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Converting from investment to owner occupied mortgage

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  • 04-09-2013 10:04am
    #1
    emclau
    Registered Users Posts: 155 ✭✭


    Hi,
    I am living abroad and want to apply for a mortgage from an Irish bank, to purchase a 3 bed house.

    However, I have been told that as I am applying for the mortgage abroad I will need to apply for an investment mortgage, which is higher interest rate than a owner occupied mortgage.

    In future, if I return to Ireland, and move into my house, can I change my mortgage to be an owner occupied mortgage?

    Has anyone had any experience in this scenario?

    Thanks!
    Tagged:


Comments

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    #2
    jimmycrackcorm
    Registered Users Posts: 14,336 ✭✭✭✭jimmycrackcorm


    It's no different than re-mortgaging an existing mortgage. Which itself is a difficult enough proposition at the moment regardless...


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    #3
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    You should be able to borrow up to 75% of the purchase price now at Investment rates and yes when you return to Ireland and occupy the property the lender should consider moving you to home owner rates.


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    #4
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Trish56 wrote: »
    You should be able to borrow up to 75% of the purchase price now at Investment rates and yes when you return to Ireland and occupy the property the lender should consider moving you to home owner rates.

    they don't move you. You would have to remortgage and the bank may or may not do that for you it will depend on the circumstances at the time of application


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    #5
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    D3PO wrote: »
    they don't move you. You would have to remortgage and the bank may or may not do that for you it will depend on the circumstances at the time of application

    You definitely don't have to remortgage to request the bank to reduce your rate to homeowners rate. It is presumed at the time you apply to the bank that you will have secured employment in Ireland and can make your repayments.


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    #6
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Trish56 wrote: »
    You definitely don't have to remortgage to request the bank to reduce your rate to homeowners rate. It is presumed at the time you apply to the bank that you will have secured employment in Ireland and can make your repayments.

    I believe your wrong. What are you basing your comments on ?


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    #7
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    I am basing my comments on experience working in the mortgage business with two lenders. All you have to do is write in to lender and confirm you have returned to Ireland and are living in the property and request that they reduce your rate to the home loan rate. Why would you go through the whole process of remortgaging which would cost between legal and valuation fees of circa €1500 just to get a rate change. Also the Op when applying for the mortgage should get clarification on this by the lender.

    As a matter of interest what are you basing your comments on?


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    #8
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Trish56 wrote: »
    IWhy would you go through the whole process of remortgaging which would cost between legal and valuation fees of circa €1500 just to get a rate change.

    the question should be why would the bank just switch you when the mortgage contract you signed was a BTL one. They have no legal obligation to do it and I would be very surprised if they would do so.

    Given how many hoops people are having to go through to restructure distressed mortgages (despite the banks saying otherwise)

    AIB in front of the Dail finance committee last week proving case in point.


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    #9
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    D3PO wrote: »
    the question should be why would the bank just switch you when the mortgage contract you signed was a BTL one. They have no legal obligation to do it and I would be very surprised if they would do so.

    Given how many hoops people are having to go through to restructure distressed mortgages (despite the banks saying otherwise)

    AIB in front of the Dail finance committee last week proving case in point.

    There's a big difference in restructuring your mortgage due to arrears and asking for a reduction in interest rate because you are occupying the house. Ulster Bank advised yesterday that they are offering an interest rate reduction under their Economic concession. I have seen this happen so am talking from experience however I did point out earlier that the OP should clarify this with the lender when taking out the mortgage


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    #10
    roro2
    Registered Users Posts: 412 ✭✭roro2


    What has a re-mortgage got to do with it? The property would already be mortgaged with Bank A and the bank would hold the deeds - there would be no need to vacate this mortgage and replace it with another mortgage in favour of the same bank. There may be another family home declaration required and maybe even a new offer letter - but that would be relatively simple and is not a re-mortgage.

    The bank would not be under an obligation to change the rate - but of course this should be clarified with the bank beforehand.


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    #11
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    roro2 wrote: »
    The bank would not be under an obligation to change the rate - but of course this should be clarified with the bank beforehand.

    You would want more than clarification you would want something in writing but like you said they are under no obligation to change the rate.

    Hence my point if they refuse to (and Id expect they would refuse) then you would need to look at remortgaging


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    #12
    emclau
    Registered Users Posts: 155 ✭✭emclau


    Hi,
    Thanks for all the replies.

    The bank called me back to discuss my application.

    As I am living abroad, they would only offer me an investment mortgage.

    The criteria were:
    30% deposit
    In full time employment (not in probation period).
    Max amount I could borrow within a multiple of my salary ( I queried an amount 3 times my salary)
    Currently saving an amount equivalent to the mortgage payment each month after all normal outgoings.

    Based on my salary I could apply to borrow 100% of the amount I wanted.

    After salary and all my monthly outgoings, I was saving very little. (Minimal amount). Bank advised I could only borrow 50% of the amount I wanted to borrow as I could not meet my monthly repayments (on full amount requested), based on normal monthly saving.

    I was told to start saving now, limit my spending over next 6 months and reapply when I had evidence of additional monthly savings each month if i wanted to to increase the amount I could borrow.

    Re, the original post, they advised I would need to renegotiate with the bank when I wanted to change from investment to owner occupied mortgage. A I knew I wasn't going to apply at this stage I did not enquire further.


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    #13
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    emclau wrote: »

    Re, the original post, they advised I would need to renegotiate with the bank when I wanted to change from investment to owner occupied mortgage. A I knew I wasn't going to apply at this stage I did not enquire further.

