cork

From €177,000 to €198,000
How can I buy this? Tanyard Wood, Millstreet, North Cork

From €160,000
How can I buy this? Stag Park, Mitchelstown, North Cork

From €162,000 to €182,000
How can I buy this? Shanowen
Rathcormac
From €129,000 to €165,000
How can I buy this? Fairfield Rise
Minor Row, Millstreet
From €160,000 to €170,000
How can I buy this?

Treehouse72

Ah yes, Affordable Housing, Irish style:

You should

• be a first time buyer (certain exceptions apply)
• be in full time employment for at least 12 months or self employed for at least 1 year
• As a guide, earn between €25,000 and €58,000 if you are applying on your own and up to €75,000 between both of you if you are applying with someone else. These are the approximate limits only – lower and higher income limits may apply depending on the type of scheme.

http://www.affordablehome.ie/My-Local-Authority/Cork-County-Council.aspx


So there you have it folks. People earning FIFTY EIGHT THOUSAND EURO are in theory open to applying for AFFORDABLE HOUSING.

Anybody tempted to buy please just stop and think about that for a moment. €58,000 is almost twice the average industrial wage in Ireland. For Dublin, it is probably about 30% above the average wage.

"Affordable Housing" should be a state benefit in kind to help those who don't qualify for social housing but can't afford property on the open market. I guess in modern parlance these would be the "working poor". But in this Godforsaken, absurd country above-average earners can qualify. It is ten million miles beyond mind-boggling.

The market is still broken all to hell and will fall and fall until this absurdity and others like it disappear. Thinking anything else will happen is like thinking water will flow uphill.

Tail Wagger

miss luce wrote: »

hi. myself and my fiance have been renting for years. we've always said that we'd buy, but we never saved anything:mad: so here we are now, nearing 30 and still in same situation.
what we'd love to know is what we need to do. here is the situation............my partner is self employed, we have car loan, credit union loan, and small bit of credit card debt. i dont work, im a stay at home mom to our 2 yr old. we dont have any savings, but we've never been late with rent repayment once. we have life assurance policies alright. hope that might make us seem some bit sensible to bank!!!!
obviously we need to save for deposit for house, but just want to know, would a bank manager actually fall round the place laughing at us, if we went about getting a mortgage??
we dont have very much left after we pay our bills etc... to do lots and lots of savings, so we're thinking that its going to take us years to save for say a 10% of bout 25000, plus we'd need money for fees and furniture etc...
i prob sound stupid, but any advice would be much appreciated:o

You have all the ideas of a normal person who wants to have their own home and there is nothing wrong with that.
Unfortunately you have everything going against you with the cards you have put on the table.
To go to a Bank to day you need to be squeaky clean and owe nothing and certainly not be self employed.
The Banks unfortunately have the monopoly at the moment and thats where people like us loose out.
There has been some good advice in some of the posts above and if I were you take it and keep all your options open for the future.
One or two options might be open to you , put your name down for a local Council house(while your saving your deposit) if you are lucky enough to avail of a Council house, you would be entitled to buy after one year (I still think) and you might be able to move on from that.
Don't worry to much you have your hubby and family to think about, and you have time on your side for buying houses. If your patient it will come to you eventually.. be patient...and good luck.