Mortgage for house in Ireland while living in abroad

gauffres

We left Ireland as a family in 2009, leaving behind a house (now in negative equity) which we have rented out. We would like to move back to Irl at some stage and have seen a property we like to buy. The plan is to sell our existing house in Ireland, buy the new one and for me to move home with our 3 children while my husband stays abroad in Europe to work coming home weekends and holidays with the hope of one of us getting a good job in Ireland eventually so that he can move home. I contacted BOI for advice and was told that we need 50% LTV as my husband, the earner, would not be resident in Ireland. This was qquite a shock and puts the house out of our reach. It seems very unfair - I'm sure there are lots of families that left Ireland in the last ten years that wish to return and start again. Is it legal to insist on such a high deposit purely because the earner is not living in Irl?? Is it not against EU principles of free movement of people? Would it be worth my while contacting other banks or is it the same story in all of them?? Any help and advice would be much appreciated

Michael D Not Higgins

It's perfectly legal. I'd recommend seeing a mortgage broker to explore your options with different banks and LTV limits.

Dr Strange

gauffres wrote: »

... Is it not against EU principles of free movement of people?

No, I don't think so. Your right to free movement between EU countries is not affected as it does not mean you are automatically entitled to own a property. Owning a property is like owning a car, a privilege - not a right, i.e. if you can afford to pay for it, you can have it.

seamus

Yes, it's perfectly legal and pretty standard to enforce a high LTV ratio for non-resident applicants. Because the plan is to buy a property for the family and not an investment property, you might get some leeway with the other banks, but probably not very much. AIB I think will do 75% LTV. But in any case the maximum LTV you will be able to get is 80%.

Another thing to note is that they won't care that you have the other property rented out. The bank will consider the full repayable amount as an ongoing cost on your husband's cash flow.

My recommendation here is for you to move home and back into your current property that's in negative equity. Work on your plan where you get a job and then your husband comes home and gets a job.
Then you can sell your property in negative equity and get a mortgage with 90% LTV (instead of an 80% one), and based on a joint application.

by the seaside

I've vaguely looked into it. Useful recent article her:

http://www.irishtimes.com/life-and-style/mortgages-for-emigrants-buying-a-house-at-home-in-ireland-1.1991001

Definitely worth speaking to a mortgage broker.

handlemaster

OP. Its amazing that you actually believe the EU's freedom of movement can be brought into a mortgage decision. Think about it if strangers asked you for a few hundred thousand as a loan to buy property but one of them wasn't going to live in the country what would you give ? Even if it could all proven to be above board legally and you had the money. Its not a right to buy a home. BOI is a business and as can set its own terms of business.

ted1

Op I would be concerned about your tax situation.

Has your tenant bring keeping back 20% to pay revenue ?

gauffres

Re the right to movement, are we not Irish citizens, already with a proven history of being able to pay a mortgage in Irl? If we wanted a mortgage from this country for a house in Irl we have to have owned a house here for 5 years so only way of moving back in immediate future to the hhouse or our dreams is by having lots of cash which we don't have! My husband earns a good salary here and I have the potential for a job too if we get back to Irl.

Our existing property is rented out, we still have to top the mortgage up with our own money to pay the mortgage and yes our tax affairs re rental income are above board. We are happy to sell this property to buy the other one we have seen.

Seamus, I know it would prob make sense to move back to the house we already own but this means missing out on the house we have recently seen which we really like. To make things more complicated, this property is also a small B& B which we would prob continue at an even smaller scale (and yes I'm aware, this may call for a commercial mortgage but I would hope to argue that the property would be mainly residential or does this make a difference??)

Anyway, thanks for all the quick replies .. I think is definitely worth getting in touch with some brokers ..

gauffres

By the sea .. that Irish Times Article is spot on - thanks! Looks like the banks all have different policies and its up to us to make our case. I do agree that it will become a bigger issue for the banks when more people start returning from overseas in the next few years ..

