Mortgage with poor account history?

Sleepy

Our landlord passed away and the house is being sold so we've only a few months to find another place. On hearing this, parents have gifted us a lump sum which would constitute a deposit of 10 to 12% of the price-range we're looking at and we can easily repay a modest mortgage (this can be demonstrated via rent over the past 5 1/2 years and the repayment of about 15k over the past 4 years with no missed or late payments on these in that timeframe. There'll also be evidence of hefty monthly savings from this point on.

If we'd known there was a possibility of a deposit landing into our laps we'd obviously have been far more careful about keeping the accounts in good order for the past 6 months or so but what's done is done: there's been a few missed direct debits, a couple of unauthorised overdrafts and a total lack of savings in that time frame.

Just wondering if anyone has gotten a mortgage from BOI or any of the other main banks in these circumstances? Or are we likely to get refused by any of the main players and end up having to look at the Home Choice Loan or similar?

davo10

Sleepy wrote: »

Our landlord passed away and the house is being sold so we've only a few months to find another place. On hearing this, parents have gifted us a lump sum which would constitute a deposit of 10 to 12% of the price-range we're looking at and we can easily repay a modest mortgage (this can be demonstrated via rent over the past 5 1/2 years and the repayment of about 15k over the past 4 years with no missed or late payments on these in that timeframe. There'll also be evidence of hefty monthly savings from this point on.

If we'd known there was a possibility of a deposit landing into our laps we'd obviously have been far more careful about keeping the accounts in good order for the past 6 months or so but what's done is done: there's been a few missed direct debits, a couple of unauthorised overdrafts and a total lack of savings in that time frame.

Just wondering if anyone has gotten a mortgage from BOI or any of the other main banks in these circumstances? Or are we likely to get refused by any of the main players and end up having to look at the Home Choice Loan or similar?

Have you asked your bank?

Avatar MIA

Check out the Pepper mortgage article today on Irish Time website. Might suit you.

Might suit you, but would come with a premium.

Wouldn't rule out your own bank eithe if you are with them a long time.

Would use your funds to bring all your accounts up to date first.

whereto now

Go talk to a broker, find one that the banks pay not you, so it won't cost you anything and you'll get proffessional advice.

CramCycle

davo10 wrote: »

Have you asked your bank?

+1 in the same boat, we found that they wanted to see a capacity to repay that was higher than our mortgage would be by IMO a decent amount.

This said, Rent plus the difference into savings without any of the issues you mentioned (eg overdraft, Aunpaid DDs) for 6 months would do it.

Some banks appear to be less stringent than others according to some people, but anecdoetal evidence os just that.

Worth contacting a few banks to see which has the requirements that are workable for you.

TonyStark

whereto now wrote: »

Go talk to a broker, find one that the banks pay not you, so it won't cost you anything and you'll get proffessional advice.

+1 for this approach!

eyeball kid

Hi Sleepy,

There's a user here on boards who works as a broker. killers1 is his username. There has been a couple of thread over the years about him..
http://www.boards.ie/vbulletin/showthread.php?p=87557147
and http://www.boards.ie/vbulletin/showthread.php?t=2056815202

He knows exactly what the banks are looking for and would be able to point you in the right direction.

I used him, 18 months ago to get a mortgage for a new build. Just in the final stages of completion now and he's still answering questions from me! He's very helpful and will try to help anyone here. Highly recommended from me anyway. He get's paid from the mortgage companies so it doesn't cost you anything to talk to him. Send him a PM. It might take a couple of days for him to get back to you but he will.

Or if you want a phone number or email address, drop me a PM and I'll give share his details.

Regards...

Sleepy

First thing we're doing is getting all accounts up to date but the timeframe our landlord has given us wouldn't be enough to let us build up 6 months of good accounts, get mortgage approval and close on a house.

Ability to repay should be the most straight-forward thing to prove, I can point to a repayment capacity of about 150% of what the mortgage repayment would be over the past 5 years and should be applying with a higher salary than I've had during that time (a small raise and conversion of some of my commission to basic).

I've been with Bank of Ireland for 35 years but tbh, if they refuse and I get a mortgage off one of the other main players, I'll be switching everything to the new bank.

Michael D Not Higgins

A couple of things to keep in mind:

The bank usually want to see that you've saved at least half of the deposit yourself. If you roll up with 10% gifted from parents and nothing else that'll likely go against you.

