Negotiating mortgage rates?

rodge123

Hi All

My girlfriend and myself were thinking of buying a house next year at some stage.

First time buyers with combined gross income €100k and deposit of about 80k.
No debts, no kids or loans, good credit ratings and both in permanent employment for last 7 years (lucky I know).
Both 29 and in good health.

1: What value of a mortgage could we expect to get?

2: Do banks allow negotiating of rates? i.e. could you get less than advertised on their sites?

Thanks

magoko101

Not sure on the amount ull be able to borrow.... but not a hope ull be able to negotiate a rate discount.... ull be lucky not to see it go up.

The banks are still fubard n have a finite amount they can lend. With them still losing money hand over fist n reposession season about to begin...you need them more than they need u re the mortgage.

chris85

Ok say a rule of thumb is 4 times gross earnings so €400k is what they could lend. Obviously its not this straightforward but its a rough idea. Also would need 8-10% deposit but you seem ok deposit wise for this.

You will have no chance negotiating rates, but the bigger the deposit the lower the LTV and thus could get better rates by using more of your 80k savings.

jamesjoyce1710

no chacne of negotiating a rate tbh, you get what they advertise unless ur a lagre institutial borrower. we were in a similar situation as you last yr, combined income of 120k, deposit of 120k and we got a max (after a lot of pushing) 320k
more so than ur income they will focus on what you can pay a month, rent + savings - loans and and other expenses, and then add a stress test of 3% increase in the rate, giving you a max a month they feel they will be able to pay.

Maximus_1

Recently went through the application process and the rates are as advertised end of story. You sound though like you are in a good position. As long as you can show that each month you were paying X in rent, saving Y and generally not being silly with money (gambling debts on credit card, stuff like that) you sound like you will sail through the process as long as you are looking for a sane amount!

drunkmonkey

You can get the rate down by getting the L

rodge123

Thanks for all the replies guys.

Another question:
So I looked at various banks websites and they have 1/2/3/5/10 year fixed rates and also variable rates.

The variable rates appear to be lower.

How often to these variables change and by how much roughly?
Are they set at a few points above the ECB rate? Will they usually go up if ECB rates go up?

What are some of the pro's and con's of variable vs fixed?

jester77

rodge123 wrote: »

Thanks for all the replies guys.

Another question:
So I looked at various banks websites and they have 1/2/3/5/10 year fixed rates and also variable rates.

The variable rates appear to be lower.

How often to these variables change and by how much roughly?
Are they set at a few points above the ECB rate? Will they usually go up if ECB rates go up?

What are some of the pro's and con's of variable vs fixed?

You are at the mercy of the banks when it comes to variable rates. They usually move with the ECB rates but I've heard the Irish banks are not passing on recent decreases to their customers. Fixed rates usually cost a bit more but with rates been historically low it is a good option to fix for long term. Rates are at rock bottom and are certain to rise at some point during the duration of a mortgage. I was recently able to negotiate a good deal with my bank here and got a 20 year fixed rate for just over 3%. It gives peace of mind not having to worry about rate increases for a long time.

StillWaters

Jester you didn't get that fixe rate here. In Ireland fixed ratesare for a much shorter period <5 years

murphaph

StillWaters wrote: »

Jester you didn't get that fixe rate here. In Ireland fixed ratesare for a much shorter period <5 years

Yup, Irish mortgage lending is simply too risky to attract the pension funds and life assurance companies that invest into long term German mortgage lending. It's ironic but if it was easier and faster for a bank to quickly recover the house of a non-paying mortgage holder (as it is in Germany), then these long term (20 years is common) fixed interest rates would be available.

Scortho

The bank can put variable rates up as often as they like it seems at the moment.
In fact with most recent ecb falls, the rate has actually increased for the variable rate mortgages fairly soon after.

There doesn't seem to be any advantage with paying a variable rate, if the fixed rate is very close to it. Especially with the current trend for variables.

Henry Ford III

chris85 wrote: »

Ok say a rule of thumb is 4 times gross earnings so €400k is what they could lend. Obviously its not this straightforward but its a rough idea. Also would need 8-10% deposit but you seem ok deposit wise for this.

You will have no chance negotiating rates, but the bigger the deposit the lower the LTV and thus could get better rates by using more of your 80k savings.

That's nuts imho.

Factor in say 2 kids and childcare and the sums no longer add up.

Scortho

Henry Ford III wrote: »

That's nuts imho.

Factor in say 2 kids and childcare and the sums no longer add up.

There'd be very few banks out there nowadays who wouldn't factor children coming along in the near future into their stress tests.

But from an affordability point of view if be stressing it before I even thought of applying with a whole load of what ifs?

Henry Ford III

chris85 wrote: »

Ok say a rule of thumb is 4 times gross earnings so €400k is what they could lend....

That's nuts imho.

Factor in say 2 kids and childcare and the sums no longer add up. Unwise lending and borrowing got us into the mess we're in. I pray to J it doesn't happen again.

killers1

No bank in Ireland currently stress tests on the possibility of having kids in the future. You either have dependents or you don't from a calculation point of view.

The_Conductor

killers1 wrote: »

No bank in Ireland currently stress tests on the possibility of having kids in the future. You either have dependents or you don't from a calculation point of view.

They may not factor it into their calculations- they certainly ask though- I have been verbally asked this by BOI and AIB in the past 2 days, and have an appointment with their lending advisors this afternoon. BOI sound more positive- however also more probing with their questions. I'm guessing I'll have realms of paperwork to start completing this evening.........

chris85

Henry Ford III wrote: »

That's nuts imho.

Factor in say 2 kids and childcare and the sums no longer add up. Unwise lending and borrowing got us into the mess we're in. I pray to J it doesn't happen again.

Its a rough rule as mentioned, obviously other factors to consider. They were giving out 10 times gross earnings back in the boom!

Scortho

killers1 wrote: »

No bank in Ireland currently stress tests on the possibility of having kids in the future. You either have dependents or you don't from a calculation point of view.

Is that not a bit naive from the banks point of view though.
Surely with a couple of child bearing age, potential future costs associated with children should be taken into account regarding repayment capacity?
Afterall crèche fees are equivelent to a second mortgage

rodge123

So I'm thinking we could afford payments of about 2k a month without putting us under pressure. (We would also save 300 each month in addition to this for contingency fund for repairs, etc...).
This would leave us with about 600 after all bills, socializing, etc..

Would the bank insist on us taking out insurance also? Would this add much to our monthly costs?

What other fixed costs should we factor in to monthly costs?

Thanks

murphaph

rodge123 wrote: »

Would the bank insist on us taking out insurance also? Would this add much to our monthly costs?

The bank is legally obliged to request that you take out mortgage protection cover (typically this costs no more than a couple of hundred a year, depending on age and health).

You should (and will be required by the bank) to take out buildings insurance (and contents cover for your own peace of mind).

Buildings and contents cover depends on property type and location. Quotes are available online from several companies for all this stuff.