Did anyone borrow towards mortgage deposit?

goofy141

Hi,

Just wondering if anyone borrowed towards the mortgage deposit, and how did it work out?

Thanks

kfrp

goofy141 wrote: »

Hi,

Just wondering if anyone borrowed towards the mortgage deposit, and how did it work out?

Thanks

If you can't afford the deposit prob best not to be buying a house.

Not saying it's a good idea but I do know of some people who it worked out fine for. You are likely to get the horror stories mostly on here though.

Wheety

The bank will ask you where you got the deposit, if they don't see a history of saving. What will you tell them?

witchgirl26

If you have any outstanding loans, the bank will reduce your borrowing capabilities for the mortgage to account for the repayments on these so it could backfire a bit.

As Wheety said, they will look for a history of saving and want to see your bank statements so will see the loan. The only way I've seen them ok with it is a loan from a parent where the parent signs to say that it's a gift.

Evil-p

kfrp wrote: »

If you can't afford the deposit prob best not to be buying a house.

With all due respect I completely disagree. My mortgage payments are half of what my rent was. It was impossible to save for a deposit but I was more than able to repay my mortgage.

awec

If you borrow money to make up your deposit you won't get a mortgage. If you are gifted money by a relative you might but it'll depend on what percentage of the deposit it is and whether or not you've shown a history of savings. Your relative will have to sign to say they don't want any of the money back.

Cuddlesworth

Evil-p wrote: »

With all due respect I completely disagree. My mortgage payments are half of what my rent was. It was impossible to save for a deposit but I was more than able to repay my mortgage.

Any chance of the figures, house type renting vs buying, rent paid, loan amount, FTB, etc?

Evil-p

Cuddlesworth wrote: »

Any chance of the figures, house type renting vs buying, rent paid, loan amount, FTB, etc?

House for rent in beaumount - 2k per month

http://www.daft.ie/dublin/houses-for-rent/beaumont/coolgariff-road-beaumont-dublin-1783704/

House for sale (same road) - 370k. Assume FTB so 10% deposit. Mortgage or 330k is around 1300 per month on a 35 year mortgage

http://www.daft.ie/dublin/houses-for-sale/beaumont/8-coolgariff-road-beaumont-dublin-1570421/

Alkers

We borrowed (from our parents) and have been repaying each month in addition to our mortgage.
For most people the constraint comes from the income multiple limits as opposed to repayment capacity so you can quite easilly demonstrate an ability ovmert mortgage repayments and service the loan.

kfrp

Evil-p wrote: »

With all due respect I completely disagree. My mortgage payments are half of what my rent was. It was impossible to save for a deposit but I was more than able to repay my mortgage.

So you think paying back a mortgage plus what would likely be a €40,000 loan would be affordable?

Look what happened before with banks giving 100% mortgages, you're saying that having a mortgage/loan of 120% will be grand.

The banks have the deposit criteria for a reason, if you can't save the deposit you should be buying.

deathtocaptcha

Evil-p wrote: »

House for rent in beaumount - 2k per month

http://www.daft.ie/dublin/houses-for-rent/beaumont/coolgariff-road-beaumont-dublin-1783704/

House for sale (same road) - 370k. Assume FTB so 10% deposit. Mortgage or 330k is around 1300 per month on a 35 year mortgage

http://www.daft.ie/dublin/houses-for-sale/beaumont/8-coolgariff-road-beaumont-dublin-1570421/

€1300pm
+ house insurance
+ property tax
+ bins
+ maintenance (i.e. chimney, boiler, guttering, the odd repair or replacement of washing machine / fridge / microwave etc)
+ new furniture cost

There's lots of hidden costs involved with owning a home. Plus there's the risk of house prices dropping significantly, leaving you in negative equity (at some stage) or the risk of losing your job and ending up having to get a job a much further distance away etc...

Evil-p

Of course it's fine to have a mortgage and a loan. I'd imagine the majority do, whether its a car loan or a loan for renovations. And if the total amount doesn't exceed what you were previously spend on rent (and could afford one would presume) I don't see the problem

godtabh

awec wrote: »

If you borrow money to make up your deposit you won't get a mortgage. If you are gifted money by a relative you might but it'll depend on what percentage of the deposit it is and whether or not you've shown a history of savings. Your relative will have to sign to say they don't want any of the money back.

