Saving for a deposit - Mortgage/Bank Cred Union Confusion

rizzee

Hi all,

Myself and the OH have just been made permanent in our jobs (both got new jobs together in separate companies and have hit the 1 year mark in the jobs)

We are both still living at home in our late 20's and want to get the head down in saving for a deposit for a mortgage. Together almost 3 years, want to buy our own home instead of paying 1200+ in our area. We both work in South Dublin and live in Meath.

We both have approx 5k each in credit union loans which we are well ahead in payments. Apart from car tax/insurance we have no other bills bar the few quid we hand up each month in 'rent'.

We could easily save 1000+ each month, would it be better to set up a joint bank account or credit union? Our current salary combined would only be just over 50k.

Any advice on best place to save and how the bank will look at us in 1-2 years time with at least 25k deposit? Looking to get the ball rolling.

Mod: PLease move if in wrong section. Thanks

Trish56

It makes no difference who you save with once you can show savings. I would advise however to try and clear the two CU loans as soon as possible.

rizzee wrote: »

Hi all,

Myself and the OH have just been made permanent in our jobs (both got new jobs together in separate companies and have hit the 1 year mark in the jobs)

We are both still living at home in our late 20's and want to get the head down in saving for a deposit for a mortgage. Together almost 3 years, want to buy our own home instead of paying 1200+ in our area. We both work in South Dublin and live in Meath.

We both have approx 5k each in credit union loans which we are well ahead in payments. Apart from car tax/insurance we have no other bills bar the few quid we hand up each month in 'rent'.

We could easily save 1000+ each month, would it be better to set up a joint bank account or credit union? Our current salary combined would only be just over 50k.

Any advice on best place to save and how the bank will look at us in 1-2 years time with at least 25k deposit? Looking to get the ball rolling.

Mod: PLease move if in wrong section. Thanks

silent_spark

There's no need for a joint account from a mortgage point of view, two separate savings accounts will be fine - just a note of caution before merging your assets before you need to. Clear those loans in the next few months, then start firing everything you can into savings. Have a look at the minimum deposit you will need for the types of property you're thinking of - that's your absolute minimum target.

rizzee

Thanks for the advice.

Does it matter where I pump my savings into? I could pay off credit union and continue to use that as a base for savings? Would this be better than saving in the bank or is there any difference?

ELM327

No difference, once you have records for the bank (IE statements) it doesnt matter where you save

rizzee

Brilliant. Have been talking to herself. Going to knock these loans off and load everything into our credit union accounts for the time being. Thanks a mil

Sunrise_Sunset

It doesn't matter where you save.
But personally I prefer to save to the credit union. Reason being, I feel my savings increase more because I don't have easy access to it, no online banking etc, once I transfer it in, I can't really touch it. It keeps me disciplined.

advertsfox

Hey rizzee, long time no chat mate :cool: I'm in the process of a 2nd mortgage so I'll give the best steps possible to have a smooth application.

Myself and the OH have just been made permanent in our jobs (both got new jobs together in separate companies and have hit the 1 year mark in the jobs)

Congratulations, step 1 is out of the way - this is mandatory and shows you are good workers who can hold down a job / pass probation. Try stick to these jobs until you get approved / draw down.

We are both still living at home in our late 20's and want to get the head down in saving for a deposit for a mortgage. Together almost 3 years, want to buy our own home instead of paying 1200+ in our area. We both work in South Dublin and live in Meath.

Where are you looking to buy? At the moment, prices are high but seem to be stabling out a bit. You have a fantastic advantage as a 1st time buyer due to the Help to Buy Incentive.

We both have approx 5k each in credit union loans which we are well ahead in payments.

Your 1st caveat - there is no problem having a loan esp. since it shows good credit but it is cash that is not going to your house deposit as well as being taken away from your monthly available cash (from the banks perspective). Concentrate on overpaying these and clearing them off as soon as possible, then offset the difference into savings when done. The bank want to see you saving about 20-30% more than what your new mortgage would be to confirm you can afford it.

