Aib refused mortgage.

Tirnanog79

My wife, two kids and myself have been renting for 9 years at a cost of €65,000

I went to Aib on Wens to look for a small mortgage (€100,000 ). The banker took all my details and said I could get a loan of €120,000.
She gave me all the paperwork to fill out at home.
Before I left I asked her what is the success rate for people in my position.
I make 39k per year and my wife is a stay at home mother.
The banker said I have a really really good chance of getting the loan. So off I went happy out.
Then today when I was in work she rang and said I can't get the loan as the bank doesn't believe I can support my family and pay the mortgage.
We have been renting from between €650 and €700 for 9 years.
The loan I requested was €666 per month for 15 years. Which is very doable as we have been doing just that for 9 years. She also said because we have two kids the bank can't grant the loan.
I've been with this bank for 20years.
Any advice on which road we can travel now ?

I really don't know what to do and it's making me feel very low.
Thanks for taking the time to read this post.

Merowig

Sad to hear. Try other mortage providers. Not much else left to do than that.
It would perhaps help if your wife returns to work at some point

matt-dublin

You can appeal the decision. When appealing you should put together a business case showing what you can afford based on the mortgage.

The only thing to think about is the bank will stress test your finances by seeing if you can afford a certain percentage interest rate hike say 1% which could equate to €100 a month.

On top of that you would be expected to pay life and home insurance which will also be €100 a month.

Property tax circa €20 a month.

Water/electricity/gas roughly €120 a month.

Internet/TV/TV licence etc €60 a month.

Also your dependants will have a fixed deduction of your disposable income.

Your disposable income will be worked out at roughly a % of your overall income. The mortgage repayment can not exceed a certain % of your disposable income.

Freddiestar

Bummer! They calculate that if your kids go to college in future it will drain a lot more of your disposable income

Olishi4

I can't see how you wouldn't have got it. Was she saying no to 120000 or 100000? Did she offer additional years like 20 years rather than 15?

Try Ulster Bank. We didn't get a mortgage from them because we were offered slightly more from AIB but Ulster Bank were offering us a loan too.

A friend of mine was looking to get a mortgage (not first) a while ago with AIB and he was delayed a few times. Every time he went in and they put his info in the system, they seem to offer significantly different amounts based on their ever changing criteria. You probably have a place picked that you need to get moving on but if not, try with them again in a couple of months.

Tirnanog79

Olishi4 wrote: »

I can't see how you wouldn't have got it. Was she saying no to 120000 or 100000? Did she offer additional years like 20 years rather than 15?

Try Ulster Bank. We didn't get a mortgage from them because we were offered slightly more from AIB but Ulster Bank were offering us a loan too.

A friend of mine was looking to get a mortgage (not first) a while ago with AIB and he was delayed a few times. Every time he went in and they put his info in the system, they seem to offer significantly different amounts based on their ever changing criteria. You probably have a place picked that you need to get moving on but if not, try with them again in a couple of months.

I asked for 100k for 15 years but she put me down for 220k over 25 years saying they will refuse that and give me 120k no problem.

Olishi4

Tirnanog79 wrote: »

I asked for 100k for 15 years but she put me down for 220k over 25 years saying they will refuse that and give me 120k no problem.

That sounds really strange compared to my experience tbh.

Maybe arrange a meeting with her to explain it further. 100000 over 15 or even if possible pushed to 25 years sounds like a no brainer. I don't get why she is even bringing the 220k into it or the 120k when you only want 100k!

drunkmonkey

What's the LTV here, is the house 120k and your putting in 20k and borrowing the 100k?
Stretching it out might be a good idea as it'll be less pressure, you can always overpay it and clear it down in 15years.

Tirnanog79

drunkmonkey wrote: »

What's the LTV here, is the house 120k and your putting in 20k and borrowing the 100k?
Stretching it out might be a good idea as it'll be less pressure, you can always overpay it and clear it down in 15years.