If you get a gift of over €20k you are likely to require a deceleration from the lender (family or who ever it is) from their solicitor.

Evil-p

deathtocaptcha wrote: »

Evil-p wrote: »

House for rent in beaumount - 2k per month

http://www.daft.ie/dublin/houses-for-rent/beaumont/coolgariff-road-beaumont-dublin-1783704/

House for sale (same road) - 370k. Assume FTB so 10% deposit. Mortgage or 330k is around 1300 per month on a 35 year mortgage

http://www.daft.ie/dublin/houses-for-sale/beaumont/8-coolgariff-road-beaumont-dublin-1570421/

€1300pm
+ house insurance
+ property tax
+ bins
+ maintenance (i.e. chimney, boiler, guttering, the odd repair or replacement of washing machine / fridge / microwave etc)
+ new furniture cost

There's lots of hidden costs involved with owning a home. Plus there's the risk of house prices dropping significantly, leaving you in negative equity (at some stage) or the risk of losing your job and ending up having to get a job a much further distance away etc...

I agree, there are lots of hidden costs. I'm a home owner myself. But not 700 euro a month in hidden costs.

GarIT

goofy141 wrote: »

Hi,

Just wondering if anyone borrowed towards the mortgage deposit, and how did it work out?

Thanks

Thousands of people did, it caused a recession.

goofy141

Hi all we already own a home (in negative equity), have good jobs and a good saving record, but trying to save 70k + even though we are saving over 2k per month is difficult and a long process. Our plan is to keep the house we are in now and rent it out and buy again.

Enquiries for a mortgage have been good and it looks like we would be offered more that what we would need, just a case of getting up the rest of the deposit, legal fees and stamp dute.

Thanks again for all the advice.

jimmycrackcorm

kfrp wrote:

The banks have the deposit criteria for a reason, if you can't save the deposit you should be buying.

It's because it's less of a risk for the bank because they hold both the value of the property plus the buyers contribution as security on the loan.

deathtocaptcha wrote:

There's lots of hidden costs involved with owning a home. Plus there's the risk of house prices dropping significantly, leaving you in negative equity (at some stage) or the risk of losing your job and ending up having to get a job a much further distance away etc...

Over the long term it's better value though. Once the mortgage is paid off compared to rent.

GarIT wrote:

Thousands of people did, it caused a recession.

I don't think borrowing a deposit was the reason behind the recession. If no one has borrowed deposits the result would have been the same.

Sleeper12

goofy141 wrote:

Just wondering if anyone borrowed towards the mortgage deposit, and how did it work out?

There's thousands of people did this at the peak of the Tiger. Most are very sorry now that they weren't honest with the lender

spurshero

i find a way higher people on these forms are negative rather then positive .sometimes you have to do what you think is right for yourself . be that buying great or renting that great as well. personally i think if you can own your own home cheaper then renting somebody elses then its a no brainer . but thats just my opinion.

Alkers

Sleeper12 wrote:

There's thousands of people did this at the peak of the Tiger. Most are very sorry now that they weren't honest with the lender

You can do it and be honest with the lender. Previously banks were lending purely based on repayment capacity, now they're constrained by the lti and LTV limits which restrict most people before their ability to repay.

cruizer101

goofy141 wrote: »

Hi all we already own a home (in negative equity), have good jobs and a good saving record, but trying to save 70k + even though we are saving over 2k per month is difficult and a long process. Our plan is to keep the house we are in now and rent it out and buy again.

Enquiries for a mortgage have been good and it looks like we would be offered more that what we would need, just a case of getting up the rest of the deposit, legal fees and stamp dute.

Thanks again for all the advice.

So you have an existing mortgage in negative equity and are looking to get another mortgage and a loan for a deposit?

I'd be very surprised if bank were willing to lend given those circumstances. You say enquiries have been good, have you disclosed about the existing mortgage?

goofy141

cruizer101 wrote: »

So you have an existing mortgage in negative equity and are looking to get another mortgage and a loan for a deposit?

