Mortgage approval

Jimmmy McNulty

Hi all,

I'm currently out of the country but I have heard so much about how hard it is to get a mortgage in Ireland these days. I'm not a home owner but I think I would like to purchase something in the next year or so. I'm single and in my late 20's.

What are the banks looking for from me in order to make me an attractive mortgage candidate? Due to reduced prices in Ireland I think I could restrict my spending to the low 200's when I do buy something.

Any thoughts on the matter would be appreciated.

Thanks,

Jimmy

chris85

Jimmmy McNulty wrote: »

Hi all,

I'm currently out of the country but I have heard so much about how hard it is to get a mortgage in Ireland these days. I'm not a home owner but I think I would like to purchase something in the next year or so. I'm single and in my late 20's.

What are the banks looking for from me in order to make me an attractive mortgage candidate? Due to reduced prices in Ireland I think I could restrict my spending to the low 200's when I do buy something.

Any thoughts on the matter would be appreciated.

Thanks,

Jimmy

Well a good solid income, no debts, a low loan to value ratio (thus bigger deposit needed than previously), regular savings, etc. The usuals.

Jimmmy McNulty

chris85 wrote: »

Well a good solid income, no debts, a low loan to value ratio (thus bigger deposit needed than previously), regular savings, etc. The usuals.

Yeah I don't have any debt or anything so I'm fine there and I'm decent at saving. Do you have any idea of what kind of loan to value ratio they would find acceptable? I have a 20% deposit guideline in my head but I might be way off with this! Thanks

chris85

Jimmmy McNulty wrote: »

Yeah I don't have any debt or anything so I'm fine there and I'm decent at saving. Do you have any idea of what kind of loan to value ratio they would find acceptable? I have a 20% deposit guideline in my head but I might be way off with this! Thanks

They will talk about loan to value (LTV). This is ratio of the loan to how much the property is worth. Basically this is the max the bank will give you and the rest you will need to get together.

The max LTV ratio with one bank is 92% but realistically they arent giving this out and the max LTV ratio you will get is 80%. So basically 20% of the price you will need to get together and you already have this figure in your head so thats good.

Also the more you stump up for deposit you get together the lower the LTV ratio will be and a lower LTV ratio usually means you will get a better rate on the loan.

killers1

Jimmmy McNulty wrote: »

Hi all,

I'm currently out of the country but I have heard so much about how hard it is to get a mortgage in Ireland these days. I'm not a home owner but I think I would like to purchase something in the next year or so. I'm single and in my late 20's.

What are the banks looking for from me in order to make me an attractive mortgage candidate? Due to reduced prices in Ireland I think I could restrict my spending to the low 200's when I do buy something.

Any thoughts on the matter would be appreciated.

Thanks,

Jimmy

Jimmy,

Are you working abroad and when you apply for your mortgage will you be working in Ireland? This will have a huge impact on your application. If you are living here the majority of banks will insist you are in a permanent position for 1 year prior to applying (AIB will consider if 6 months in permanent employment). The max loan to value is 92% (and yes it is still being given). Some banks offer 90%, some 85% & the rest are at 80% ltv. If you are buying the property and working abroad you will find it hard to convince a bank that you are buying a 'home'. In this case you are probably looking at a loan to value of closer to 50% and investment loan rates. The criteria that banks are assessing applications on are twofold. Firstly they assess your income to see what figure that allows you to borrow. Secondly they look at the stressed repayment on that figure to see if you have proven that you can meet the repayments on a monthly basis. Repayment capacity is proven by way of rent payments, loan repayments, savings etc. e.g your salary qualifies for a loan amount of €200k. The stressed loan repayments are €1,200pm. You have been paying rent of €600 for the past year & putting €600pm into a savings account for the past year. You have sufficient savings to cover 8% deposit, stamp duty, legal fees & fit out. Bank will be happy to lend to you....

dgworkshop

Hi im new to all this , Im 27 My girl friend is 28 i had my own buissness for 4 years didnt work out but im now working the last 6 months earning 600 euro per week bringing home after tax ive just cleared all my bills here and there {family members } no bad credit thank god BUT MY QUESTION IS i want to buy a house for about 220,000.00 euro for my self my girl friend and two children 2 and 9 years old as i said i earn 600 per week my girlfriend is not working 200 per week dole due to no work i really dont know how to go about things the way things in this contry where do i save aib or ptsb can any one give me any advice pls How much SHOULD i save per week do i have to speak to the people in the bank and tell them i want to save for a morgage i really dont know wat to do Help How long does it normally take to save to be approved We just want are own home thanks

chris85

dgworkshop wrote: »

Hi im new to all this , Im 27 My girl friend is 28 i had my own buissness for 4 years didnt work out but im now working the last 6 months earning 600 euro per week bringing home after tax ive just cleared all my bills here and there {family members } no bad credit thank god BUT MY QUESTION IS i want to buy a house for about 220,000.00 euro for my self my girl friend and two children 2 and 9 years old as i said i earn 600 per week my girlfriend is not working 200 per week dole due to no work i really dont know how to go about things the way things in this contry where do i save aib or ptsb can any one give me any advice pls How much SHOULD i save per week do i have to speak to the people in the bank and tell them i want to save for a morgage i really dont know wat to do Help How long does it normally take to save to be approved We just want are own home thanks

Firstly you will have to be in a permanent job in Ireland in order for them to give you a mortgage.

