Have deposit but didn't save it. This seems a problem

Flashdan

Hi,

We were not in a position to think of buying a house but we received an inheritance (lucky us) so we decided to apply for a mortgage as we have no bills, credit cards, loans etc.

Even though we have evidence of paying rent that would cover a mortgage and have half the price of the house as inheritance we are not eligible because we didn't save it ourselves.

Anyone know anything about this? It seem like we are stuck until we can save 25 grand on our own.

Edgware

Flashdan wrote: »

Hi,

We were not in a position to think of buying a house but we received an inheritance (lucky us) so we decided to apply for a mortgage as we have no bills, credit cards, loans etc.

Even though we have evidence of paying rent that would cover a mortgage and have half the price of the house as inheritance we are not eligible because we didn't save it ourselves.

Anyone know anything about this? It seem like we are stuck until we can save 25 grand on our own.

I sympathise with you. Paying a rent which is far in excess of what the monthly repayment would be, on time, payment recorded. and in full employment just doesnt seem to make any difference. What more " ability to repay"do they need?

pleh

Flashdan wrote: »

Hi,

We were not in a position to think of buying a house but we received an inheritance (lucky us) so we decided to apply for a mortgage as we have no bills, credit cards, loans etc.

Even though we have evidence of paying rent that would cover a mortgage and have half the price of the house as inheritance we are not eligible because we didn't save it ourselves.

Anyone know anything about this? It seem like we are stuck until we can save 25 grand on our own.

Start saving now consistently. You probably need a saving history for 6 months for the stress tested amount for your mortgage payment. So that would include rent and the balance in savings. Ask the bank mortgage advisor what the minimum you need to save each month for the mortgage amount you aim for.

C3PO

I would talk to a broker

Six months record of saving covering the stress test amount should see you right.

Talk to a broker alright.

Flashdan

Thanks for your replies. We do have 6 months of saving just not the required percentage. They say 5% in savings so that would be 12500 but as I said it was not long notice before I got the money. This is through a broker but these were the people who offered the most potentially. The broker is looking into other options.

Thanks again for your replies

NinjaTruncs

Would it work if you paid your rent out of your inheritance and save from your wages, assuming they are in different account. It doesn't make any difference in terms of money, but would make it look like you're saving.

Flashdan

NinjaTruncs wrote: »

Would it work if you paid your rent out of your inheritance and save from your wages, assuming they are in different account. It doesn't make any difference in terms of money, but would make it look like you're saving.

I will look into that.

AngryLips

The broker is definitely your best bet - they'll have a better knowledge of the credit criteria of each of the lenders and will direct you to the one that will be most favorable to you.

listermint

Get a credit history though. That could even mean doing your shopping on a credit card paying it down monthly in full. It all goes towards your record meaning you appear reliable to the bean counters

jimmycrackcorm

pleh wrote:

Start saving now consistently. You probably need a saving history for 6 months for the stress tested amount for your mortgage payment. So that would include rent and the balance in savings. Ask the bank mortgage advisor what the minimum you need to save each month for the mortgage amount you aim for.

My ex got half the equity of it shared home so she had a substantial deposit to buy her own place. However she had no record of saving every month so that was the black mark for getting a mortgage.

To get it she basically had to show that she could save 1k every month for six months. After that she had the large deposit, a record of saving and qualified for 3.5 times the mortgage she needed. So it was straightforward.

A bank won't hand out a mortgage simply on the basis of having a big enough deposit. You need to also demonstrate that you have fiscal reliability also.

Dolbhad

As previously posters said, you will need at least 6 months savings at the stress test amount. Usually this can be shown between your rent and saving the balance. I don’t think you’ll get around that regardless of a broker or not. Keep the head done and save away and you’ll be ready to go in no time.

Sleeper12

Flashdan wrote:

Anyone know anything about this? It seem like we are stuck until we can save 25 grand on our own.