If you are paying €200 each to the CU, then change it to this way:

Now: E.g €400 to CU + €1000 Savings (for example)
Instead: €800 to CU + €600 Savings until both loans cleared
After: €1400 to Savings only

PS: Do you have any savings in the CU? If so, talk to the CU about using them to pay off the loan ASAP and using the cash in the account towards the final balance payment.

Apart from car tax/insurance we have no other bills bar the few quid we hand up each month in 'rent'.

Do you pay this rent in cash or via standing order? It's declarable in the bank as will stand against how much you can afford to pay each month. If you don't pay it via SO, I would do so and call it "home rent" etc. Your e.g €1400 a month savings would then show a mortgage repayment potential of this + whatever your "rent" is (e.g €1800 a month if you pay €400).

If you are serious about doing this, then maybe talk to the parents and see if there is a possibility of reducing / stopping this while you clear the loan off... only of course if possible - it should greatly improve the time frame in which you can apply for a mortgage and help the parents "get you out of the house"

We could easily save 1000+ each month, would it be better to set up a joint bank account or credit union?

Save what you can but don't leave yourself broke or needing to dip into the savings (which you should never ever do in this case!). If you can save €1000, then do it with a Standing Order.

Personally it is not required to have a joint account but I'd recommend a similar setup to myself for convenience (paperwork for the bank gets lengthy so 1 simple savings statement showing all of your cash going to 1 place works well). I'd recommend a bank for savings, the statements are easier to get.

1 Joint AIB Demand Deposit Account (online access only, no attached debit cards - no fees)
2 x Current Accounts with standing orders sending your 50% savings each into it

PS: We also have the same bank (TSB) for our day to day current accounts with a joint "bills" account - we both get paid to this bank, have our standing order for savings to our AIB and leave the required cash here for the rest of the monthly direct debits / bills. Whatever is left, we split down the middle into our separate "cash" accounts. Easy to track and you'll (in theory) never miss a direct debit / go overdrawn because you do NOT want this to ever happen when going for a mortgage.

Our current salary combined would only be just over 50k.

Is 50K before or after tax? With the 3.5 times rule:

50K = Max 175K mortgage (not house price, with 25K savings + HTB scheme, the house you could afford would be near €220,000.).
50K after tax is c. 70K before which would be max 245K mortgage (with 25K savings + HTB scheme, the house you could afford would be near €290,000).

Any advice on best place to save and how the bank will look at us in 1-2 years time with at least 25k deposit? Looking to get the ball rolling.

What bank are you with now? You are not obliged to use who you are with for a mortage. Nearly all banks have online saver accounts with 3/7/21 day access - these are great for visibility and prevent you taking cash out.

All the banks are fighting for new mortgage customers, we went with BOI due to their lower fixed rates (originally 3.6% fixed for 3 years, our new one is going to be 3.0% fixed for 5 years) and their cash back incentives (2% of the mortgage amount + 1% after 5 years). I like the idea of stability in paying the same amount each month, you can renew a fixed rate after this time if you don't like the idea of a variable rate. Shop around and use the online mortgage calculator.

It's a long process but so rewarding, all this saving really and organising really helps you appreciate the effort you have put it. I'd highly recommend consolidating as much loan / debt / bills you have and listing it in a spreadsheet so you know exactly what is coming in / out of your account each month. The banks will appreciate it and it helps you budget for the future.

The best of luck!

Paul_Mc1988

Just to add as I'm in the middle of this process. I'm with BOI and opened a mortgage saver account. Once you have saved into it for at least six months when you drawdown and close the account they give you an extra €2000. I'm going fixed rate for 5 years at 3% and they also give 3% cash back.

2% at the start and a further 1% at the end of the fixed term.

So for my 300k mortgage I receive 8k back at drawdown and 3k at the end. You can overpay by a small amount on a fixed rate and I plan to use the 8k to overpay by the maximum amount.