She said they will give me 110k and I have to give 10k up front. She said I had a very good chance of getting it. But now she said she will write me a refusal letter to give to the council so I can try to get a council house but my wife and me want our own house.
You have to excuse me but what is LTV. I'm all new to this mortgage carry on and I don't know much about the lingo used.

sillysocks

I'd say it'd be worth going to a broker. We found them great for knowing exactly what we should get and how to apply properly, what info to give the bank etc.

bmwguy

Sorry to hear your predicament. Banks are tight these days. Try a broker they will take the case to a number of lenders for you. I got a 200k mortgage on about same income as you in 2010. No kids though

drunkmonkey

It's the mortgage amount owed versus the value of the property.

Lets' say the house your buying is 200k, You put in 100k and the bank puts in 100k, your loan to value is then 50%.
The risk to the bank is lowered the lower the LTV. You also get a different interest rate based on the LTV

You can see the rates here for AIB http://personal.aib.ie/our-products/mortgages/mortgage-interest-rates

Tirnanog79

bmwguy wrote: »

Sorry to hear your predicament. Banks are tight these days. Try a broker they will take the case to a number of lenders for you. I got a 200k mortgage on about same income as you in 2010. No kids though

How much roughly would a broker cost ?
My wages will go up year after year with the company I'm with but she said that didn't matter.
Seems like such a big hill ahead trying to get a small simple house. I never went crazy during the boom. Just tipped away working and with family life I had no time to get a mortgage and I'm a bit disgusted with myself I didn't go about it sooner.
I've spent €65000 in rent in 9 years which is over half of what I want which now seems all wasted.

Just feeling sorry for myself at the minute.
At least we have our health

sillysocks

Brokers don't usually charge (in my experience anyway), it's free for you and then if they get you a mortgage they'd get a commission or fee from the bank for referring you to them.

Alkers

There's six other lenders to try first of all!

Tirnanog79

Tirnanog79 wrote: »

I asked for 100k for 15 years but she put me down for 220k over 25 years saying they will refuse that and give me 120k no problem.

Did she seriously put you down for more than you wanted? Why did you allow it?

Tirnanog79

[Deleted User] wrote: »

Did she seriously put you down for more than you wanted? Why did you allow it?

She told me that's the way it works.
I asked for 100k @ 15 years and she advised me to ask for 220k @ 25 years.
She said if I look for more il get what I want. I have no experience in all this and took her advice.

TallGlass

She must have gotten out of a time machine and thought it was 2005. Why would you even as a bank employee try that? Bizarre.

clairewithani

Just throwing out the question here but will the fact that he was refused this mortgage tell against OP? Will there be a question on the next form asking "were you ever turned down for a mortgage by another lending institution?"

Glen_Quagmire

Am I reading this correctly? The banker put your application in for 220k when you're making 39k per annum?

The lending rules are 3.5 times your income, therefore the maximum mortgage you can get without an exception is well below 220k?

Tirnanog79

Glen_Quagmire wrote: »

Am I reading this correctly? The banker put your application in for 220k when you're making 39k per annum?

The lending rules are 3.5 times your income, therefore the maximum mortgage you can get without an exception is well below 220k?

She said she would put it down for 220k.
Then rang me up and said I would have to earn 3.5k a month to cover mortgage and living expenses.

fatherted1969

Tirnanog79 wrote: »

I asked for 100k for 15 years but she put me down for 220k over 25 years saying they will refuse that and give me 120k no problem.

Don't feel too bad. I was also refused a top up on my existing mortgage with AIB about 5 months ago. No other bills other than 1k in credit card, 11k owing on existing mortgage and a 15k topup giving a total debt of 27k. Salery cert of 40k submitted. Have 3 kids under 18.

Wife is currently out sick with a serious illness so we were refused cos she had no payslips for the period when we applied. Both of us are permanent pensionable so go figure. Calculation system is a disgrace. All leaned towards double income couples with no kids.

