Worried first time buyer

catrionanic

So like a lot of first-time buyers, we have spent the last number of years of our working lives saving religiously in order to save up that holy grail of 10% deposit for a house in Dublin.

For a while now, our plan was to start the mortgage approval process in January 2015.

Low and behold, CB announces that we'll now need a 20% deposit. Which is something I don't think we'll ever be able to save up, given the price of Dublin rents.

We are completely crestfallen.

I've heard talk about introducing some first-time-buyer incentives with the banks for lower deposits, but it all just seems to be talk right now. Would really really REALLY appreciate some advice from people who know a bit more about the situation that we do (which isn't a lot) about what we should realistically expect going forward - what is likely to be brought out for a FTB, what should we expect, and under what sort of timeframe?

We were really looking forward to soon enough owning our first home together

Kenno90

Why wait till January to get mortgage approval? Start now.

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.1970686

Mrs OBumble

Speak to your TD and let them know about your issue. That's part of how the political process works.

Meathlass

The 20% rate is not a done deal - it's currently open for consultation at the moment.

I'm speculating that it will be closer to 15% that will be needed. Just speculation but there has been considerable dismay amongst FTB so I'd be surprised if the Central Bank sanctions the full 20%

And as Kenno said, why wait? Start the process now and you'll have 6 months to close the deal once the new rules come in.

doubter

Kenno90 wrote: »

Why wait till January to get mortgage approval? Start now.

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.1970686

+1. Start now - it's the starting date that counts.

Frank Lee Midere

Meathlass wrote: »

The 20% rate is not a done deal - it's currently open for consultation at the moment.

I'm speculating that it will be closer to 15% that will be needed. Just speculation but there has been considerable dismay amongst FTB so I'd be surprised if the govt sanctions the full 20%

And as Kenno said, why wait? Start the process now and you'll have 6 months to close the deal once the new rules come in.

Its not up the Government. The government would sanction negative interest rates, and negative deposit coupled with inadequate supply. Luckily it is up to the CB.

Meathlass

Frank Lee Midere wrote: »

Its not up the Government. The government would sanction negative interest rates, and negative deposit coupled with inadequate supply. Luckily it is up to the CB.

Thanks for the correction.

OP should make a submission during the consultation period.

NinjaTruncs

Meathlass wrote: »

The 20% rate is not a done deal - it's currently open for consultation at the moment.

I'm speculating that it will be closer to 15% that will be needed. Just speculation but there has been considerable dismay amongst FTB so I'd be surprised if the Central Bank sanctions the full 20%

And as Kenno said, why wait? Start the process now and you'll have 6 months to close the deal once the new rules come in.

the fact that the government announced a measure in the budget that aligned with the 20% deposit I'd say there's a very strong case that it will end up at 20%. What I feel may change are the number of mortgages that can be given by a bank that don't adhere to the 20% deposit rule.

cpoh1

doubter wrote: »

+1. Start now - it's the starting date that counts.

What happens if you get approval for €350k but the final sale agreed price is €345k?

It is very unlikely that the amount you get approval for in November will be the exact price you buy your house for a few months down the line.

catrionanic

Approval now isn't possible. My fiancé lives in England and is starting his new job in Ireland in January, so in reality even getting approval in January was likely an early estimate, as I think we'll need a few pay cheques behind him as proof of earnings in Ireland.

Sighhhh. I feel so frustrated.

NinjaTruncs

As has been explained to me by BOI (not sure if other banks follow this) the mortgage approval is on a specific house. When I went for mine a house I wasn't interested in buying but was in the area I was looking at and at roughly the price I wanted to pay was selected for the application. The mortgage approval was on that house and that house alone, I would need to get new approval for a different property. but I was told it the conditions were the same it wouldn't be an issue getting re-approved.

however is the conditions change when I go for re-approval the amount I'm approved for could change. The mortgage adviser was clear that it's not just my conditions that can change but also the lending conditions of the bank.

My point is that unless you have a property you are about to buy identified, getting approval now may not be a workaround to these new rules.

Ritchi

catrionanic wrote: »

Approval now isn't possible. My fiancé lives in England and is starting his new job in Ireland in January, so in reality even getting approval in January was likely an early estimate, as I think we'll need a few pay cheques behind him as proof of earnings in Ireland.

Sighhhh. I feel so frustrated.

Apply now and see what they say, they'll be able to let you know what you need. Rather them tell you what you need, than you "thinking" what you need.

