Mortgages 2013

slimshady007

Myself and my OH have applied for a mortgage on a property. The house is currently at a "builders finish" where doors, skirtings and painting are completed. Flooring, kitchen, etc is not complete.

We assumed we would get the price of the property and then use our own money to do it up - we'd only be doin the bare essentials and then completing the rest when we'd have the money. The bank came back and asked us to get a surveyor to complete a detailed costings form they supplied whick came to almost €50k.

We consider this to be outrageous but bank are insistent that this amount plus the price of roperty is the amount that the mortgage must be taken out for. There were a number of unnecessary items on this form - to give you an example there was landscaping and tarmacced driveway which alone came to almost €15k.

Has anyone else experienced this before? Are there other banks out there where they may be more understanding regarding the above. The bank we're dealing with at the minute is AIB.

D3PO

AIB have the best rates on the mortgage market right now by a significant distance.

I dont really see the problem if you are going for a variable mortgage. If you wanted 100k for example and they are insisting 150k take the 150k and then either

a) spend what you need form the 50k to bring the place to the finish you require and pay the rest back as a lump sum overpayment

or

b) draw it down and return the 50k as an overpayment immediatly.

There is no disadvantage here for you also bear in mind that a mortgage is the cheapest loan rate you will ever ever get so if you were intending to get a loan at some stage for finishing the property then its actually advantageous to you.

Also bear in mind that AIB are much cheaper than other banks so even with taking out this extra 50k you will probabkly find your monthly outgoings (should you chose to use that 50k) will be little higher than if you drew down the original amount with another lender (dependent on the original amount you needed of course)

killers1

Knowing AIB they are more likely looking for you to put your funds towards the initial purchase and they will release stage payments as the works progress. This reduces their initial exposure on the unfinished property as you are contributing more than intended to the purchase price. By releasing funds on completion of the works that are satisfied that the works have been carried out and their security is protected. AIB also always look for a costings template where any works are proposed. If the surveyor has come up with a list of costs etc there is nothing to stop you providing a quote of your own from a builder and argue the difference with them. You should have discussed the costings in detail before submitting them to the Bank. Ultimately the Bank are reluctant to lend all the funds for you to purchase the house as there is no guarantee that you will ever complete the works and they don't want another unfinished property to try to sell in the event of a default. It makes sense in their eyes for you to put more towards the contract price and then release monies to pay for the works on completion.

slimshady007

Thanks for the replies.

Yes, we looked at all the different lenders and came to the conclusion that AIB were offering the best rates. They've actually just been back in touch to say they wouldnt offer loans to include cosmetic items such as painting (why they have these on their costings form if they dont offer loans for them I dont know). In any case their sending me out the form again for the surveyor to complete again based on the feedback they've given (no doubt will have to pay him the same fee again to do this). I'm not sure I could give it back to them as a lumpsum though as the vibe I got from them was that they would be doing a valuation of the property when the work was completed to ensure that the property was at a "finished" state.

ACA2009

All,

I only just registered today to vent my anger and dissappointment. Let me fill you in on the reason why and I would appreciate if anyone has feedback or advice.

I am a 29 year old Chartered Accountant earning €50k per annum, with €18k of savings (I got married last year and had to restart the savings!). I started a permanent job last July and I am well past my probation period.

I applied in January for a €170k mortgage, I was planning to use €20k of that for a site. After jumping through hoops for two months they told me today that they have declined my application, citing that they believe a 1900 sq ft bungalow will cost €161k and that if my savings are taken over 12 months I was only saving 400 euro per month (in fact I have been saving anywhere from €1k to €1.8k per month since August.)

They refused to take my wifes earnings into account as she is not permanent.

There is something seriously wrong with society if earnings and savings like this cannot get you a mortgage. I am now thinking of headig for Canada next year as this country is goosed.

Shedite27

ACA2009 wrote: »

There is something seriously wrong with society if earnings and savings like this cannot get you a mortgage. I am now thinking of headig for Canada next year as this country is goosed.

I'm sure others will reply to your comments about your mortgage situation but as someone who lived in Canada, if you think it's going to be any better over there to buy a house forget about it - they're on a huge property bubble at the moment

roro2

ACA2009 wrote: »

After jumping through hoops for two months they told me today that they have declined my application, citing that they believe a 1900 sq ft bungalow will cost €161k and that if my savings are taken over 12 months I was only saving 400 euro per month (in fact I have been saving anywhere from €1k to €1.8k per month since August.)

