Mortgage rejection

acdublin

Wife and I got informally turned down for a mortgage today (bank were at least kind enough not to do it formally to keep it from our record). We were absolutely amazed. I earn 50k (in permanent job), she earns 40k (contract ends in September but new 5 year one begins in December). We have 45k as deposit. We were looking for 125-150k mortgage. We have no debts, we don't pay rent, credit history is impeccable and I've been with bank for more than 20 years. We have a baby on the way in August. Was I very naive to be surprised we were turned down? This is our first foray into looking for a mortgage. It was Bank of Ireland. Any advice happily received!

jodaw

Only thing I am seeing there that would be a stumbling block would be lack of demonstrating ability to pay. You have 45K savings. Has this been saved gradually over time or a lump sum. Also not paying rent would probably count against you.

cpoh1

Bizarre scenario really. I would shop around!

iwillhtfu

Try another bank you sound like an ideal candidate. The only blemish is your wifes contract (will she be entitled to maternity leave on full pay/will she be taking maternity leave/becoming a stay at home mother? ) with that deposit and your earnings. I'd have though you'd have qualified for 150k on your own.

Liam D Ferguson

How much do you save each month? Sometimes mortgage applications can be turned down if you cannot show "affordability". If you don't pay rent then the bank would want to see that you're saving more than the mortgage repayment each month.

Did you give the bank documented evidence of the contract renewal?

listermint

Child would also be taken heavily into account.

Her job is not secure by an means and what is the maternity pay situation?


You have not rented so not demonstration on ability to pay bills in the past.


banks tend to look for model payers , creatures of habit if you will.

acdublin

Thanks for reply. The deposit has been saved consistently (though not exactly monthly) over past three or so years. Never thought that not paying rent could be a stumbling block but I suppose it contributes to the picture of ability to pay.

jodaw

acdublin wrote: »

Thanks for reply. The deposit has been saved consistently (though not exactly monthly) over past three or so years. Never thought that not paying rent could be a stumbling block but I suppose it contributes to the picture of ability to pay.

This^^^

You salaries and deposit would make you an ideal candidate

For six months save what you would be paying in rent to a landlord and also save additional savings on top of this. Without fail each and every month. Then you should have no problem.

You are being refused based on not showing ability to repay

techdiver

A crude calculation of affordability is to take rent + savings = maximum repayment capability. For each child there is a reduction and there is a standard amount of living expenses that are subtracted from net salary as affordability.

If you have no monthly rent payment and only savings, that is your only proof of repayment capacity.

So roughly speaking a €150,000 mortgage over 30 years is €761.37 per month. So you have to be saving in excess of this to be granted that mortgage.

EDIT: You should contact killers1 here on boards, who is an excellent mortgage broker.

cookiecakes

OP we had never paid rent and the bank never even mentioned it. That said, we did have a set amount of savings going out every month which was never touched. This amount was more than our mortgage payment turned out to be so this might have balanced that out.

acdublin

All things considered, I think we save about €2000 a month but, like I said, it could be €3000 one month, €1500 the next. Do we just need to take our foot of the accelerator on applications and do 6 months of putting the exact amount in each month? Thanks again for the great replies.

alibab

Unfortunately i am not surprised but i think if you shop around you may be more successful also maybe try a broker . on 50,000 a year forgetting about you wife income with one child you should have qualified as a sole applicant for about 140,000 . Is there any option to appeal there at all with BOI .

I was a sole applicant and originally 9 months ago turned down by BOI on capacity to pay as i had not been paying rent . I went away and rented as i sold my previous house kept saving monthly which i had been doing and put the head down squeaky clean bank accounts no loans and no credit card debt etc . I applied with AIB and was approved very quickly . I then went back to BOI as had banked with them for 30 years and reapplied told them i was very dissatisfied etc and the 1% offer was better off in my pocket . I did then get approved but it wasnt quick or easy with them and they kept coming back and back looking for more info but i eventually got over the line . There big thing is capacity to pay and they really want to see this .

I would give AIB a shot in your case or maybe have a chat with a broker as on your salary alone you should qualify with that deposit .