On a side, the 20%(if that's what it ends up being) only applies to a percentage of each banks loan book. A certain percentage will be allowed have deposits less than 20%. If you're as good a candidate as you've implied, you could well fit the criteria for having a less than 20% deposit.

cpoh1

catrionanic wrote: »

Approval now isn't possible. My fiancé lives in England and is starting his new job in Ireland in January, so in reality even getting approval in January was likely an early estimate, as I think we'll need a few pay cheques behind him as proof of earnings in Ireland.

Sighhhh. I feel so frustrated.

It'll be June at the earliest in reality, your partner will need to get beyond the 6 month probation period in his new job before he can apply for a mortgage.

cpoh1

NinjaTruncs wrote: »

My point is that unless you have a property you are about to buy identified, getting approval now may not be a workaround to these new rules.

Spot on. People who think they can get approval before the measures come in and wait it out a few months may get a shock, you need the address and the house must cost the exact same as what you are approved for.

Meathlass

cpoh1 wrote: »

Spot on. People who think they can get approval before the measures come in and wait it out a few months may get a shock, you need the address and the house must cost the exact same as what you are approved for.

Does that mean if you bid on 10 different houses you need to get mortgage approval 10 different times? How long is it going to take banks to turnaround these applications? What if you bid 200,000 for a house, it's accepted, you get your mortgage approval and then you're gazumphed by 20,000. Do you have to start the whole process again?

cpoh1

Meathlass wrote: »

Does that mean if you bid on 10 different houses you need to get mortgage approval 10 different times?

No. You get approval for a certain amount on a hypothetical property, and then you bid on any house you like with the certainty (within reason) that you will be able to get funding from the bank once you go for full approval.

Meathlass wrote: »

What if you bid 200,000 for a house, it's accepted, you get your mortgage approval and then you're gazumphed by 20,000. Do you have to start the whole process again?

Yes you need to start the process again, in the sense you need to go for re-approval for the new amount. If you go away and get approval in principle for a mortgage you still need to get final approval before you can draw down etc. This will involve the exact amount and the address of the property.

In short getting approval in principle before the measures come in and then trying to draw down at a later date will be highly unlikely unless you can predict into the future what house you will buy and how much it will cost.

marcmc5

Banks can make a big deal of offering approval in principal in 15 mins but if you do identify a property you want and start the mortgage approval proper they are likely to tie in a load if conditions and make hard work of the admin. You may find you don't get approval proper or offer letter untill early in year and then they may insist on 20 percent deposit . It's such a racket. I would agree though the 20percent thing isn't set in stone so don't loose heart

Pinkycharm

Go to the bank tomorrow and get the process going!

catrionanic

It would appear that mortgage approvals are v busy... the next available Saturday mortgage appt with an Ulster Bank branch in town is on Sat 20th Dec!

cpoh1

catrionanic wrote: »

It would appear that mortgage approvals are v busy... the next available Saturday mortgage appt with an Ulster Bank branch in town is on Sat 20th Dec!

I dont want to sound pessimistic but you really are wasting your time until your partner is in the country and 6 months into his new employment and out of probation. Banks just wont touch you before then.

My advice would be to continue saving hard, keep your accounts clean and wait it out.

o1s1n

If I were you I'd wait a while and see what happens to house prices. 20% deposit means potentially less people bidding against each other which may then see a drop in asking prices (so your 10% will go further)

A lot of folks seem to be rushing in now to 'beat' this new rule without giving much consideration to the above.

Sala

House prices have been rocketing upwards so your 10% you needed has already been increasing month on month already. If the new rules are implement it should hopefully halt the rises, and maybe prices might fall -you could have 10% and approval for 5 times income now, but next year only 3.5 times income and need a 20% deposit - everyone your are bidding against bar cash buyers will be the same and competing but a much lower price point. The more the banks will lend the more prices go up. 10% of a 500K house is 50k - 20% of a 300k house is 60k - if prices drop your deposit requirements drop. As it stands, your deposit requirement is growing. The 20% may not that bad

punkyy8

They more than likely won't get the go ahead on this new purposed 20% deposit as it will lead to more people being on the social housing list and the list is already growing and the government don't have the means to look after the people already on it.

We got a call from the bank we have loan approval with and they recommended that we look for a house before this new ruling comes in.

Kenny has already said he doesn't agree with it and I think it would be something he'll fight for as his party is already under enough pressure without having this new ridiculous thing brought in.

