2nd time buyer 20%deposit issue

MrMaki

I'm planning to move from my current house in Dublin to the new ( to me) place outside Dublin.
Reason is I need more space, and cannot afford larger house in capital.

Current place is in positive equity, what means after I sell house I should be left with some cash in the pocket ( based on value of other houses sold recently in the same estate)

New place will be bigger and cheaper ( under 200k) , mortgage repayments will be circa 30% smaller than now.

I checked recently with one bank and they say I need to have 20% for deposit + cash for solicitor, fees, etc.

- I do not have 20% of the value of new place to put in front
- The only option I see is to sell current place, move to temporary rented accommodation and with cash in the pocket search for new place, and apply for a brand new mortgage, but then I won't have much cash left for renovation etc.

Is there any other option to pay less than 20% of deposit if the new place is going to be cheaper, and mortgage repayments will be smaller than currently?

4ensic15

MrMaki wrote: »

I'm planning to move from my current house in Dublin to the new ( to me) place outside Dublin.
Reason is I need more space, and cannot afford larger house in capital.

Current place is in positive equity, what means after I sell house I should be left with some cash in the pocket ( based on value of other houses sold recently in the same estate)

New place will be bigger and cheaper ( under 200k) , mortgage repayments will be circa 30% smaller than now.

I checked recently with one bank and they say I need to have 20% for deposit + cash for solicitor, fees, etc.

- I do not have 20% of the value of new place to put in front
- The only option I see is to sell current place, move to temporary rented accommodation and with cash in the pocket search for new place, and apply for a brand new mortgage, but then I won't have much cash left for renovation etc.

Is there any other option to pay less than 20% of deposit if the new place is going to be cheaper, and mortgage repayments will be smaller than currently?

You will be getting a brand new mortgage anyway. Your problem is that you will not be borrowing as a first time buyer. Rentine after you sell won't change that.

Jen44

I just got a mortgage as a second time buyer with only 10% deposit. If you go into the banks and let them know your whole situation they may be able to exempt you from one of the new rules. They exempt us from the 20% deposit rule as we were not looking to borrow more then 3.5 times our combined salary, which is one of the other new lending rules.

Irishcrx

What you will need is a booking deposit on the new house around €5,000 , estate fee's and solicitor fee's will be paid after the sale of the house , unless some estate agent ask for around €250 for advertising up front.

You can sell and buy at the same time entering a housing chain , this means that the 20% deposit you need will come of the equitity of selling your current house , you won't have to front the cash , you will just need to be selling either right before or at the same time as you buy , a lot of cash goes a lot of differant ways between the sale but your solicitor will deal with all the transfers. The problem with this is a lot of factors come into play and if anyone pulls out the whole deal is dead in the water you have.

* A buyer for your property
* Yourself buying another property
* A seller for the other property
* That seller buying another property

All of these need to work for the sales to go through, as you mentioned the other option is that you sell , rent and then buy. My issue with doing this is the AIP from the banks , the thought of being AIP , selling up and then being rejected as you go to draw down and left without any property is my worry with this.

I'm in the same situation as you , looking to sell in Dublin and move to a bigger house outside of Dublin so I've been meeting with the banks over the last few weeks. I also don't want to rent in the interim as it's a waste of equitity and double the hassle of moving , plus the lack of a cash deposit I have to enter the chain to sell.

gerry26

Hi
We are in the same situation. We got approved for 10 % deposit from BOI 2 months ago but that was only for 190 k as I requested for 190k only. Suddenly the price now went up by 55 k don't know how the bank will handle this. Still the amount would be 2.3 times of our combined salary. But we do have small car loan of 8k and 25k personal loan. Any thoughts if we still qualify for 10 % deposit. We have our house up on the market and its little bit on the positive equity. Fingers crossed now.

awec

Jen44 wrote: »

I just got a mortgage as a second time buyer with only 10% deposit. If you go into the banks and let them know your whole situation they may be able to exempt you from one of the new rules. They exempt us from the 20% deposit rule as we were not looking to borrow more then 3.5 times our combined salary, which is one of the other new lending rules.

To be clear here, borrowing less than 3.5 times does not mean you are exempt from the 20% rule. Whether or not you borrow 3.4, 3.5 or 3.6 times your salary is not really the deciding factor in your required deposit. It is not that simple.

No bank is going to turn round to you and say "oh you are only looking 3 times your salary, yea a 10% deposit is grand".

Borrowing over the 3.5 limit is something they generally won't allow in most circumstances anyway, at least not without you having a substantial deposit.

Some people may get away with less than 20%, but this would be a small minority of people. You should speak to other banks and see what they say but realise that it's very unlikely you will get away with less than the 20%.