ABEasy

Just want to point out that the informal refusal wasn't them doing you a favor, rather them keeping a refusal off their records so they can claim a higher application success rate than the true figure! OP you seem to be an ideal candidate on the face of it, shop around & when one of BOI's competitors accept your application cut all links with BOI.

techdiver

acdublin wrote: »

All things considered, I think we save about €2000 a month but, like I said, it could be €3000 one month, €1500 the next. Do we just need to take our foot of the accelerator on applications and do 6 months of putting the exact amount in each month? Thanks again for the great replies.

OK. Well, imo the refusal makes no sense then, unless it's primarily due to your wife being a contractor. Your savings are well in excess of any mortgage repayment.

I would definitely contact a broker such as killers1. He dealt with our application and it was a stress free experience for us.

jodaw

The amount you are saving should also be sufficient. 1,500 one month and 3,000 next is equally good.

You would almost qualify on your salary alone.

There must be something else because everything that you outline should allow you to qualify for that amount. Have you a copy of your report from the ICB?

Did the mortgage advisor with the bank indicate why they would not proceed with a formal application? Surely something must have prevented to for making an application. Something glaringly obvious that they would not even put in a aplication?

alibab

I would also after you get approved with another competitor go back to BOI and ask them in writing to outline exactly why you were refused, In the end with BOI and me it was pure stubbornness on my part as i knew i was good enough for AIB and PTSB but i wanted that 1% back . I was very lucky also i had great backing from my own branch who really did a lot of work on it as they could see i was a perfect candidate it took 3 weeks back and forth with the underwriters etc .

Just to give you some figures i about sole applicant 2 kids on approx 50,000 a year maybe more with allowances etc as public servant and was approved for 139,000 . So really i think that you should look elsewhere . The only other thing i can think of would be a issue is if either of you and any loans at all or money at all owed on credit card ,

alibab

As someone else pointed out i would also check out your ICB asap . Have you ever even once missed a credit card payment this can be enough to have a black mark , If there is anything at all on ICB its game over banks will not even look at a application . It all just seems very strange to me . BOI would not even take my maintenance from ex husband into account they were very strict but i still qualified without this seems very unusual in your case.

Frank Lee Midere

If you get a mortgage somewhere else, leave BOI high and dry.

It does make you wonder who is buying the 400K properties.

Frank Lee Midere

I wonder if they are only taking the 50K into account ( as contractors often are just rejected). And the 2K savings a month is in a situation where you didn't pay rent, or possibly any other forced outgoings. If you saved 2K a month in the rental sector you would be in like Flynn.

I still think thats unfair though.

Little Miss Cutie

acdublin wrote: »

. The deposit has been saved consistently (though not exactly monthly) over past three or so years.

I think this is the issue OP, they will want to see that you can "afford" the payment each month. Proof of this is normally rent + savings = afford, the savings element should never be touched.

I would suggest contacting Killers1 and then also setting up a monthly DD for savings to an account that you never touch for six months

jackhammer

OP, last year I went directly to BOI for mortgage approval. Got approved and put a deposit on a house, then my approval was pulled. I nearly lost the house. Their reason:- I'm a contractor (but they knew that when they approved me).

I went to a broker and I had a mortgage with another bank (KBC) within a matter of weeks.

Another poster has advised you to appeal to BOI. I wouldn't bother if I were you. I wouldn't advise direct contact with any bank in relation to applying for a mortgage. Go to a broker, it's in the broker's best interest to get you the mortgage. My impression with dealing directly with bank staff, was that they couldn't be bothered if you got over the line or not (they get paid regardless whereas the broker only gets paid once the mortgage is drawn).

dar100

I got approved as single applicant, 33,000. Saving for 5 months, have child and hadn't got any rent to pay as I was living at home with parents. I just said I paid 50 euro weekly to them.

I also had two loans running, saying that, I did manage to save 50 percent more than what my monthly mortgage repayments are. And I went for 92 percent mortgage

aristotle25

Some things I learned that banks look at (but not all have the same criteria):

1) if you have a child then they take 500 per month of you net income in determining your affordability
2) They take 1000 per month for each adult off net income along with point 1 above
3) You really need to show 6 months minimum ability to save
4) Stress testing of 2% on current variable rates

TheDriver

aristotle25 wrote: »

Some things I learned that banks look at (but not all have the same criteria):

1) if you have a child then they take 500 per month of you net income in determining your affordability
2) They take 1000 per month for each adult off net income along with point 1 above
3) You really need to show 6 months minimum ability to save
4) Stress testing of 2% on current variable rates

5) Online gambling of ANY form is frowned upon
6) 2 or more unpaid DD or SO are bad news

aristotle25

TheDriver wrote: »

5) Online banking of ANY form is frowned upon
6) 2 or more unpaid DD or SO are bad news

online gambling you probably mean?