Also they will lend a maximum 4 times your salary so that would be about €120k is the max they would even consider.

Jimmmy McNulty

killers1 wrote: »

Jimmy,

Are you working abroad and when you apply for your mortgage will you be working in Ireland? This will have a huge impact on your application. If you are living here the majority of banks will insist you are in a permanent position for 1 year prior to applying (AIB will consider if 6 months in permanent employment). The max loan to value is 92% (and yes it is still being given). Some banks offer 90%, some 85% & the rest are at 80% ltv. If you are buying the property and working abroad you will find it hard to convince a bank that you are buying a 'home'. In this case you are probably looking at a loan to value of closer to 50% and investment loan rates. The criteria that banks are assessing applications on are twofold. Firstly they assess your income to see what figure that allows you to borrow. Secondly they look at the stressed repayment on that figure to see if you have proven that you can meet the repayments on a monthly basis. Repayment capacity is proven by way of rent payments, loan repayments, savings etc. e.g your salary qualifies for a loan amount of €200k. The stressed loan repayments are €1,200pm. You have been paying rent of €600 for the past year & putting €600pm into a savings account for the past year. You have sufficient savings to cover 8% deposit, stamp duty, legal fees & fit out. Bank will be happy to lend to you....

I am currently in a full time position abroad and don't plan on living in Ireland in the short term. I was just thinking of buying something for when I come home. I don't plan on using it as an investment property as I would like to buy it as a first time buyer. For the sake of getting a rental income off it for a year or so and paying tax on that, I would be safer to put some family memeber living in it for free until I take it back would I? It wouldn't be worth paying the extra stamp duty. It sounds like the living abroad thing is going to make things difficult for me even though my ability to pay the mortgage is greater.

I won't have much difficulty proving my saving patterns. I typically put away 1,500 euro per month after I have paid my rent and other living expenses. I think I should be able to afford the repayments with that.

Zane97

I got mortgage approval in 3 days. Showed our regular savings by standing order with a credit union statement. Neither of us have a state job or are on big money

Had the deposit saved and they are giving us 92%

mmc2010

I haven't been saving much over the past 10 months as I have been paying off a loan at 700 extra per month. Do you think this would sufficiently show repayment capacity. The loan will be repaid in Jan so this should prove that I have €1000 extra per month rep cap( 306 normal repayment + 700 extra ). Do you think the banks would see it as such or will they make me wait another 6mths before they consider me for a mortgage?
Thanks

Jim2007

dgworkshop wrote: »

We just want are own home thanks

Why? I know it's every Irish person's dream, but if we have learned anything at all over the last few years it is that mindless following that dream is the road to financial destruction! The majority of Europeans do not own their own homes, nor do they aspire to do so, in fact many consider it very risky to sink all your money and then some in a single property that you may or may not be able to sell when you need to. In stead they rent a small property starting out, move to something bigger when the family come along and move back to a small property at retirement, with possibly a further hop to a town later on to be near medical facilities. Another rule of thumb that is common in Europe is that housing payments (rent or mortgage) should not account for more than 20% - 25% of your monthly income...

Applying the more typical European lending norms to your figures would suggest that your borrowing capacity should be about €80,000 - €100,000 (long ago when I was a boy these were the kind of figures Irish banks used to use too!). Once you go beyond those kind of figures you are starting to move into areas where you could very easily find yourself in serious financial difficult should things go wrong.

If you can find a reasonable place to rent that suits your family, I'd say it would be by far the most prudent thing to do financially, although not the popular move.

chris85

Jim2007 wrote: »

Why? I know it's every Irish person's dream, but if we have learned anything at all over the last few years it is that mindless following that dream is the road to financial destruction! The majority of Europeans do not own their own homes, nor do they aspire to do so, in fact many consider it very risky to sink all your money and then some in a single property that you may or may not be able to sell when you need to. In stead they rent a small property starting out, move to something bigger when the family come along and move back to a small property at retirement, with possibly a further hop to a town later on to be near medical facilities. Another rule of thumb that is common in Europe is that housing payments (rent or mortgage) should not account for more than 20% - 25% of your monthly income...

Applying the more typical European lending norms to your figures would suggest that your borrowing capacity should be about €80,000 - €100,000 (long ago when I was a boy these were the kind of figures Irish banks used to use too!). Once you go beyond those kind of figures you are starting to move into areas where you could very easily find yourself in serious financial difficult should things go wrong.

If you can find a reasonable place to rent that suits your family, I'd say it would be by far the most prudent thing to do financially, although not the popular move.

+1

Agree mostly with this. Its the biggest purchase most will ever make and also the most stressful thing most people will ever do in their lives.

Long term renting is the norm in many European countries. However the tenant is better looked after in other countries.

You have no need to buy at moment. You are out of the country and the sole income and yet you wish to rent where you are and also purchase abroad. You must be Rockefeller or something!

Jimmmy McNulty

chris85 wrote: »

+1

Agree mostly with this. Its the biggest purchase most will ever make and also the most stressful thing most people will ever do in their lives.

Long term renting is the norm in many European countries. However the tenant is better looked after in other countries.

You have no need to buy at moment. You are out of the country and the sole income and yet you wish to rent where you are and also purchase abroad. You must be Rockefeller or something!

HaHa! Fair point. I wouldn't say I want to purchase abroad as I am from Ireland and wish to move home. It looks like I should just get a decent deposit together, switch employment to Ireland and buy when I have done that. Cheers