Jen44

awec wrote: »

To be clear here, borrowing less than 3.5 times does not mean you are exempt from the 20% rule. Whether or not you borrow 3.4, 3.5 or 3.6 times your salary is not really the deciding factor in your required deposit. It is not that simple.

No bank is going to turn round to you and say "oh you are only looking 3 times your salary, yea a 10% deposit is grand".

Borrowing over the 3.5 limit is something they generally won't allow in most circumstances anyway, at least not without you having a substantial deposit.

Some people may get away with less than 20%, but this would be a small minority of people. You should speak to other banks and see what they say but realise that it's very unlikely you will get away with less than the 20%.

I was explaining our situation, the reason why we were exempt. I suppose my point is to go into the banks and tell them your whole story. Online calculators etc don't allow you to go into all the details. You may qualify for exemption based on one thing or another its worth a shot. Im glad we did as we are now in our new house.

Marcusm

awec wrote: »

To be clear here, borrowing less than 3.5 times does not mean you are exempt from the 20% rule. Whether or not you borrow 3.4, 3.5 or 3.6 times your salary is not really the deciding factor in your required deposit. It is not that simple.

No bank is going to turn round to you and say "oh you are only looking 3 times your salary, yea a 10% deposit is grand".

Borrowing over the 3.5 limit is something they generally won't allow in most circumstances anyway, at least not without you having a substantial deposit.

Some people may get away with less than 20%, but this would be a small minority of people. You should speak to other banks and see what they say but realise that it's very unlikely you will get away with less than the 20%.

The institutions are permitted to exceed the guidelines for a small proportion - perhaps as much as 20% of loans. Whether a loan will be permitted into this category will vary from institution.

gaius c

Re the exemptions:

The mortgage market is poised to grind to a halt over the coming months as banks run up against Central Bank limits on lending to homebuyers, it has emerged.

Mortgage experts are now warning that a number of lenders have already maxed out the number of exemptions they can grant for the year under new rules."

Banks are allowed to breach the rules in a limited number of cases, however, there are fears some lenders have already run out of room to allow exemptions to the rules, banking and mortgage market sources told The Sunday Business Post last week.

From SBP yesterday.

Pac2015

gaius c wrote: »

Re the exemptions:

From SBP yesterday.

A family member said to me at the weekend that first time buyers don't are required only to have the 10% now that the central bank changed the rules and that some 2nd time buyers dont need the full 20% I am sure they got parts of it wrong but wondering did anyone else hear the same.

MrMaki

Thank you for your replies. I will definitely check with banks and see if 10% is still possible.
I do understand there are some rules that needs to be followed, but some of them make no sense to me....

If customer pay his mortgage for the last number of years, was never even once late with the payment, and has income every single month going onto the account there should be no problems made for this customer, who wants to put bank in lower risk because of his action.

Lower risk for bank is situation where customer proved he can afford monthly repayments of higher mortgage and wants to get cheaper house with lower repayments and lower total sum of mortgage.

These rules are not fair, as they put bank on a winning position - they got you , they caught you and they squeeze last penny from you , because if you want to remortgage to a lower value you need to have 20% of the new house.....

Why rules are the same for customer who wants to get bigger mortgage and want to lend more money from the bank and for customer who wants to reduce risk?

Irishcrx

MrMaki wrote: »

Thank you for your replies. I will definitely check with banks and see if 10% is still possible.
I do understand there are some rules that needs to be followed, but some of them make no sense to me....

If customer pay his mortgage for the last number of years, was never even once late with the payment, and has income every single month going onto the account there should be no problems made for this customer, who wants to put bank in lower risk because of his action.

Lower risk for bank is situation where customer proved he can afford monthly repayments of higher mortgage and wants to get cheaper house with lower repayments and lower total sum of mortgage.

These rules are not fair, as they put bank on a winning position - they got you , they caught you and they squeeze last penny from you , because if you want to remortgage to a lower value you need to have 20% of the new house.....

Why rules are the same for customer who wants to get bigger mortgage and want to lend more money from the bank and for customer who wants to reduce risk?

Well , that's bank for you. A lot of it doesn't make sense in reality and day to day life. I went into my bank and explained my situation, for me selling my house and buying a bigger cheaper house elsewhere made sense for myself , family and I thought the bank but it got very confusing very quickly , and they are strung up by the central banks new lending criteria.

For me , house is worth 280k , I owe them 167k , I have plenty of equitity to put towards a deposit on a new mortgage , new mortgage is less per month and in term and the loan amount is less....still they cannot deviate from the CB lending terms. I've never missed a payment either so find it difficult to stomach the hassle in drawing down a new smaller mortgage.