I'd be very surprised if bank were willing to lend given those circumstances. You say enquiries have been good, have you disclosed about the existing mortgage?

Yes I have disclosed everything. I am not talking about borrowing 60-70k but a proportion of the deposit. Our house although in negative equity is actually increasing well in value and is now only about 10k in Neg equity. Rented proporties are being sought in the area and rent will well cover the mortgage.

runawaybishop

goofy141 wrote: »

Rented proporties are being sought in the area and rent will well cover the mortgage.

Are you sure? Its taxed at 50% and there can be a lot of expenses if you get a bad tenant.

goofy141

runawaybishop wrote: »

Are you sure? Its taxed at 50% and there can be a lot of expenses if you get a bad tenant.

Yes I have spoken to the council and they are willing to rent for 10 years and guarantee contents etc.

runawaybishop

goofy141 wrote: »

Yes I have spoken to the council and they are willing to rent for 10 years and guarantee contents etc.

https://www.boards.ie/vbulletin/showthread.php?t=2057803639

Have a read of that.

goofy141

will do thanks

LirW

If you're just 10k in negative equity by now, wait a few months and if you're in an urban area the chances are quite high that you'll be out of it by then, sell and move on. Being a landlord in the current climate is absolute madness and I wouldn't want to get involved with any council promising all you want. They are not known for dealing well with problematic tenants.
Your rental income is taxed with 50% and it's not said that the mortgage is paying itself, I'd just leave it honestly.

If you're in negative equity plus you're looking for a high mortgage again plus having a loan that partly funds the deposit the bank doesn't see you as an ideal candidate for a mortgage.

gar32

I got a loan for furniture for my new apartment Used it for deposit and got free or cheap furniture until loan was paid off. If you want something you will find a way. If you don't you will find an excuse

Good luck

newo

Yes we had no savings as we were renting. Got my brother to get a loan through his credit union for our deposit and had my parents do a declaration to say they had gifted me the money. Only way we could do it at the time and thankfully it has worked out. Paid my brother's loan back and no problem with mortgage payments. Banks criteria is too strict IMO.

endacl

Wheety wrote: »

The bank will ask you where you got the deposit, if they don't see a history of saving. What will you tell them?

Horses.

Victor

Evil-p wrote: »

With all due respect I completely disagree. My mortgage payments are half of what my rent was. It was impossible to save for a deposit but I was more than able to repay my mortgage.

Sure, but the bank may be on the hook for the full amount, which they don't like.

Colonel Claptrap

I'm fairly shocked how many posters have hidden loans from banks, or support this behaviour. Maybe I'm naive but I thought this madness ended 10 years ago.

Just my opinion on when I bought my first house in 2003.

I had saved around 5% of the LTV and I did borrow the rest plus more for a car. I bought a cheaper car then said my parents gave me the rest. They signed a document and no more was ever said.

In the end it worked out very well as my repayment on everything was still if I remember about 55-65% of my rent at the time. And back then rent was very reasonable.

In all honesty while I can see house prices slow and stop soon, I don't see rent dropping by 30% anytime soon. Your numbers above suggest you will be about this much better off

tedpan

Colonel Claptrap wrote:

I'm fairly shocked how many posters have hidden loans from banks, or support this behaviour. Maybe I'm naive but I thought this madness ended 10 years ago.

Unfortunately a bit naive.. The majority of people at work have either had a letter from their parents or had some sort of secret loan. The banks don't care, once they have the deeds, they still own the house until paid. It's not a huge risk for them.

The J Stands for Jay

tedpan wrote: »

Unfortunately a bit naive.. The majority of people at work have either had a letter from their parents or had some sort of secret loan. The banks don't care, once they have the deeds, they still own the house until paid. It's not a huge risk for them.

Bought in 2008 and 2016. Never had any secret loans or mammy letters. Not rich either, just able to manage money like an adult.

tedpan

McGaggs wrote:

Bought in 2008 and 2016. Never had any secret loans or mammy letters. Not rich either, just able to manage money like an adult.