I'm surprised you weren't laughed out the door when you applied first. AIB is a joke of a bank. Feigning concern in their refusal while trying to sell a personal loan for the same amount. Topup was at 3.25% while the personal loan was 9.9%

Sorry to hijack the thread but it's laughable that someone with debts of 11k with a perfect credit history could be refused a 15k remortgage

Best of luck

Tirnanog79

Sorry to hear about your wife.
At the end of the day we are lucky to live til 75 hopefully. And I know money is a silly thing to worry about in this short life of ours but sometimes I get real sick of money,banks,mortgages etc.

I just want to spend my hard earned money on "our" own house and not someone else's. I have the means to pay off 120k but just need a little break.

newacc2015

Tirnanog79 wrote: »

Sorry to hear about your wife.
At the end of the day we are lucky to live til 75 hopefully. And I know money is a silly thing to worry about in this short life of ours but sometimes I get real sick of money,banks,mortgages etc.

I just want to spend my hard earned money on "our" own house and not someone else's. I have the means to pay off 120k but just need a little break.

But when you are getting a mortgage on 'your house'. You will have to pay for things you dont currently pay for eg LPT, maintenance of the property, furnishings, insurance. You can pay the mortgage, as it is the same price as rent. But realistically having a mortgage will be about €850 a month minimum when you factor in all your additional financial costs that come with owning a home rather than renting it. I imagine the bank factored these additional costs into your mortgage. It will be even more expensive when the ECB hikes rates in a few years.

Go to a broker who is seeing who is giving out credit. I phoned a broker a few years back who immediately told me what banks were actually open for business. A broker will know how to fill out a mortgage application form

matt-dublin

Tirnanog79 wrote: »

I asked for 100k for 15 years but she put me down for 220k over 25 years saying they will refuse that and give me 120k no problem.

Something isn't right here.

The max she should have requested is €139,000 (3.5 times income)
Your minimum deposit would have been €34,000 (80% LTV)
These are the new rules, she can apply for an exception but it would be very unlikely you would get one due to your circumstances.

On a €100,000 loan you would still require €25,000 deposit based on the new banking rules unless she got you an exception.

What's your monthly take home?
Seems to me that it should be approx €2100 of which say €1500 is classed as disposable.

Knock say 20% off for the kids leaves you with €1200

Your mortgage repayments can't exceed 35% of this figure, €670 is a little over half.

That's probably where you're getting caught.

My advise here would be to go to a mortgage broker and request him to get you some for of AIP. It's likely KBC or the permo will lend to you. KBC has a better variable rate at the moment than AIB anyway so your repayments would be less.

Out of curiosity what age are you, to get around the % of disposable income you should borrow for the max term you can on a variable rate and then just dump your spare cash into the mortgage.

So say your repayments are €450, you just transfer an extra €250 every month into your mortgage and it will be repaid earlier than the actual loan term and there won't be any penalties

blindside88

My best advice would be to go to a broker, I had trouble with aib when I was applying for a mortgage and went to a broker, ended up getting the mortgage through haven (same underwriter as AIB). What part of the country are you in? Someone might be able to advise of a good broker

Tirnanog79

I just turned 37 and I'm from West Cork. I make 39.5k per annum which isn't including a bonus of 1k to 2k per annum.
Thanks to all for the advice by the way.

I'll try to act on it as best I can.

Olishi4

matt-dublin wrote: »

Something isn't right here.

The max she should have requested is €139,000 (3.5 times income)
Your minimum deposit would have been €34,000 (80% LTV)
These are the new rules, she can apply for an exception but it would be very unlikely you would get one due to your circumstances.

On a €100,000 loan you would still require €25,000 deposit based on the new banking rules unless she got you an exception.

What's your monthly take home?
Seems to me that it should be approx €2100 of which say €1500 is classed as disposable.

Knock say 20% off for the kids leaves you with €1200

Your mortgage repayments can't exceed 35% of this figure, €670 is a little over half.

That's probably where you're getting caught.

My advise here would be to go to a mortgage broker and request him to get you some for of AIP. It's likely KBC or the permo will lend to you. KBC has a better variable rate at the moment than AIB anyway so your repayments would be less.

Out of curiosity what age are you, to get around the % of disposable income you should borrow for the max term you can on a variable rate and then just dump your spare cash into the mortgage.

