Mortgage advice

Peterss1

Hi was wondering if anyone could give advice to me.

Me and my girlfriend recently got refused a mortgage from AIB on the grounds that my girlfriend is not a permanent contract. She is temporary ongoing at the moment and is guaranteed a permanent contract 1st of February. She got a letter from her job sayin this bit the bank said that although all our financials are ok that this is the reason we were rejected.

Our situation is:
I earn 42000 a year. She earns 26000.
I am permanent in the job 2 years. She is in her job 20 months.
We have savings of 22000.
We got 10000 off her mother. And have a gift note confirming this. We rented for 6 months but are now in my parents house. All rent paid can be seen in our account statements. We have saved 400 a week into a joint account for over 6 months. And are still saving that amount and now and more here and there.

We would be lookin for a mortgage of between 200 and 220k.

Does anyone think we should approach other banks or would a broker be the best??
Or have we no hope either way.

Any advice would be great.

miller50841

Hi one thing I would say don't rush into things and try and save a little more each month if possible.

Also if you waited till February you would have another bit saved and the gf would be permanent.

The banks are lending again but the rules are a lot tighter and they want to make sure you will both be up to paying the money each month.

Did you try your own bank that you do your actual banking with if not try them 1st then try a few others as there is no harm in calling around treat it like shopping around for insurance.

The_Conductor

They are a lot stricter at using income multiples these days than they used be.
For example (and this is just an example)- typically you might be offered a mortgage to a max of:

4 times the higher salary and half the secondary salary-
subject to

Mortgage LTV ratio of 90% or less
Repayments of lower than 35% of NET salary
History of repayments
The positions on which the salary multiples are being calculated being permanent and not contract in nature

Etc-

Using rules like this- would barely get you over the 200k starting line- 220- is probably a stretch.

Killers1- is a broker who hangs around these parts- and has been helpful to a number of Boards members in situations not dissimilar to you. I would always suggest talking to a broker- as they are in a better position to know what is currently happening in the market.

BOI, AIB and PSTB- are all going to be implementing new capital rules, ahead of their hand-over for governance to the ECB next year (they are 3 of the 130 EU banks going to be controlled directly by the ECB rather than the central bank going forwards). I would suggest that the rules governing loans are going to be applied ever more rigorously going forwards- you will have leeway in the market place (relatively speaking) for the next 6-8 months, that is going to evaporate thereafter.

Talk to a broker. Don't be in any hurry to buy. Most people your ages might be trying to leave as many options open as possible- as long as possible- investing a quarter of a million in real estate- is something that is going to tie you to a particular area- career paths, family choices etc- for a long long time to come. Is this something you want to do? Have you discussed all the possible options objectively amongst yourselves? Buying property is not the be-all and end-all.

Hi OP

Your situation sounds somewhat similar to my own. The end result was identical....refusal!!

I had applied directly to AIB and they refused despite me having a secure job on a similar salary to your own.

After being refused I found a few threads on here where people had suggested using a mortgage broker who frequently posted on boards. Killers http://www.boards.ie/vbulletin/member.php?u=143901

I got in touch with him and pretty soon he had the ball rolling. He advised on what I could potentially borrow I supplied him with all the documents he needed and that was it. He did all the work and I mean all!! He kept me in the loop at all times and I always knew what was going on.

More importantly for me he explained the fancy jargon into lay man terms and he explained all the ins and outs of the application.

I had approval in principal within a very short period of time and when it came to drawing down the funds there was no problems.

I couldnt recommend Killian highly enough. He doesnt charge and as I have said always had me up to date with where things were. All calls were answered or returned promptly. He really took the hassle and hardship out of my application.

The guy even rang me to see how we were settling in after a week in our new home!!!

Get in touch with him is my advice. He will give you good honest and realistic advice and wont jerk you around.

Peterss1

Thanks for the suggestions guys. I've got in touch with killian so fingers crossed we'll see some light at the end of the tunnel. Thanks again.

Rois14

The_Conductor wrote: »

BOI, AIB and PSTB- are all going to be implementing new capital rules, ahead of their hand-over for governance to the ECB next year (they are 3 of the 130 EU banks going to be controlled directly by the ECB rather than the central bank going forwards). I would suggest that the rules governing loans are going to be applied ever more rigorously going forwards- you will have leeway in the market place (relatively speaking) for the next 6-8 months, that is going to evaporate thereafter.

Would you suggest that variable mortgages could be a bad idea based on this? And would you recommend taking on a mortgage before ECB governance comes into play?

The_Conductor

Rois14 wrote: »

Would you suggest that variable mortgages could be a bad idea based on this? And would you recommend taking on a mortgage before ECB governance comes into play?

Variable mortgages- as opposed to fixed term mortgages? Tracker mortgages- have been extinct for a few years now- they don't exist any more- the skeletons of them are still around in the remains of many Tiger era mortgages.

My point- is that we are renowned in the western world for our lack of proper oversight of our financial sector. The Germans used laughingly call us the 'Wild West'- unfortunately- its come back to bite us.

It looks increasingly likely that a not insignificant number of ECB oversight posts are going to be held by career civil servants from Frankfurt- the German's yesterday announced a scheme to treat the ECB like any other German government Department and to actively encourage employees of the German Central Bank move between the two institutions (previously- as an external body- a civil servant would have to resign their current post, or take unpaid leave of absence, in order to take up employment in the ECB.

So- expect our 3 pillar banks (BOI, AIB and PTSB) to resemble sensible banks from the continent in future. If this also introduces fixed term mortgages- aka mortgages with interest rates fixed for the entire term of the loan- brilliant- however, I'm not going to hold my breath.

The point I was making- is while lending may be constrained here- the Irish banks have not even really begun to face up to the enormity of their bad debts. Oversight from the ECB- is going to speed this up. Unless they can massively recapitalise at favourable rates- the opposite side of the equation- is a further constriction in loan approvals- and increases in interest rates being demanded.

The major benefit of all this- is it will force the pillar banks to actually face up to their mess- however- the Irish public, are once again going to bear the burden of this navel gazing.