The bank looks at it as you both earned X amount over the last two or three years yet you didn't manage to save any of it. They want you to prove that you can save regularly.

I hope I don't sound judgemental. I'm just showing how the banks look at it.

Have a chat with Bank of Ireland, directly. I spoke to them and they said that paying rent, or indeed paying a loan on time every month, is a demonstrator of your ability to repay.

Flashdan

[Deleted User] wrote: »

Have a chat with Bank of Ireland, directly. I spoke to them and they said that paying rent, or indeed paying a loan on time every month, is a demonstrator of your ability to repay.

Will do that. Think that is who they are trying next

Flashdan

Flashdan wrote: »

Will do that. Think that is who they are trying next

I'm with BoI and I'm happy enough with them, so perhaps there's a bias, but I found them reasonable enough when chatting on the phone. They seem to have a couple of stackable offers too at the moment (if you save for your deposit with them, using a "mortgage saver" account, they'll give you €2k at drawdown, and they do an offer of 2 cashback at drawdown, and 1% cashback in 5 years.

(I presume you only get the 1% in 5 years if you stick rigidly to the repayment schedule, but I could well be wrong).

My opinion on them being 'reasonable' may well change if they refuse me, the day I go looking for a mortgage, of course

Eric Cartman

listermint wrote: »

Get a credit history though. That could even mean doing your shopping on a credit card paying it down monthly in full. It all goes towards your record meaning you appear reliable to the bean counters

absolutely this, the amount of people I know who have gone their whole lives only getting loans off their parents and save save save, no credit card etc.. who get declined mortgages and the ones that were living in credit card debt but keeping up payments and only tightened the belt for 18 months to get a house.

I think any employed adult needs a credit card not only for emergencies but also building credit history, getting a card and throwing all your normal spending on it and paying it off every month while still saving is the best route to being mortgage ready in 12 months.

Reversal

Eric Cartman wrote: »

absolutely this, the amount of people I know who have gone their whole lives only getting loans off their parents and save save save, no credit card etc.. who get declined mortgages and the ones that were living in credit card debt but keeping up payments and only tightened the belt for 18 months to get a house.

I think any employed adult needs a credit card not only for emergencies but also building credit history, getting a card and throwing all your normal spending on it and paying it off every month while still saving is the best route to being mortgage ready in 12 months.

Has this not consistently been shown to be false? I've seen multiple banks and brokers put out stuff recently in an effort to bust this myth. I've seen it stated numerous times that there is no impact on a mortgage application, whether you've never availed of a credit facility or not. Unless you've missed repayments of course.

grassylawn

The issue is that you need to show you can make the repayments. If you save X per month then you show you can afford to repay X per month. In our case they took rent into account, which was fine in itself because it was greater than the repayments.

FileNotFound

Flashdan wrote: »

Will do that. Think that is who they are trying next

You are in that odd situation where having a loan would have helped.

They tend to need something that gives a credit rating, rent used not count and based on you post still doesn't.

They may be able to agree a pre mortgage savings plan with you - save X for X months to show you can etc.

BeginnerRunner

Reversal wrote: »

Has this not consistently been shown to be false? I've seen multiple banks and brokers put out stuff recently in an effort to bust this myth. I've seen it stated numerous times that there is no impact on a mortgage application, whether you've never availed of a credit facility or not. Unless you've missed repayments of course.

Correct. We're not in the states.

There's no "credit score" in Ireland. Just reports that show if you've missed payments.

bucketybuck

I can see the banks point on this, how many times has somebody got a windfall and then blew it within a year because they had no money management skills? What happens after that inheritance is gone?

When you think about it, even just juggling money between accounts over a 6 month period to make it look like you are saving, even that is showing that you understand the procedures and are able to handle the money.

All a lump sum sitting in a bank shows is that somebody gave you a big lump sum.

Flashdan

Thanks everyone for your comments.

I didn't make it clear in my OP

I have been saving for a year straight with no interruptions but I have not hit the 12.5 grand they need to give me the mortgage.