What you consider repayment capacity and what the bank considers could be quite different. Missing DD and going into overdraft are likely to be highlighted as not being able to pay off current bills/debts.

The advice already given about going to a broker is likely the best, they'll be able to give you more information based on your circumstances.

Ursus Horribilis

I think you're about to find that being a customer of a bank for x number of years counts for nothing these days.

April 73

Buying a house is a major financial decision & you are committing to a long-term financial agreement when you take out a mortgage.

What's the rush, besides your LL selling up? Take the time to get your accounts looking good, show savings every month & continue to rent until you are in a position to go to a mainstream lender with a good financial record.

No-one should contemplate taking a mortgage out in a rush or choosing a house in a rush or taking a higher interest rate because you won't take time to put your accounts in order over six months. By all means speak to a broker but chill out on the rush.

Sleepy

The reason for the rush is simple enough: to rent in the area I'm living would cost almost twice what a mortgage will in decent areas that I can afford.

I've two primary-school going kids who I don't want to have to move to a different school (in an area where I can afford to save alongside paying rent) while we get the accounts in order only to move them again a year later. It's just not great for kids IMO.

CramCycle

Go to a broker or bank ASAP, don't wait around here for advice, truth is despite the ability to pay, they may not take you on. The sooner you are on the path they need to see you on, the easier it will be.

You may already be on that path but are too critical of yourself or you maybe so far off the mark that it is an unreasonable prospect.

L1011

The main concern here is going to be the gifted deposit and the size of it rather than anything else. They are also going to require savings. Start immediately.

I had a marginally poor history when applying - few late DDs mainly down to my employer being inconsistent as hell with payment dates for a number of years (when the financial controller left and was replaced by someone far less personally wealthy and reliant on their salary surprisingly that stopped); however it was all with BOI who I was applying to; and I was taking an 86% mortgage and had another 8% on top of that to cover costs, furnishings etc.

This Pepper crowd feel like the start of another subprime problem to me so I'd be avoiding.

Stealthfins

What part of the country do you live in ?

Relocation to the west coast of Ireland may be a better option.

The Wild Atlantic way ???

Property is cheaper to rent/buy

Does anyone remember the urban renewal scheme during the 90's ?

I think something similar may be on the horizon....

Todd Toddington III

whereto now wrote:

Go talk to a broker, find one that the banks pay not you, so it won't cost you anything and you'll get proffessional advice.

Boi and ulster bank are not authorised to pay any broker however all other banks will pay their fee (that's according to a broker I've just used)

Sleepy

I'll be going to a broker/bank as soon as possible. I'm currently in salary negotiations and hoping to be able to show a higher salary than I currently have and a better base salary to commission ratio.

Savings start on payday this month

Sleepy

Stealthfins wrote: »

What part of the country do you live in ?

Relocation to the west coast of Ireland may be a better option.

The Wild Atlantic way ???

Property is cheaper to rent/buy

Does anyone remember the urban renewal scheme during the 90's ?

I think something similar may be on the horizon....

I'm in Dublin over a decade but still a Galwegian at heart. I'd love to head west but it's just not an option for us due to family commitments and employment opportunities.

Evil-p

I keep seeing this stuff about a gift not being accepted by a bank as deposit on here.

In my experience and the experience of a few friends, the bank will accept a cash gift as long as you have proven ability to save or repay the mortgage amount + stress test.

In our case the mortgage was 500 euro less than our monthly rent. We only had about 1/3 of our deposit saved. The bank had no issue lending as we had rented consistently for 7 years.

CramCycle

Evil-p wrote: »

I keep seeing this stuff about a gift not being accepted by a bank as deposit on here.

In my experience and the experience of a few friends, the bank will accept a cash gift as long as you have proven ability to save or repay the mortgage amount + stress test.

In our case the mortgage was 500 euro less than our monthly rent. We only had about 1/3 of our deposit saved. The bank had no issue lending as we had rented consistently for 7 years.

Same here, they didn't/don't care once we proved the capacity to pay the mortgage + over the band of the stress test.

So we started paying the difference between our rent and the stress test into a savings account for 6 months and they were happy.

I asked about the deposit and they said it made no difference, once the capacity was there and we were showing capacity to go above and beyond (via savings) how the deposit came about was of no interest.

Michael D Not Higgins

CramCycle wrote: »

Same here, they didn't/don't care once we proved the capacity to pay the mortgage + over the band of the stress test.