So say your repayments are €450, you just transfer an extra €250 every month into your mortgage and it will be repaid earlier than the actual loan term and there won't be any penalties

Ye it sounds like you might just not scrape it with those figures but should if you could get 25 or 30 year mortgage. At 39000, two children and stay at home wife, I'd say take home is a bit more than 2100.

Afaik two banks dont deal with brokers. I think its Ulster Bank so try Ulster Bank yourself as well even if you go to a broker.

When we went into them, they took our information but also did a questionaire about expenses essential and non essential. It's important that you have listed all your expenses and that this ties in with the mortgage so your not going over your monthly outgoings so work this out before going into them.

So don't over estimate things like entertainment, clothes shopping etc. Best to keeps those things low so that it shows that with the mortgage and expenses that you can still save, even if that's only a small amount like 20 or 50 euro. You can cut down on some of them if it means getting your house anyway. Do they include childrens allowance cause that's another 260 towards your monthly income.

wonga77

Me and my oh built a house over the course of a few years. As I was in the building trade for long enough I was able to do the most of it myself keeping costs down. We are also in a lucky position where we were able to build the most of it using savings. Anyway to cut a long story short we overshot the budget and coming towards the end of the build realised we would need another 20k for furnishing. Went to the BOI, who I have used all my life, where we both had savings accounts (used to build the house) so we figured that was proof enough that we were capable of meeting any requirements.
Like you op we were advised to go for more so we went for 30k. Now at the time we were both in part time employment but still making around the 20k or so per year. As we have 2 small kids it made more sense to be part time and take care of the kids then both be full time pay for creche etc. We were shot down for that pitiful amount on the basis that we couldnt afford to keep ourselves and our 2 kids and maintain a payment to the bank. I was fuming, it wasnt like I was looking for 300k
We went to the credit union instead and took out 20k over 5 years which is their max amount for the max time (or was 2 years ago anyway) finished the house and have the loan almost repaid already.

My aunt was in a similar position to you last year, her and the husband went to a broker and they got their loan, but only after jumping through alot of hoops and it took a long while, its still probably your best bet though

Tirnanog79

Thanks for the advice Wonga.
All I need is 100k for a site and log house.
the site is 20k and log house is 80k.

My brother gifted me an acre of land he had since the boom time but it's in a location far from where we presently live and far from work. I'm going to get it valued as agricultural land or try to get planning on it and sell it.
Hopefully whatever I make from it will go to a deposit. A broker has been mentioned many times so I believe that's my next step in the right direction.

Graham

Were you looking for a self-build mortgage?

wonga77

Even thinking about it now gets me annoyed, we had the guts of 80k saved up with BOI over the last 10 or so years and had financial backing from the family business but they more or less laughed at us. The woman in the bank apologised and said that these applications were decided by someone in Dublin who didnt seem to understand that cost of living in Sth Kerry would be much cheaper than the capital.
In the end it probably worked out better for us but still.

CarrieDzzz

Hi OP, we were also in similar situation last year, we applied to AIB, they told us there would be no problem whatsoever in getting the amount required. We submitted all the papers, letters, accounts, and back and forth to them for about a month and then came the phone call, sorry even though you meet the financial requirements and we had no other loans, my OH is a farmer and the turned it down based on the fact his job "is seasonal", despite submitting 5 years of accounts and showing the same earnings each year. Anyways, we were advised to go through a broker, I would definitely recommend going this route. Its in their best interest to get you approval.

Best of luck with it. Hopefully it works out for you too.

Muas Tenek

Not sure if you would qualify for Home Choice loan http://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/home_choice_loan.html
Here is a list of brokers in Cork area http://www.homechoiceloan.ie/Authorised-Brokers.aspx?id=4
I hope this helps.... best wishes to you and your family.

Shop40

Hi OP,
my advice would be to try KBC. We got a much better deal with them than BOI etc were offering and they were prepared to lend us a bit more.
I wouldn't see them refusing the amount you need to be honest.
Good luck!

Trish56

Hi OP,
I'm a mortgage broker with over 40 years experience so will try and help out here as there seems to be a lot of confusion and incorrect information given out.