TheDriver

aristotle25 wrote: »

online gambling you probably mean?

Edited, thanks!

acdublin

My unpaid Standing Order to Paddy Power might count against me then???

superman28

I would say they found something they don't like in your credit history... Gambling, online poker is a big red flag,, also can you be sure your wife has a good credit history?

alibab

acdublin wrote: »

My unpaid Standing Order to Paddy Power might count against me then???

Yes it both impact on your ICB and any sign of online betting will go against you enough to get a outright refusal without even going as far as the underwriter. I would contact a broker and talk through everything they will tell you straight out weather you can get a mortgage or not

Little Miss Cutie

acdublin wrote: »

My unpaid Standing Order to Paddy Power might count against me then???

I assume you are joking???

irish gent

Very sorry to hear that you where turned down. I can tell you something the country is still in a bad way..I'M in a full time job 20 years and with the same bank almost 20 years, wages gets transferred Ulster Bank..I was refused 5k lol. I have a house worth 250k only 15 k left om mortgage..lol

acdublin

Little Miss Cutie wrote: »

I assume you are joking???

Yes:)

alibab

acdublin wrote: »

Yes:)

Well if it's something you can joke about all well and good , people here are just trying to come up with reasons why someone who seems like a prime candidate for a mortgage was for some reason turned down for no good reason at all pretty straight away which would indicate a big issue . I presume you went and checked your ICB and your wife's .

TheDriver

You may joke but think of simple grand national bet done online or playing bingo online, all somewhat harmless but can catch you out. Banks don't care as they are covering themselves mainly.

acdublin

alibab wrote: »

Well if it's something you can joke about all well and good , people here are just trying to come up with reasons why someone who seems like a prime candidate for a mortgage was for some reason turned down for no good reason at all pretty straight away which would indicate a big issue . I presume you went and checked your ICB and your wife's .

I'm really appreciating the help and comments - it's a whole new world to me. I didn't mean to cause offense by the joke. Neither of us do any gambling.

Jimbloggs

Banks are being overly cautious these days.

I know of a couple that have 4 years left on their mortgage, owe less than 25k and house worth more than 300K. Both working full time for over 20 years.

They wanted to do renovations on the house so asked about extending the term and continuing to pay at the same rate they'd been paying for previous 21 years (with no missed payments)

The amount they were looking for was 25K. The bank turned them down. No issues with savings or gambling that I know of.

Maybe it's the low interest rates? Maybe the banks can't make money on smaller loans so are reluctant to lend? I can't think of any other reasonable reason.

omahaid

The banks are lending though, I'm drawing down a mortgage next week. 1 income + 3 kids, not even as attractive a bet as the OP. Try around is my suggestion...

alibab

acdublin wrote: »

I'm really appreciating the help and comments - it's a whole new world to me. I didn't mean to cause offense by the joke. Neither of us do any gambling.

I am a bit sensitive at the minute and especially when it comes to BOI . They have given me a right run round at this stage with cherry on top this morning if sending me mortgage loan offer with the wrong amount on it .

It's no longer worth the battle for the 1 % so I have thankfully gone back to AIB who I have had no issues with and with who I will be transferring everything to when I am finally settled in my new home .

They are lending i am a single divorced women here with 2 kids earning slightly less that op and looking for the same amount .

I strongly suggest OP get everything together and go sit down with Aib and Ptsb you have everything to gain and nothing to lose .

millionmystery

dar100 wrote: »

I got approved as single applicant, 33,000. Saving for 5 months, have child and hadn't got any rent to pay as I was living at home with parents. I just said I paid 50 euro weekly to them.

I also had two loans running, saying that, I did manage to save 50 percent more than what my monthly mortgage repayments are. And I went for 92 percent mortgage

Hi just wondering what sort of deposit you had? I'm applying but only have 5k though I save regularly, but am getting a gift of 7000. Looking for 100k

dar100

Hi million mystery

If you're going with AIB , you can get a 92 percent mortgage, so if the property is selling for 100k, you should be ok with 8000 deposit.