But I am having hassle.

lainey316

gaius c wrote: »

Re the exemptions:

From SBP yesterday.

One bank has told me straight out that this is the case - they have used up all their exemptions, so they were suggesting come back in January. Another told me they still have some flexibility.

As per other poster, have heard that the CB have rejected any suggestion of changing the rules - minister for finance suggested they should I think.

awec

Jen44 wrote: »

I was explaining our situation, the reason why we were exempt. I suppose my point is to go into the banks and tell them your whole story. Online calculators etc don't allow you to go into all the details. You may qualify for exemption based on one thing or another its worth a shot. Im glad we did as we are now in our new house.

Yea I know, but I doubt you were excluded just because you were borrowing less than 3.5 times your salary (unless you were borrowing a very low amount compared to your income).

I am guessing that there were other factors taken into account about your financial status.

Pac2015

I think really what all the posts show from what I can see is that everyone's situation is unique and people seem to have various experiences.

Dearg81

Pac2015 wrote: »

A family member said to me at the weekend that first time buyers don't are required only to have the 10% now that the central bank changed the rules and that some 2nd time buyers dont need the full 20% I am sure they got parts of it wrong but wondering did anyone else hear the same.

In general the banks require first time buyers to have 10% of the loan up to €220k and 20% above that. 2nd time buyers require 20%, there can be exceptions to these rule though as other posters have said. I remember reading that 85% of loans have to follow the above criteria though.

gaius c

Pac2015 wrote: »

A family member said to me at the weekend that first time buyers don't are required only to have the 10% now that the central bank changed the rules and that some 2nd time buyers dont need the full 20% I am sure they got parts of it wrong but wondering did anyone else hear the same.

FTB's need 10% up to 220k and 20% for anything over that.
There was a discussion on the matter between Brendan Burgess and Thomas Byrne and Byrne appeared to be completely unaware of the above.

Some second time buyers could be exempt from requiring 20% deposit but there's only a limited number of exemptions available. As the SBP story suggests, some banks may have used up those exemptions for the year already (which is quite an achievement when you consider that they didn't come into effect straight away and that we're still a good bit off the end of the year yet).

As for changes to the rules, that was most likely kite flying/a solo run from Noonan. It was quashed fairly quickly.

The rules are here to stay.

gaius c

MrMaki wrote: »

I'm planning to move from my current house in Dublin to the new ( to me) place outside Dublin.
Reason is I need more space, and cannot afford larger house in capital.

Current place is in positive equity, what means after I sell house I should be left with some cash in the pocket ( based on value of other houses sold recently in the same estate)

New place will be bigger and cheaper ( under 200k) , mortgage repayments will be circa 30% smaller than now.

I checked recently with one bank and they say I need to have 20% for deposit + cash for solicitor, fees, etc.

- I do not have 20% of the value of new place to put in front
- The only option I see is to sell current place, move to temporary rented accommodation and with cash in the pocket search for new place, and apply for a brand new mortgage, but then I won't have much cash left for renovation etc.

Is there any other option to pay less than 20% of deposit if the new place is going to be cheaper, and mortgage repayments will be smaller than currently?

If you don't qualify for an exemption, that will be your only course of action. It's unlikely you'll get that exemption this year and next year you'll be competing with others for one.

There's also the fact that you might get approved for an exemption until it comes to drawdown and the bank tell you to get lost then.

One route gives you a lot more control and the other has you victim to the whims of the bank.

lostsoul01

Anyone know what the chance would be of banks approving mortgage with just 10K deposit, Have sold family home in divorce settlement so have no chain but as a second time round buyer I am struggling to see where I will get 20% deposit even on a small house with 125k I would be borrowing solo and 3 times my salary

dubal

lostsoul01 wrote: »

Anyone know what the chance would be of banks approving mortgage with just 10K deposit, Have sold family home in divorce settlement so have no chain but as a second time round buyer I am struggling to see where I will get 20% deposit even on a small house with 125k I would be borrowing solo and 3 times my salary

All the rules are in here :-> http://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/paying_for_a_home.html

Michael D Not Higgins

lostsoul01 wrote: »

Anyone know what the chance would be of banks approving mortgage with just 10K deposit, Have sold family home in divorce settlement so have no chain but as a second time round buyer I am struggling to see where I will get 20% deposit even on a small house with 125k I would be borrowing solo and 3 times my salary

Exceptions are made to the rules, for second time buyers 20% of the value of these can be granted an exception for deposit rules, however they limit this to a minimum of 10% deposit.

In your case, you'd need to save at least 2.5k more to qualify for the exception. Your best bet is to speak to the banks or a broker so you know if you can realistically qualify for an exception or not.