General Mortgage Switching Query

tempnam

I'm trying to figure out the reason why I'm unable to switch my mortgage when my monthly repayments would decrease after switching due to better interest rates being offered by various banks.

The LTV is now at 80%

We've held our current mortgage for the past 10 years. Never once gone into arrears or missed a payment.

My salary has increased since first taking out the mortgage in 2008.

Small balance owed on a credit card.

Car loan.

Banks keep telling me that in order to switch to them I'd need to be earning in the region of €80K.....

Now the change in circumstances since we first took it out is that we were both full time employed with no dependents. We now have 3 dependents and are a single income family.

But, after 10 years my current salary is now more than our combined salary back in 2008. So, liked i said earlier, after switching and availing of a better interest rate I'd be paying less each month so it would be even more affordable.....

Every time I ask this I just get a 'computer says no!' Type of answer from bank staff.

Could someone please explain it to me - is it a matter of a bank considering the risk involved? Would they ever take the past 10 years repayment history into consideration?

Thanks in advance!

Fol20

Depending on each bank. Normally you need about 1150per adult and 250e per child of your net income and what you have left is for your mortgage papyment. Having 4 dependants on one salary can be quite risky. This combined with the 3.5x rule of your salary can have limitiations on affordability. One option to consider is to go to a broker to see if they can sell your financial hostory better. Try all the banks as their rules are different. Lastly. Has ypur wife ever considered going back to work even if its just for a year or 2 just so you can have more income flowing in - again chat to broker to see if thos would help you in any way

averagejoe123

What is your current salary and How much are you looking to borrow?

What happened back in 2008 is no longer relevant as the banks not have to follow strict lending criteria.

tempnam

Fol20 wrote: »

Depending on each bank. Normally you need about 1150per adult and 250e per child of your net income and what you have left is for your mortgage papyment. Having 4 dependants on one salary can be quite risky. This combined with the 3.5x rule of your salary can have limitiations on affordability. One option to consider is to go to a broker to see if they can sell your financial hostory better. Try all the banks as their rules are different. Lastly. Has ypur wife ever considered going back to work even if its just for a year or 2 just so you can have more income flowing in - again chat to broker to see if thos would help you in any way

(1,150 × 2) + (250 × 3) = 3,050 per month - what is this allocated against?

We're currently a little above this figure - but our current mortgage payment is 950 per month.

We made the decision for my wife to stop working mainly for 2 reasons:

The first being that we wanted at least one of us to be there with the kids especially during their first few years. After the first was born my wife continued to work while the baby was with a minder every day. We just weren't happy with dropping the baby off every day and not seeing her until the evening time. We didn't want to become the family where both parents see their kids for an hour in the evenings after both being at work all day.

Secondly, after deciding to start a family we looked at the financial aspect also. Creche/ minder fees and travel expenses for my wife would have eaten into 90% of her net income. We were willing to give up that 10% income for the sake of having a happier family life.

She of course would consider going back to work when the kids are all in school. But the youngest is only 6 months so that's a few years away yet.

I'll speak to a broker. Thanks for the steer.

tempnam

averagejoe123 wrote: »

What is your current salary and How much are you looking to borrow?

What happened back in 2008 is no longer relevant as the banks not have to follow strict lending criteria.

Yes I'm aware that the rules have changed. All I was explaining is that i have a proven track record of the ability to keep up repayments over the past 10 years - but this appears to be irrelevant when spaking to banks.

phormium

Your record is pretty much irrelevant unless you can meet their present lending criteria which is where you are having the problem. You need to qualify under lending rules first to even get started, then they will look at all the other bits such as record etc.

Unfortunate as I understand what you are saying about the payment decreasing but the new bank has to underwrite it at stress tested repayments so the actual figures don't really come into it that much.

tempnam

phormium wrote: »

Your record is pretty much irrelevant unless you can meet their present lending criteria which is where you are having the problem. You need to qualify under lending rules first to even get started, then they will look at all the other bits such as record etc.

Unfortunate as I understand what you are saying about the payment decreasing but the new bank has to underwrite it at stress tested repayments so the actual figures don't really come into it that much.

So it seems. Oh, well - I suppose we've no choice but to just stick to what we're doing for the foreseeable future!

I contacted a broker this morning and they talked me through this also.

tempnam

Separately, could anyone link me to an explanation of how mortgage interest repayments are calculated - as I just don't 'get it' when looking at mortgage calculators available on banks websites.

Trish56

Are you getting the best loan to value rate from your present lender op. since January this year if your loan to value has reduced they have to reduce your interest rate. So if you borrowed 90% 10 years ago and are paying 3.75% and their loan to value rate for 80% is now 3.50% - you are entitled to this rate but must submit an up to date valuation.

I know the banks won't be screaming this from the roof tops but there could be substantial savings for many people on variable or fixed rate mortgages.

tempnam

Trish56 wrote: »

Are you getting the best loan to value rate from your present lender op. since January this year if your loan to value has reduced they have to reduce your interest rate. So if you borrowed 90% 10 years ago and are paying 3.75% and their loan to value rate for 80% is now 3.50% - you are entitled to this rate but must submit an up to date valuation.

I know the banks won't be screaming this from the roof tops but there could be substantial savings for many people on variable or fixed rate mortgages.

Yes i had a rate change with a valuation about 18 months ago for 1 year fixed. Will look into it again.

Currently on 3.3% with KBC.