El_Dangeroso

punkyy8 wrote: »

They more than likely won't get the go ahead on this new purposed 20% deposit as it will lead to more people being on the social housing list and the list is already growing and the government don't have the means to look after the people already on it.

We got a call from the bank we have loan approval with and they recommended that we look for a house before this new ruling comes in.

Kenny has already said he doesn't agree with it and I think it would be something he'll fight for as his party is already under enough pressure without having this new ridiculous thing brought in.

The Irish Central Bank is ruled by the European central bank, and the ECB are vehemently in favour of these measures.

The fact that Enda has said he doesn't agree with it and yet introduced measures in the budget that indicate they will be introduced means actions speak louder than words.

There is no downside as a FTB to proceeding as if it were a done deal.

marco_polo

I don't think the central bank could care less about social housing/house prices I suspect what they really want to make sure that whatever mini (definately supply related) bubble that is developing isn't fueled to even greater heights by credit from banks whose balance sheets still ain't in great shape for the most part lets be honest.

Sensible long term measure imo but certainty could have phased it in less abruptly I think.

pinkmonkey045

I have learned a lot from this thread and posted article (21st oct). In particular I have learned how screwed I am in relation to buying a house. As are a generation of (ageing) young, well educated and employed people (late twenties early thirties) in dublin. If 400k is the minimum for a 3 bed house in a half decent area (from searches) - looking at 80k deposit??

That would take me at least 4 years saving with my boyfriend (or 8 years if alone) with major dedication and sacrifices (like, moving home). Limericks looking real nice these days.....

cpoh1

pinkmonkey045 wrote: »

I have learned a lot from this thread and posted article (21st oct). In particular I have learned how screwed I am in relation to buying a house. As are a generation of (ageing) young, well educated and employed people (late twenties early thirties) in dublin. If 400k is the minimum for a 3 bed house in a half decent area (from searches) - looking at 80k deposit??

That would take me at least 4 years saving with my boyfriend (or 8 years if alone) with major dedication and sacrifices (like, moving home). Limericks looking real nice these days.....

You and most others are missing the point with all these new restrictions, that €400k house you are looking at wont cost that much anymore when restrictions on lending are in place. When that house reduces in value to €300k then your 20% deposit will only only cost you €60k.

This will take a year or two to bed in but is better for the country in the long run.

trobbin

pinkmonkey045 wrote: »

I have learned a lot from this thread and posted article (21st oct). In particular I have learned how screwed I am in relation to buying a house. As are a generation of (ageing) young, well educated and employed people (late twenties early thirties) in dublin. If 400k is the minimum for a 3 bed house in a half decent area (from searches) - looking at 80k deposit??

That would take me at least 4 years saving with my boyfriend (or 8 years if alone) with major dedication and sacrifices (like, moving home). Limericks looking real nice these days.....

Exactly!! Now what does that tell you? If you're screwed and also so many others. Just think about it?

Property has had it's day. The last 25years shouldn't be even looked at. Property needs to be in line with incomes, everything has gone against property in the last two years, yet it still rose in value. Being pushed. It's a fake market. Full of debt.

Zamboni

trobbin wrote: »

Property has had it's day. The last 25years shouldn't be even looked at. Property needs to be in line with incomes, everything has gone against property in the last two years, yet it still rose in value. Being pushed. It's a fake market. Full of debt.

Property no longer needs to be in line with incomes. This is a historical norm but we now have global markets and foreign investors. If there is a yield to be achieved by purchasing property in Ireland and renting it, income levels will become largely irrelevant.
I'm not saying prices will go up or down but the relationship between PAYE incomes and house prices is waning.
With a slow supply expected and no rent controls in place, landlords will bleed every last cent out of renters.

trobbin

Zamboni wrote: »

Property no longer needs to be in line with incomes. This is a historical norm but we now have global markets and foreign investors. If there is a yield to be achieved by purchasing property in Ireland and renting it, income levels will become largely irrelevant.
I'm not saying prices will go up or down but the relationship between PAYE incomes and house prices is waning.
With a slow supply expected and no rent controls in place, landlords will bleed every last cent out of renters.

Of course property needs to be in line with incomes. If people can't afford them, they won't want them. I don't fully disagree with rents rising in the future, but that doesn't garuntee that house prices will rise. Owning property wasn't always the in thing to do, many would prefer to rent, short term. Anyway if wages stay outa line with property, people will emigrate at a higher rate.

International markets won't effect the market in the way you suggest, if anything they'll help, as they would contribute to wages as opposed to property.