Firstly I must say I am shocked at how you were dealt with by a very inexperienced staff member at AIB and would have to believe that she was not a mortgage advisor. All the lenders have affordability calculators and when all your information is input it tells you if you qualify for a mortgage or indeed will tell you how much you qualify for.

I'm not sure from your post if an actual application was submitted with supporting documentation (P60's, payslips etc) however I do know she could have advised you within a few minutes just from the info you posted here.

The calculator will calculate what your net disposable income is per month which is after tax, PRSI and USC and pension deductions for those in public service. In your case your net disposable income is €2260 per month and as far as the lenders are concerned that after stressed monthly repayments of in your case €615 you should have €2550 left over for a couple with two children. The result is you are short on income of €290 per month to qualify for a mortgage of 100k over 28 years. Your income qualifies you for a mortgage of 54k. Is there any possibility that your wife can get an evening job?

Lenders also look at the following when assessing your mortgage application:
Affordability - you need to provide evidence that you have monthly savings or paying out rent or both equal to the stressed monthly repayment. In your case you are paying rent in excess of €615. This rent must be shown to go out from your bank account monthly.
You also need to show savings of at least 10%.

I'm also not a 100% sure that any of the lenders would accept a log cabin as security and the cost would be a lot more than 100k when you take into consideration, site preparation, entrance, driveway, sewerage, water, ESB, footpaths, planning permission, Architect fees and legal fees.

You did not mention that you have any savings to cover the above however you mentioned that you were looking for 100k to cover site 20k and log cabin 80k. The most you can borrow is 90% of the purchase price subject to all of the above so you would need savings to cover the 10% plus extra's.

I hope the above explains why you were refused and hopefully your wife might be able to get some part time work in the evenings to help you qualify for a mortgage in the future.

I am horrified at how you were treated at the bank and the mis - information you were given and perhaps you should write a letter of complaint to the Manager of the branch.

Trish

phormium

OP did I read it right and you are looking for a mortgage for a log house?

If so double check with the lender that this is ok, I worked for a main bank for many years and they would not do a mortgage on a log home as a home loan. They would do them as holiday homes but not at the same loan to value, I think it was only around 50% they would lend. House insurance used to be higher on them too, maybe things have changed there though.

ChampagnePop

What deposit do you have OP?

Make a complaint against your original advisor, you can't borrow over 3.5 times your salary so to be advised to do so was stupid and will now affect your AIB credit rating.

Trish56

It wont affect his credit rating just because he applied for a mortgage and got declined. I would think a full application was never submitted to Dublin and a more senior person in the branch than the staff person the OP met made the decision.

ChampagnePop wrote: »

What deposit do you have OP?

Make a complaint against your original advisor, you can't borrow over 3.5 times your salary so to be advised to do so was stupid and will now affect your AIB credit rating.

matt-dublin

Trish56 wrote: »

It wont affect his credit rating just because he applied for a mortgage and got declined. I would think a full application was never submitted to Dublin and a more senior person in the branch than the staff person the OP met made the decision.

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

amcalester

matt-dublin wrote: »

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

But they may have declined in locally without sending it to the underwriters, perhaps someone more senior felt that it was a waste of time sending it up and so declined it.

wonga77

Thats may of happened but would be very irresponsible of any bank employee, I couldnt imagine anyone would do it

matt-dublin

amcalester wrote: »

But they may have declined in locally without sending it to the underwriters, perhaps someone more senior felt that it was a waste of time sending it up and so declined it.

They don't have the authority to decline it. They would advise that it's unlikely the mortgage would be approved but would still have to send it to underwriting.

The branches have no authority any more.

Judge Trudy

I'm sorry to hear about this and I hope you'll be able to explore other options. We will be in a similar situation to you next year. We will be looking for a €100,000 mortgage with two children. My partner is self employed and I'm not permanent at the moment. I'm really hoping I'll get another contract after my maternity leave is up in January. Can I ask if you had much of a deposit saved?

matt-dublin

Judge Trudy wrote: »

I'm sorry to hear about this and I hope you'll be able to explore other options. We will be in a similar situation to you next year. We will be looking for a €100,000 mortgage with two children. My partner is self employed and I'm not permanent at the moment. I'm really hoping I'll get another contract after my maternity leave I'd up in January. Can I ask if you had much of a deposit saved?