You never said what the problem with their €161k estimate is.

If you save for another 5 months, you'll have fulfilled the 12 month requirement and have an extra €5k - €9k. You don't have much to spare at the moment with €18k of savings against a purchase/build cost of around €180k. This would be pushing the max LTV for the purchase of an existing property, but you'll only get a lower LTV for a self-build anyway. Plus most banks won't even consider an applicant with less than 12 months of permanent employment. Based on what you've provided, it's not surprising that you've been turned down. But it also appears you'd stand a much better chance in 6 - 12 months.

killers1

ACA2009 wrote: »

All,

I only just registered today to vent my anger and dissappointment. Let me fill you in on the reason why and I would appreciate if anyone has feedback or advice.

I am a 29 year old Chartered Accountant earning €50k per annum, with €18k of savings (I got married last year and had to restart the savings!). I started a permanent job last July and I am well past my probation period.

I applied in January for a €170k mortgage, I was planning to use €20k of that for a site. After jumping through hoops for two months they told me today that they have declined my application, citing that they believe a 1900 sq ft bungalow will cost €161k and that if my savings are taken over 12 months I was only saving 400 euro per month (in fact I have been saving anywhere from €1k to €1.8k per month since August.)

They refused to take my wifes earnings into account as she is not permanent.

There is something seriously wrong with society if earnings and savings like this cannot get you a mortgage. I am now thinking of headig for Canada next year as this country is goosed.

What did you submit the cost per sq ft for the build as? I take it you applied to AIB based on the response you got back..? They work off a circa €85 per sq ft cost to build so you would need to be coming in at close to this level (obviously where in the country you are will have an impact). If the cost per Sq Ft came in at the Bank's target level you could have made an argument over your repayment capacity evident over the past 6 months as opposed to 1 yr (they've given you a bit of an excuse here) but the main reason for the decline IMO is that you have submitted in their eyes an unrealistic build cost. They would also like to see you have more savings in the background to cover any cost overruns etc..

ACA2009

Yes Killers1, sorry, it was with AIB and you are right about the 85 per sq foot. I didnt submit any costings as they simply asked what size house I planned to build, so I said between 1800 and 2000. I think they based it on 1900. I'm living in rural county Limerick. What annoys me is that my family are all in the building trade and I could build the house for far less then 85 per sq foot. Also, I had planned to build in a contingency which would still come in below cost. However, I am going to try Ulster Bank as I have met with them already and they seem to be a bit more approachable.

ACA2009

Would not be considering buying over there, just working. Have you been there long? What is your advice on living in Canada?

killers1

ACA2009 wrote: »

Yes Killers1, sorry, it was with AIB and you are right about the 85 per sq foot. I didnt submit any costings as they simply asked what size house I planned to build, so I said between 1800 and 2000. I think they based it on 1900. I'm living in rural county Limerick. What annoys me is that my family are all in the building trade and I could build the house for far less then 85 per sq foot. Also, I had planned to build in a contingency which would still come in below cost. However, I am going to try Ulster Bank as I have met with them already and they seem to be a bit more approachable.

As an unwritten rule AIB generally look for applicants to have circa 20% of the build cost in savings to cover cost overruns etc, particularly if you plan on going down the self build route. I'd imagine it was the lack of savings and cost per sq ft that led to your decline. Fingers crossed you'll have better luck with Ulster Bank, they wouldn't be as stringent as AIB when it comes to self builds. Be sure to details costings, explain that family are in the trade and point out where savings will be made so that you build cost is realistic.

Shedite27

ACA2009 wrote: »

Would not be considering buying over there, just working. Have you been there long? What is your advice on living in Canada?

Sensational spot to live, very different culture to Ireland tho. If you're into outdoors you'll love it. I was and loved it, my gf wasn't and hated it. Social life is strange, no real pub culture, restaurant culture etc. Very different from Ireland from that point of view.I was there 2 years. As for house prices, I was in Vancouver and house prices there are absolutely ridiculous. Probably worse than Ireland 6 years ago in that the houses that were selling for millions were of a worse quality.

ACA2009

Thanks to you both for your advice, I will keep you posted on Ulster Bank.