Not many like you around. Most never grow up to adulthood

Manion

deathtocaptcha wrote: »

€1300pm
+ house insurance
+ property tax
+ bins
+ maintenance (i.e. chimney, boiler, guttering, the odd repair or replacement of washing machine / fridge / microwave etc)
+ new furniture cost

There's lots of hidden costs involved with owning a home. Plus there's the risk of house prices dropping significantly, leaving you in negative equity (at some stage) or the risk of losing your job and ending up having to get a job a much further distance away etc...

A lot of that is an argument against buying a property let not against borrowing for a deposit. You could argue that not buying leaves you exposed to potentially being priced out of an area within committing distance to you job. It really depends on personal circumstances.

Colonel Claptrap wrote: »

I'm fairly shocked how many posters have hidden loans from banks, or support this behaviour. Maybe I'm naive but I thought this madness ended 10 years ago.

If you cannot save the deposit don't buy the property might sound like prudent financial advice but it's just the other side of the borrow to hilt mentality. Don't make life decisions based on rules of thumb and intuitively nice sounding things. When we decided to buy a property we did all the sums including stress testing likely life scenarios including changing jobs and interest rate increase. I'd a massive spreadsheet of this. It's fairly straight forward to calculate can you afford the loan repayment. Calculating the total month on month, year on year costs of buying a house is something you should be doing anyway.

Long story short my mortgage repayments are about 65% of what it would cost to Rent a property where I live. My mortgage repayments if anything are coming down due to interest rate competition while rents are steadily increasing. I could not afford to rent where I live now but buying is quiet comfortable.

bleary

Twenty years ago buyers pushed to increase the income multiples from strict 2.5 first income and 1.5 second income.
10 years ago they had moved to 10 times my flatmates income.100% mortgage ,extra loan for fitting out. New tv on credit card and they were talking about getting a new car . When I asked if they could afford the repayments their response was if the bank gives it I must be able to afford it.
That was the reason houses went from 100k to 400 k in ten years. So no ,bank rules are not too strict. They are the only thing stopping eejits inflating prices even more.

__..__

I thought everyone borrowed most of the deposit. An unsaid rule

I don't know anyone personally anyway who didn't.

The J Stands for Jay

bleary wrote: »

Twenty years ago buyers pushed to increase the income multiples from strict 2.5 first income and 1.5 second income.
10 years ago they had moved to 10 times my flatmates income.100% mortgage ,extra loan for fitting out. New tv on credit card and they were talking about getting a new car . When I asked if they could afford the repayments their response was if the bank gives it I must be able to afford it.
That was the reason houses went from 100k to 400 k in ten years. So no ,bank rules are not too strict. They are the only thing stopping eejits inflating prices even more.

To paraphrase Fight Club: we spend money we don't have to buy things we don't need to impress people we don't like.

wally79

bleary wrote: »

Twenty years ago buyers pushed to increase the income multiples from strict 2.5 first income and 1.5 second income.
10 years ago they had moved to 10 times my flatmates income.100% mortgage ,extra loan for fitting out. New tv on credit card and they were talking about getting a new car . When I asked if they could afford the repayments their response was if the bank gives it I must be able to afford it.
That was the reason houses went from 100k to 400 k in ten years. So no ,bank rules are not too strict. They are the only thing stopping eejits inflating prices even more.

Keep the multiples but look at ability to repay I.e. savings each month plus rent rather than a deposit which people with well off parents can bypass

.......

This post has been deleted.

fg1406

We’ve saved our deposit through hard graft over the past 3 years (and that includes a Dublin rent in the mix) but the bank did go through our finances with a fine tooth comb. I got a cashed an expenses cheque through the credit union where our separate savings accounts are and they questioned even that. I couldn’t even entertain the concept of lying to them about my deposit had I borrowed for it.

budhabob

We bought 2 years ago in Dublin. It was a reasonably quick decision as we were in a lovely house renting for 4 years, and all of a sudden asked to move out - so that was the incentive, along with sky high rents to jump. We had decent savings, but the new rules increased the requirement, so we got a "gift" which we are now paying back over 5 years. While renting we were saving a lot per month, and paying sky high rents. Now that we own, we're paying the mortgage and repaying the "gift" so our outgoings are greatly reduced. To say people shouldn't borrow without knowing the full circumstances is madness.