Michael D Not Higgins

gauffres wrote: »

Re the right to movement, are we not Irish citizens, already with a proven history of being able to pay a mortgage in Irl?

Your rights to movement are not infringed by a bank practicing prudential lending.

by the seaside

gauffres wrote: »

By the sea .. that Irish Times Article is spot on - thanks! Looks like the banks all have different policies and its up to us to make our case. I do agree that it will become a bigger issue for the banks when more people start returning from overseas in the next few years ..

I'd be interested to know how you get on, as we are in a slightly similar position, so please update us!

Victor

gauffres wrote: »

Is it not against EU principles of free movement of people?

It is recognised as part of this that certain categories of people, e.g. new residents, foreign residents, etc. pose a greater risk and different rules can apply.

Additionally, as you are Irish it probably doesn't apply.

seamus wrote: »

Then you can sell your property in negative equity and get a mortgage with 90% LTV (instead of an 80% one), and based on a joint application.

As they aren't first time buyers, I suspect the 80% rule would apply.

Marcusm

Victor wrote: »

It is recognised as part of this that certain categories of people, e.g. new residents, foreign residents, etc. pose a greater risk and different rules can apply.

Additionally, as you are Irish it probably doesn't apply.

As they aren't first time buyers, I suspect the 80% rule would apply.

If they have been living in another EEA state since 2009, they will now be established there and entitled to assert free movement rather than simply citizenship rights. There's an increasing body of judicial decisions on the point (starting from Singh). 6 months is often suggested as the minimum foreign stay.

Arbiter of Good Taste

Marcusm wrote: »

If they have been living in another EEA state since 2009, they will now be established there and entitled to assert free movement rather than simply citizenship rights. There's an increasing body of judicial decisions on the point (starting from Singh). 6 months is often suggested as the minimum foreign stay.

Nobody is denying them free movement. They can move all they want. The bank just won't give them a mortgage.

Marcusm

Arbiter of Good Taste wrote: »

Nobody is denying them free movement. They can move all they want. The bank just won't give them a mortgage.

I knew I should have deleted avert thing except Victor's middle sentence which is what my reply is aimed at.

I fully agree that they have little realistic prospect of obtaining a mortgage based on these facts; personally even if the non resident earner wasn't in point, I would have thought the negative equity would have pretty much ruled it out.

gauffres

If we were resident in Ireland and wanted to sell our negative equity house and move to another one we would only need 10% deposit - this requirement is only for those in negative equity who want to move houses . 20% deposit is for first time buyers and I presume people not in negative equity who want to move house.

ted1

gauffres wrote: »

If we were resident in Ireland and wanted to sell our negative equity house and move to another one we would only need 10% deposit - this requirement is only for those in negative equity who want to move houses . 20% deposit is for first time buyers and I presume people not in negative equity who want to move house.

Do you plan to pay off the negative equity or try to transfer it?

gauffres

transfer it .. wouldn't have the funds to pay it off!

the groutch

based on the LTV requirements for the new mortgage, you would have to have a deposit, which the bank could force you to use to clear the remaining balance when your current house is sold.

there is no guarantee that a bank will allow you to transfer the outstanding balance onto a new mortgage.

seamus

Victor wrote: »

As they aren't first time buyers, I suspect the 80% rule would apply.

If you sell your principal residence in negative equity, the 80% rule doesn't apply.

based on the LTV requirements for the new mortgage, you would have to have a deposit, which the bank could force you to use to clear the remaining balance when your current house is sold.

there is no guarantee that a bank will allow you to transfer the outstanding balance onto a new mortgage.

Most of the banks are offering negative equity mover products. It's not in their interests to "trap" a person in negative equity on a property that they don't want as they're more likely to fall into arrears.

The rule in most cases is simply that you must have the 10% deposit for the new property. Any shortfall on the old one is then transferred to the new property.