    I knew you couldn't just write them a letter and expect them to convert. I love how people come on here and give out definitive advice that doesn't stack up.


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    #14
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    D3PO wrote: »
    I knew you couldn't just write them a letter and expect them to convert. I love how people come on here and give out definitive advice that doesn't stack up.

    As the OP said he will have to renegotiate with the bank not remortgage at considerable expense. I gave advice based on fact that I personally sent a letter on behalf of customers to the loan servicing dept. requesting a reduction in the interest rate charged due to the mortgagor occupying the property. This reduction was granted and yes of course it is up to the particular bank to agree to the reduction but Remortrgage.....NO WAY.


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    #15
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Trish56 wrote: »
    I personally sent a letter on behalf of customers to the loan servicing dept. requesting a reduction in the interest rate charged due to the mortgagor occupying the property. This reduction was granted and yes of course it is up to the particular bank to agree to the reduction but Remortrgage.....NO WAY.


    For somebody who claims to have 20 plus years service in the banking sector you seem to have a severe knowledge gap.

    1. The bank has no obligation to reduce the rate FACT

    2. If they refuse to reduce the rate then the OP has no other way to reduce the rate than to remortgage FACT

    So you can say NO WAY all you like but the facts are the facts. You should realize this with your industry knowledge.

    Just because its happened before doesn't mean it will happen now. Banks did many things in a more lax way 5-6 years ago than they do today you seem to have totally overlooked this.


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    #16
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    D3PO wrote: »
    For somebody who claims to have 20 plus years service in the banking sector you seem to have a severe knowledge gap.

    1. The bank has no obligation to reduce the rate FACT

    2. If they refuse to reduce the rate then the OP has no other way to reduce the rate than to remortgage FACT

    So you can say NO WAY all you like but the facts are the facts. You should realize this with your industry knowledge.

    Just because its happened before doesn't mean it will happen now. Banks did many things in a more lax way 5-6 years ago than they do today you seem to have totally overlooked this.

    You're making it up as you go along.... where did I state in the post I have 20 years experience????
    My first response to the OP was that the bank should consider his request to reduce the rate and later on having been cross examined by yourself I stated I had experience of this happening.

    Where is all your experience in this??? The fact of the matter is that lender will consider and yes your right they don't have to grant a decrease. If it was the other way around and the OP was going to rent the property after living in it the bank can also increase the interest rate to Investment rates.


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    #17
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Trish56 wrote: »
    You're making it up as you go along.... where did I state in the post I have 20 years experience????

    you didn't but ive seen your other posts in this and the banking forum. Are you denying this is the case ?

    My first response to the OP was that the bank should consider his request to reduce the rate and later on having been cross examined by yourself I stated I had experience of this happening.

    Your first response was that the bank should reduce the rate with only a letter being written yes, but the response will be no sorry. It doesn't take a rocket scientist to know this, banks are losing money hand over fist, anybody that believes that writing a letter asking for a reduction will yield results is not being realistic.

    Where is all your experience in this??? The fact of the matter is that lender will consider and yes your right they don't have to grant a decrease. If it was the other way around and the OP was going to rent the property after living in it the bank can also increase the interest rate to Investment rates.

    yes they can because contractually they are allowed to. They contractually do not have to reduce the rate in the opposite scenario, so why would they ?

    you should just retract your statement and be done with it. You know your statement was incorrect so why not just accept that rather than keep going with an argument that has no merit


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    #18
    roro2
    Registered Users Posts: 412 ✭✭roro2


    D3PO wrote: »
    you should just retract your statement and be done with it. You know your statement was incorrect so why not just accept that rather than keep going with an argument that has no merit

    Your first response was "they don't move you. You would have to remortgage and the bank may or may not do that for you it will depend on the circumstances at the time of application". So do you now accept that this is incorrect and you will retract it?

    They may move you to an owner occupier rate, not simply "they don't".
    You don't have to remortgage, this would be a last resort. You can only re-mortgage with a different lender. Your reference to "the bank" indicates that you think you can re-mortgage with the same bank, this is not correct either.

    Maybe you should get your FACTS straight before attacking other posters.


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    #19
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    that's because they don't. Just because the possibility exists doesn't mean it will happen.

    I can send a letter to my bank right now and ask them to make my mortgage interest free if I so wish. I can do it but it wont ever materialize. I could post that in a thread where somebody is addressing a situation where they cannot pay their mortgage if I so wished.

    However its pointless as it doesn't address the situation in the real world, the same as advising that you can ask your bank to switch your rate in this thread fails to properly address the OP's question.

    and I never said you would remortgage with the same bank Im well aware you would have to remortgage with an alternative bank.


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    #20
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,694 Mod ✭✭✭✭Henry Ford III


    The bank has a charge on the property. That and the term of the mortgage won't change.

    The underlying interest rate being charged can be changed easily however. I don't see why they wouldn't do it either in the circumstances given. Homeloans are less expensive than buy to let mortgages. OP might have to prove that it's a bona fide home loan however.

    Just my 3c worth.


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    #21
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Henry Ford III wrote: »
    The bank has a charge on the property. That and the term of the mortgage won't change.

    The underlying interest rate being charged can be changed easily however. I don't see why they wouldn't do it either in the circumstances given. Homeloans are less expensive than buy to let mortgages. OP might have to prove that it's a bona fide home loan however.

    Just my 3c worth.

    Nobody denys it can be changed, the point is they have no obligation to do so.


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