You will need anthor 3000 or so for solicitor fees, stamp duty.

Once you can show regular saving that's equal or more than the mortgage monthly payments, you should be ok. If you want any other info, feel free to PM me

dar100

If imagine you are now in the prison forum:)

quadrifoglio verde

Jimbloggs wrote: »

Banks are being overly cautious these days.

I know of a couple that have 4 years left on their mortgage, owe less than 25k and house worth more than 300K. Both working full time for over 20 years.

They wanted to do renovations on the house so asked about extending the term and continuing to pay at the same rate they'd been paying for previous 21 years (with no missed payments)

The amount they were looking for was 25K. The bank turned them down. No issues with savings or gambling that I know of.

Maybe it's the low interest rates? Maybe the banks can't make money on smaller loans so are reluctant to lend? I can't think of any other reasonable reason.

The inability to repossess the family home has lead to the banks stopping lending to a couple like this.
They want to lend, but only to people who their stress tests show will 100% pay.

Jimbloggs

quadrifoglio verde wrote: »

The inability to repossess the family home has lead to the banks stopping lending to a couple like this.
They want to lend, but only to people who their stress tests show will 100% pay.

That's interesting.

KindOfIrish

Jimbloggs wrote: »

Banks are being overly cautious these days.

.

My experience is that in banks no human takes decisions any more. It's all about computers. You simply have to tick all the boxes. If you didn't, mortgage will be refused regardless you income and circumstances. For example, computer says rent has to be paid monthly from your current account. You don't pay rent, box is not ticked. Refusal.

alex03

BOI aren't doing you any favours by not formally refusing you, they are just manipulating their figures. Nothing will change with BOI if they are allowed to hide these type of refusals. BOI would have done a recent ICB check so any lender you apply to will be able to see that you have already applied with them, so you gain nothing from their informal refusal. I would call them out and insist on formal refusal as if people do this, it will become obvious what's going on to the Financial Regulator. If you insist on formal refusal, you may be surpised, they may suddenly revise their calculations and approve you anyway!

tomred1

We it be beacuse your wife is due a baby in August and will have no job to go back too and the Bank are seeing your wage supporting 3 people then.

gmisk

In my experience BOI arent lending as much as other people.
Personally I found AIB and EBS very easy to deal with and they offered slightly more money.

I think the key thing is to save, and save regularly, minimum period seems to be 6 months.

In OP you stated "we don't pay rent"
This will definitely count against you, unless you are saving the amount you would normally be paying in rent into a savings account.

millionmystery

omahaid wrote: »

The banks are lending though, I'm drawing down a mortgage next week. 1 income + 3 kids, not even as attractive a bet as the OP. Try around is my suggestion...

Hi omahaid, congradulations. Which bank did you go with? Any advice for anyone trying to get a mortgage?

irishguy1983

acdublin wrote: »

Wife and I got informally turned down for a mortgage today (bank were at least kind enough not to do it formally to keep it from our record). We were absolutely amazed. I earn 50k (in permanent job), she earns 40k (contract ends in September but new 5 year one begins in December). We have 45k as deposit. We were looking for 125-150k mortgage. We have no debts, we don't pay rent, credit history is impeccable and I've been with bank for more than 20 years. We have a baby on the way in August. Was I very naive to be surprised we were turned down? This is our first foray into looking for a mortgage. It was Bank of Ireland. Any advice happily received!

What hope do the rest of us have??! Shocked.

Hope it gets sorted

DulchieLaois

I have similar case where my wife and I were rejected for a removal of brothers name and adding of my wifes name to an existing mortgage which my wife and I have been paying for 7 years.

I have been asked by the branch advisor (who has been useless) to submit a letter of appeal which should state Affordability / Repayment Capacity and any other information you feel will help turnaround the decision.

Bank is BOI - anyone have suggestions please

Bang_Bang

We were rejected by BOI, AIB ( which I'm a customer for the last 18 years). EBS were the only ones that gave use a mortgage, we had 40k in savings, but we had to prove we could save at least €600 per month for 1 year. After we proved that that, they gave us the mortgage. That was in 2010, I don't know what the requirements are now.