One-bed Mortgages

Kung Lao

So having called around and checked all the websites, it appears that the Irish banks either won't provide mortgages for one bed apartments or will only provide 75% - 80% LTV. Does anyone know of any financial institution providing 85% - 90% LTV mortgages for one bed apartments or if foreign banks would provide a mortgage for a property purchased here??

Sun in Capri

Hi Kung Lao, I know the score for one bed apartments but even for other properties you now have to have 20% deposit.

Larbre34

No, foreign banks will not provide mortgages for irish properties, unless they have a presence here,such as KBC.

As mentioned, you need 20% deposit in almost all 1-bed situations.

superleedsdub

Larbre34 wrote: »

As mentioned, you need 20% deposit in almost all 1-bed situations.

Unless i`m missing something, I don`t think this statement is true (unless of course you are referring to non-first time buyers):

"There are different limits for different categories of buyers:

PDH mortgages for non-first time buyers are subject to a limit of 80 per cent LTV.
For first time buyers of properties valued up to €220,000, a maximum LTV of 90 per cent will apply. For first time buyers of properties over €220,000 a 90 per cent limit will apply on the first €220,000 value of a property and an 80 per cent limit will apply on any excess value over this amount.
The cumulative monetary value of loans for principal dwelling purposes which breach either of these limits should not exceed 15 per cent of the euro value of all PDH loans on an annual basis."

I`m in the process of selling a 1-bed apartment and I really hope my buyer is not refused a loan:-(

Senecio

Banks were applying 80% LTV on apartments even before the new central bank rules kicked in. First time buyer or not. They are considered higher risk, one beds even more so.

superleedsdub

Thanks for the information, hadn`t heard about that, it does make alot of sense:-)

dearg lady

AIB told me 25% for 1 bed apt, and that was their own rule, pre Central Bank LTV rules.

MarkAnthony

+1 on the 3 above posts (+3 :pac:)

Just so you have double, double confirmation (Quadruple - okay enough of that).

This has been a rule for a long while, certainly pre CB rules.

Cilar

Why 1-bed room apt are considered higher risk?

gaius c

Cilar wrote: »

Why 1-bed room apt are considered higher risk?

Lower chance of being a PPR therefore higher risk of default. BTL mortgages have a much higher rate of default than PPR's.

johnnyskeleton

Cilar wrote: »

Why 1-bed room apt are considered higher risk?

They arguably shouldnt be as they produce quite good yields at the moment. However, the banks have decided they are high risk so thats the end of it. As far as I know KBC (the cheapest variable rate lender) wont lend for 1 beds at all!

MarkAnthony

Cilar wrote: »

Why 1-bed room apt are considered higher risk?

To add to the above:

No chance of renting a room to service mortgage if owner loses job.

More chance owner thinks sod it and moves and stops paying the mortgage if they start a family.

Basically numerous reasons but as said above banks have decided so that's that I'm afraid.

Kung Lao

That's what I thought alright, was hoping on the off chance there might have been a change in this general rule by one of the banks but there doesn't appear to be.

As many have said, they are deemed too high risk by banks although I don't completely follow the logic as yields are the same or often higher in one beds. In any case, I'm one of these rarities that actually wants to buy a one bed to live by myself, a concept that very few seem to understand!

Also, I'm not sure if everything said above is true regarding mortgages for apartments, as I have been offered approval in principle for a 2 bed apartment previously and it was for 90% LTV. My understanding is that the 20% deposit only applies for one bed apartments (except in cases of first time buyers greater than €220k per new rules).

gaius c

Kung Lao wrote: »

That's what I thought alright, was hoping on the off chance there might have been a change in this general rule by one of the banks but there doesn't appear to be.

As many have said, they are deemed too high risk by banks although I don't completely follow the logic as yields are the same or often higher in one beds. In any case, I'm one of these rarities that actually wants to buy a one bed to live by myself, a concept that very few seem to understand!

Also, I'm not sure if everything said above is true regarding mortgages for apartments, as I have been offered approval in principle for a 2 bed apartment previously and it was for 90% LTV. My understanding is that the 20% deposit only applies for one bed apartments (except in cases of first time buyers greater than €220k per new rules).

They can offer you anything they (or you) want but when it comes to actual drawdown, they will have to comply with the CB rules.

They can be more stringent if they want and in the case of one bed apartments, they are definitely looking for buyers with "skin in the game" because the default rate on btl properties is ridiculous. The chances of a one bed being a PPR for the entire lifetime of the mortgage is very small and the bank are only looking to protect themselves from the risk of default.

MarkAnthony

To be fair yields have aren't at issue either I'm afraid. If you're looking for a BTL the conditions are even more stringent and the interest rates are astronomical. A bank isn't going to base a policy on someone using a mortgage product specifically against it's T&Cs.

Kung Lao

gaius c wrote: »

They can offer you anything they (or you) want but when it comes to actual drawdown, they will have to comply with the CB rules.

They can be more stringent if they want and in the case of one bed apartments, they are definitely looking for buyers with "skin in the game" because the default rate on btl properties is ridiculous. The chances of a one bed being a PPR for the entire lifetime of the mortgage is very small and the bank are only looking to protect themselves from the risk of default.

I don't understand this. For first time buyers (FTBs) of PDHs: A limit of 90 per cent LTV applies on the first €220,000 of the value of a residential property and a limit of 80 per cent LTV applies on any value of the property thereafter.

I am not purchasing a property with a value in excess of €220k so this rule will not apply in the case of two bed apartments. I am simply referring to one bed apartments which banks require a 20% - 25% deposit on in every case, regardless of the CB rules. The CB rules are irrelevant to the query I have raised so I'm not sure why they're being referred to in a number of posts.

gaius c

Kung Lao wrote: »

I don't understand this. For first time buyers (FTBs) of PDHs: A limit of 90 per cent LTV applies on the first €220,000 of the value of a residential property and a limit of 80 per cent LTV applies on any value of the property thereafter.

I am not purchasing a property with a value in excess of €220k so this rule will not apply in the case of two bed apartments. I am simply referring to one bed apartments which banks require a 20% - 25% deposit on in every case, regardless of the CB rules. The CB rules are irrelevant to the query I have raised so I'm not sure why they're being referred to in a number of posts.

That's pertinent information, which we did not know at the time of making the posts.

Cilar

Cilar wrote: »

Why 1-bed room apt are considered higher risk?

All previous responses plus concern that they might not hold value in years to come.