You will need 20% of what you intend to spend plus overheads.

Your husband will need 5 years of accounts for the bank and I don't think they will take part time or contract income into consideration or it will be heavily scrutinised.

Trish56

The branch manager has the responsibility to ensure all mortgage applications sent to Dublin for underwriting complies with the credit policy and that all supporting documentation is attached. The first item to accompany the application is the 'mortgage affordability calculator' which would clearly show the OP does not qualify for 100k or the 210k that was mentioned. Therefore the application would not be sent. There are very strict guidelines for both brokers and Branch Managers before sending an application for underwriting.

matt-dublin wrote: »

The local branches can't do that anymore, only the underwriters in town can do that.

All local approvals were removed after the boom specifically to control lending better

Trish56

There's a lot of incorrect information being posted on here.

A first time buyer can borrow up to 90% of the purchase price or 3.5 times joint income which ever is the lesser up to a purchase price of 220k and 80% on the balance. Therefore a 10% deposit will be required plus 1% stamp duty and approx. €2200 in legal fees.

You need to have a net disposable monthly income after stressed tested mortgage repayments of €1300 for a single person and €2050 for a couple plus €250 per child.

Self employed will need 3 years accounts and/or 3 years P21's (Revenue Tax Assessment forms) plus a letter from their Accountant stating their taxes are up to date. Lender will take the average over the 3 years as income.

If you pay childcare or maintenance this will be treated the same as a short term loan.

Part time income will be taken into consideration once the position is permanent.

For a home choice mortgage the minimum income for a joint application is 45k and 30k for a single applicant.

If you are paying rent it needs to be reflected in your current account and not paid by cash.

Hope the above helps.
Trish

matt-dublin wrote: »

You will need 20% of what you intend to spend plus overheads.

Your husband will need 5 years of accounts for the bank and I don't think they will take part time or contract income into consideration or it will be heavily scrutinised.

matt-dublin

Trish56 wrote: »

There's a lot of incorrect information being posted on here.

A first time buyer can borrow up to 90% of the purchase price or 3.5 times joint income which ever is the lesser. Therefore a 10% deposit will be required plus 1% stamp duty and approx. €2200 in legal fees.

You need to have a net disposable monthly income after stressed tested mortgage repayments of €1300 for a single person and €2050 for a couple plus €250 per child.

Self employed will need 3 years accounts and/or 3 years P21's (Revenue Tax Assessment forms) plus a letter from their Accountant stating their taxes are up to date. Lender will take the average over the 3 years as income.

If you pay childcare or maintenance this will be treated the same as a short term loan.

Part time income will be taken into consideration once the position is permanent.

For a home choice mortgage the minimum income for a joint application is 45k and 30k for a single applicant.

If you are paying rent it needs to be reflected in your current account and not paid by cash.

Hope the above helps.
Trish

I forgot about the first time buyer exceptions. Well spotted.

RE the branch approval process. Based on the mortgage affordability calculator that loan should never have been suggested based on current affordability information so the loan officer shouldn't have sent it for approval in the first place.

The branch manager wouldn't really look at it unless there were considerable extenuating circumstances as it suddenly becomes a micromanagement role (first hand experience with both ebs and AIB).

The lending officer is supposed to deal directly with central underwriting and cut out the middle man unless they were looking at doing something out of the norm like rule exceptions (which potentially they were trying to do with that loan amoun possibly?)

What really strikes me is that they seem to have suggested an application value based on 5-6 times the gross income??

Can't understand why they would do that as it's usually a massive push to get 4-4.5 times income?

matt-dublin

Some other costing which are missing:
Surveyer fees : €1500 + vat
Land registration and search outlays (should be included in solicitor charges but roughly €750)
Some lenders also charge a €150 valuation fee as well