Mortgage application difficulty

littlebsci

My husband and I have just started applying for a joint mortgage and are getting absolutely nowhere with the various lenders.

- I'm a permanent secondary teacher on 46,500
- My husband is permanent on 45000 with a guaranteed bonus of 10,000
- Combined savings of 55,000
- Monthly rent of 1,000
- Save 550 per month combined
BUT
- He jointly owns an apartment with an outstanding mortgage in negative equity so it can't be sold
- Apartment is rented which covers half the mortgage repayments

We were hoping to get in the region of 240,000 but so far the highest we've been told there's even a chance of is 160,000. Any advice? Or can you recommend a broker that's worth going to?

B

Someday

Did you go to Ulster Bank? Its tough and a complete Joke if you ask me, holding back the recession!

littlebsci

Someday wrote: »

Did you go to Ulster Bank? Its tough and a complete Joke if you ask me, holding back the recession!

Yeah, they have decided that the only part of my salary they'll take into consideration is my "basic" and not all my allowances which are allowances in name only....part of my salary end of! And they won't take my husbands guaranteed bonus either even though they ask on their site if you have other income such as this....don't get it!!! As a result they're looking at even less than 160,000.

pwurple

We have rented property in neg equity, savings and double income.
We were in slightly better position in that rent is more than covering mortgage...

Our highest approval was with KBC.

godtabh

Your savings seem low (€550/pm). Myself and my wife save about 3 times that and we would be on similar money. What are the rest of your outgoings?

littlebsci

pwurple wrote: »

Our highest approval was with KBC.

So far they're the highest for us too....definitely doesn't bode well!!

littlebsci

godtabh wrote: »

Your savings seem low (€550/pm). Myself and my wife save about 3 times that and we would be on similar money. What are the rest of your outgoings?

I save 250 every 2 weeks and he saves 150pm.
My other outgoings would be rent, household bills, he has the same and the shortfall on his mortgage.

roro2

littlebsci wrote: »

- He jointly owns an apartment with an outstanding mortgage in negative equity so it can't be sold
- Apartment is rented which covers half the mortgage repayments

This is the main issue. Although he may jointly own it, he presumably has joint and several liability for the full debt, so the banks will assess him on the basis that he is liable for the full amount outstanding. The rent only covers half of the repayments - and it may cover less if (when) interest rates increase. Some banks also ignore the rental income in their calculations on the basis that the rent is not guaranteed.

Depending on lots of factors including the amount of negative equity, etc., a longer-term solution may be to look at selling this property and converting the shortfall into a personal loan. Some savings could be used to cover a portion of the shortfall as a sweetener for the bank to accept this proposal. Not an easy decision to make, but the property is costing him on an ongoing basis as well as restricting his access to credit now.

littlebsci

roro2 wrote: »

This is the main issue. Although he may jointly own it, he presumably has joint and several liability for the full debt, so the banks will assess him on the basis that he is liable for the full amount outstanding. The rent only covers half of the repayments - and it may cover less if (when) interest rates increase. Some banks also ignore the rental income in their calculations on the basis that the rent is not guaranteed.

Depending on lots of factors including the amount of negative equity, etc., a longer-term solution may be to look at selling this property and converting the shortfall into a personal loan. Some savings could be used to cover a portion of the shortfall as a sweetener for the bank to accept this proposal. Not an easy decision to make, but the property is costing him on an ongoing basis as well as restricting his access to credit now.

Oh I know you're right! We have quickly realised in the last week that he was going to be considered liable for the whole lot of it. Problem there was that late last year when we had a look around a couple of institutions told us that they'd only hold him liable for half the mortgage and we didn't realise that this had changed! So we toddled off to the banks expecting to be in a good position coz we have more savings etc....ah well!

I don't think selling it is an option at the moment coz the negative portion is rather large! But I completely understand what you're saying.

Icepick

Good to hear that banks are not giving out crazy mortgages for now.

The_Conductor

Would the 55k in savings be sufficient to clear the NE associated with the apartment? Or at least your partner's portion of the NE? Would the other owner be amenable to disposing of the property- and in a position to sort their portion of the NE?

Getting rid of the apartment- even if it ate up your savings- might be preferable to other courses of action- of course you'd then have to rebuild your savings- however, as you'd no longer have to worry about paying half the mortgage that the rent doesn't cover- it would be lots easier to save too.