Foreign investment in Irish property was huge, that's no longer the case, and won't be in the near future. Last year there was large cash investments in Irish properties, but if people think they where bidding on residential houses, they're wrong. Many hedge funds all American bought up loads of appartment blocks, and hotels. This was at a knockdown price, and was also in an effort to spread their wealth in different currieries, as a protection against a dollar drop.

That investment saw Irish cash buyers enter the market, but that's just because money follows money. It wasn't a smart move. We could talk all day, but won't be certain until some time in the future. But I firmly believe property will fall further. In fact, I don't think it fell far enough from boom prices.

trobbin

hoodwinked wrote: »

is this true though? we are going for a mortgage for a build, our LTV will be 43%, our monthly payments will be less than what we are currently paying in rent, we have no deposit (years of paying rent & creche, creche is over with now though and that money is going into savings) but some banks will let us use the land value as a deposit,


but our income x4 will be less than the mortgage we need so these income limits could stop us?!?

It's true for a stable market. Of course if you have land and the property value compared to mortgage is only 43% LTV, well then. It's risk free, almost, for the bank.

Even tough you don't have high earnings, your getting your loan based on the comparison to your house price. So if you default on your mortgage it's payday for the bank.

Remember banks are very slow to repossess houses that are in negative equity. But if a bank can repossess a house that will sell at a profit, they won't be so slow. And yes this happens all the time, banks are sharks.

Skatedude

I dont see anyone mentioning that the new rules also say that you can only borrow 3.5 times your salary, Not sure if that is been enforced yet

cpoh1

trobbin wrote: »

Exactly!! Now what does that tell you? If you're screwed and also so many others. Just think about it?

I dont believe that for a second either. My sister in law and partner both in their late 20's and out working 4-5 years have no problem saving €35k between them a year while renting in Cork. That is them taking it easy on their living but not being a complete miser either.

Owning and buying a house never was a done deal for the masses. There is a social pecking order out there, guys with the most money can afford to live in the best areas and others have to live further out. Some less fortunate again cant afford to buy and will need to rent long term. This is what a balanced market looks like and these measures will dampen prices but still maintain the social balance.

Having all houses in SCD for under €350k is not the answer either.

Larbre34

cpoh1 wrote: »

My sister in law and partner both in their late 20's and out working 4-5 years have no problem saving €35k between them a year while renting in Cork. That is them taking it easy on their living but not being a complete miser either.

€340 a week put away, by each of them, out of their take home pay?

They are either living in a skip, black marketeers or both earning far higher than the average industrial wage, which in their late 20s is good going.

Believe me when I tell you that rate of saving is the exception, and not possible for most people.

cpoh1

Larbre34 wrote: »

€340 a week put away, by each of them, out of their take home pay?

They are either living in a skip, black marketeers or both earning far higher than the average industrial wage, which in their late 20s is good going.

Believe me when I tell you that rate of saving is the exception, and not possible for most people.

They both put €1500 away each month, one is an accountant the other an engineer. Both are on average salaries for their professions, not mega bucks but a decent income (close to €90k combined).

My point was that people making comments like "what are all the bright graduates who have only started out on their life path going to do" are in fact misleading. There are loads of people out of college 3-5 years in solid jobs earning over €40k a year and well able to save a deposit of €50-60k in a decent timeframe.

gmisk

cpoh1 wrote: »

They both put €1500 away each month, one is an accountant the other an engineer. Both are on average salaries for their professions, not mega bucks but a decent income (close to €90k combined).

My point was that people making comments like "what are all the bright graduates who have only started out on their life path going to do" are in fact misleading. There are loads of people out of college 3-5 years in solid jobs earning over €40k a year and well able to save a deposit of €50-60k in a decent timeframe.

On a wage of approx 45k....I find it very hard to believe someone could save 1500 euro a month...with travel costs, taxes, rent, pensions etc.
Unless you mean they put away 750 each? thats very do-able

cpoh1

gmisk wrote: »

On a wage of approx 45k....I find it very hard to believe someone could save 1500 euro a month...with travel costs, taxes, rent, pensions etc.
Unless you mean they put away 750 each? thats very do-able

No, I was deadly serious, €1500 a month is easily achievable on a net salary of €2800 plus expenses. I did it with my wife a few years back too. The only difference I can see with Dublin folk is that rent is cheaper in Cork, we were paying €700 a month before we bought for a 2 bed town house.