So we started paying the difference between our rent and the stress test into a savings account for 6 months and they were happy.

I asked about the deposit and they said it made no difference, once the capacity was there and we were showing capacity to go above and beyond (via savings) how the deposit came about was of no interest.

The issue isn't from not having contributed to the deposit but more that the OP has no savings and has previously missed direct debits and gone into overdraft. That doesn't demonstrate capacity. Being more prudent in the coming months and regularly saving helps the application.

Sleepy

I can demonstrate capacity via 8 years of paying rent of 1k per month (or higher) and four years of loan of €540 per month which I just cleared last month. I'd be hoping to borrow around 200k over 30 years so unless rates went above 8.5% (which I believe is beyond the current stress tests?) the mortgage would be less than the repayment capacity demonstrated for the past 4 years...

Now, obviously there'll be additional expenses (home and life cover, maintenance) but combined they'd be less than 100/150 a month or so.

Still waiting on the boss to get back to me with a figure... driving myself demented flipping figures in spreadsheets at this stage!

April 73

Sleepy wrote: »

The reason for the rush is simple enough: to rent in the area I'm living would cost almost twice what a mortgage will in decent areas that I can afford.

I've two primary-school going kids who I don't want to have to move to a different school (in an area where I can afford to save alongside paying rent) while we get the accounts in order only to move them again a year later. It's just not great for kids IMO.

That makes sense.

Looking at your rent & loan repayments you've got a decent repayment capacity. Good luck!

Mrs OBumble

So how many months exactly do you have to find a new property to purchase, and for the purchase process to go through? Or are you hoping to purchase the property you're in now?

If you have to find another property to purchase, then I doubt you can do it fast enough, even if you can get a mortgage.

Sleepy

I've about 5 months which is going to make it very difficult or impossible to pull off without having to take a short-term lease somewhere in the meantime.

L1011

Evil-p wrote: »

I keep seeing this stuff about a gift not being accepted by a bank as deposit on here.

Its generally not accepted as the entirity of the deposit. The proven ability to save will mean you've either got cash to add to the gifted deposit or have blown it elsewhere - and that'd be a problem.

I had a (small) gift and BOI required proof that a proportion - they specified something, I'd need to check the paperwork - was my own savings. It was significantly lower than what was so one certified statement printoff was sufficient.

Sleepy

Got my expected raise in work this morning and contacted killers1 at lunchtime to get the ball rolling on getting mortgage approval. Got the income statement completed in work and have dug out my payslips for the past 6 months, last couple of P60's etc. and getting the rest of the paperwork together now. The raise will enable me to save a fair chunk each month but I'm not sure I'll have proof of it. I'm hoping the extra repayment capacity, lower earnings multiple being requested and lower LTV will help cancel out the lack of savings history and the couple of over-limit charges on my current account and credit cards over the past year. Will just have to wait and see.

We've seen somewhere we love (good size family home in a nice area, livable but in need of total redecoration which can be done over a couple of years - exactly the type of thing we've always wanted to buy) but don't want to be screwing around with the vendor so waiting until we have approval before making an offer. Fingers crossed someone doesn't beat us to it in the next month or so.

Toots

Good luck Sleepy! I hope it works out for you!

Sleepy

Thanks Toots. I'm getting a bit nervous I have to admit. It'll be the end of February before I can get all the necessary paperwork together which, even assuming an approval within a week (highly optimistic imo) gives us four months to go from sale agreed to getting the keys and moving in. :eek:

I suspect we'll need to look at self-storage and a short-term lease somewhere (or maybe persuade the executors of our landlord's estate to allow us stay a bit longer in exchange for flexibility on viewings).

Evil-p

Definitely doable Sleepy.

We offered on a house subject to mortgage approval. We were very upfront about it with the EA. Offer was accepted pending approval. I had submitted the docs to the bank the week before so I thought we were all good. Then the bank dragged its feet and were an absolute nightmare to deal with (i.e. they had the wrong address for my solicitor as solicitor had moved premises, refused to change the address even though solicitor website was updated etc, until they got it in writing to their securities dept and it would take several weeks to change the address even then, and after all that they sent my docs to the old address . If i ever do it again I am getting a broker!)

Even with all that we went from offer accepted to keys in 11 weeks.

We needed storage as we were going from rental to buying and have been living with family while refurbishing house. I'll drop you a PM about that.