With respect of the allowances and bonuses not being counted- this is normal- only core pay is counted- regardless of how guaranteed or definite those bonuses and allowances may be. If you're in the public sector- don't count on the allowances being safe, despite Haddington Road- the government have form on rowing back on their word and mauling the public servants- and letting the media spin it as a positive thing. Seriously- don't take any of it for granted.

littlebsci

The_Conductor wrote: »

Would the 55k in savings be sufficient to clear the NE associated with the apartment? Or at least your partner's portion of the NE? Would the other owner be amenable to disposing of the property- and in a position to sort their portion of the NE?

Getting rid of the apartment- even if it ate up your savings- might be preferable to other courses of action- of course you'd then have to rebuild your savings- however, as you'd no longer have to worry about paying half the mortgage that the rent doesn't cover- it would be lots easier to save too.

Although I see where you're coming from on this I don't think that the guys will be able to do so. And to be totally honest, half of "our" savings are mine and I've worked hard to save that money over the last few years so I'd hate to see my good money being thrown after their bad! And yes I know that probably sounds ridiculous but I can't help it!!!

With respect of the allowances and bonuses not being counted- this is normal- only core pay is counted- regardless of how guaranteed or definite those bonuses and allowances may be. If you're in the public sector- don't count on the allowances being safe, despite Haddington Road- the government have form on rowing back on their word and mauling the public servants- and letting the media spin it as a positive thing. Seriously- don't take any of it for granted.

As it happens we haven't even accepted Haddington Rd yet so God knows what will happen...it's such a shame that they were not just classified as part of core pay. This is just one of those things that's frustrating coz when I went to BoI on our behalf last year they had no problem taking my full salary into account....nothing I can do about it now though!

pwurple

Well, if KBC offered that amount, all I can say is maybe look in that price bracket. You have ~210k to purchase with there. Not a small amount of money, especially in todays market.


I would not put all your savings in that debt. You would have no deposit at all then. Banks require large deposits for mortgages. You would be shooting yourself in the foot.

You are saving 6k a year, can you rent another two or three years? That's another 20k to addto the pot.

theteal

How much is the mortgage on his property per month? Would it not be feasible to move in there and save a bit more for a while?

The_Conductor

theteal wrote: »

How much is the mortgage on his property per month? Would it not be feasible to move in there and save a bit more for a while?

I was thinking this too. If the rent is only covering half the mortgage- it must be less than the rent you're paying at the moment? Obviously you'd be paying half the rent to the co-owner, and still have to cover half the mortgage on the property- but your outgoings would be a good deal lower, surely?

D3PO

The_Conductor wrote: »

I was thinking this too. If the rent is only covering half the mortgage- it must be less than the rent you're paying at the moment? Obviously you'd be paying half the rent to the co-owner, and still have to cover half the mortgage on the property- but your outgoings would be a good deal lower, surely?

they would have to be massively lower, no taxable income on the rent aswell, likewise for the other owner so he she should be very ameniable to it.

littlebsci

We're looking to move into/buy somewhere bigger. We don't have enough space where we are at the moment and would actually have even less in their place. But I fully understand the financial benefits of doing so as have been described above.

If we can't get the house we have in mind we'll just have to stay renting and see how we get on over the next year or so. Not that it can surely get better given that prices are on the increase in the areas we'd like to settle in!

Thanks for the advice, we'll take it on board and see what we can work out!

noodler

The_Conductor wrote: »

With respect of the allowances and bonuses not being counted- this is normal- only core pay is counted- regardless of how guaranteed or definite those bonuses and allowances may be. If you're in the public sector- don't count on the allowances being safe, despite Haddington Road- the government have form on rowing back on their word and mauling the public servants- and letting the media spin it as a positive thing. Seriously- don't take any of it for granted.

Soapbox, soapbox for the Conductor!

Maximus_1

Have recently been approved for a mortgage and despite our combined earnings being a modest 50,000 (so much much less than OPs) we were saving the same per month, sometimes 600, for 3 years (even with my wife being on maternity leave for 7 months we kept it up). Ulster Bank where we got approved were really stringent about our savings record so if possible OP I would be looking to dramatically up that if at all possible.