Seems weird that you have to pay rent and save a massive amount. Surely the fact that you pay double in rent then the repayments would be would be enough.

I guess this is just the way it is.

theteal

Flashdan wrote: »

Thanks everyone for your comments.

I didn't make it clear in my OP

I have been saving for a year straight with no interruptions but I have not hit the 12.5 grand they need to give me the mortgage.

Seems weird that you have to pay rent and save a massive amount. Surely the fact that you pay double in rent then the repayments would be would be enough.

I guess this is just the way it is.

I'm very surprised if that's the way it is. If you're paying ridiculous rent, it's madness if this doesn't count when getting a mortgage that would work out at a fraction.

I know over here (UK), it's very much taken into account. We had next to no regular savings, a lump of a deposit from my previous life back in Ireland, rent was £1100 - mortgage monthly was ~£825. We didn't have a clue of the process so went through a recommended broker and it was never in doubt.

YellowLead

It’s not just about saving the amount needed for mortgage repayments - it’s about passing the stress test so they can see if interest rates increased you would be okay to continue paying.
https://www.google.ie/amp/s/www.irishtimes.com/business/borrowers-face-new-stress-test-1.390118%3fmode=amp
So it depends also on how much money you have left over every month once bills are paid.

Flashdan

Flashdan wrote: »

Thanks everyone for your comments.

I didn't make it clear in my OP

I have been saving for a year straight with no interruptions but I have not hit the 12.5 grand they need to give me the mortgage.

Seems weird that you have to pay rent and save a massive amount. Surely the fact that you pay double in rent then the repayments would be would be enough.

I guess this is just the way it is.

It just sounds like you haven't hit the 10% requirement? Are you buying a property for 125k? If so you need 10% of it as a deposit. The rules aren't set by the bank themselves, but they have to adhere to them. As far as I am aware, it doesn't matter what your finance situation is, they can't give a mortgage without the deposit requirement being met.

BeginnerRunner

BeginnerRunner wrote: »

Correct. We're not in the states.

There's no "credit score" in Ireland. Just reports that show if you've missed payments.

Ah in fairness, there is an actual score. I can't remember the specifics but I did a credit check before with ICB and I think my score was about 600 or something like that.

wonski

They will give a score if the lender requested it I think, but generally it isn't considered as important as in the UK or the States.

They just dont want to see any red flags rather than the ridiculous "building credit history" approach sold by banks and reporting agencies in those countries. Which is BS imo.

I know of at least 5 people who got mortgage approval recently in Ireland without having a credit card or loan history at all.

Just regular savings, income coming through their account and no missed payments on their statements. They weren't high earners either. Just carefully managing their accounts prior to applying for a mortgage.

AssaultedPeanut

wonski wrote: »

........

I know of at least 5 people who got mortgage approval recently in Ireland without having a credit card or loan history at all.

Just regular savings, income coming through their account and no missed payments on their statements. They weren't high earners either. Just carefully managing their accounts prior to applying for a mortgage.

Yep. This is my recent experience. I was approved in January and I've no loans, no credit cards, nothing on finance. Never had anything like that. They actually said to me "this won't take very long" after asking me questions about it at the start of the process.

wonski

AssaultedPeanut wrote: »

Yep. This is my recent experience. I was approved in January and I've no loans, no credit cards, nothing on finance. Never had anything like that. They actually said to me "this won't take very long" after asking me questions about it at the start of the process.

It is actually dangerous to even suggest to the op to build up credit history when he was refused mortgage only because of lack of saving history.

Getting a credit card or a loan won't fix it.

It isn't a credit score, it's the lack of regular savings pattern that resulted in refusal.

Dolbhad

I never had any loans or credit card and I never had an issue with getting AIP and due down funds in December. I also didn’t rent either so didn’t have much outgoings. A the bank wanted to see was I was away the mortgage amount plus stress test every month.

FromADistance

Flashdan wrote: »

Thanks for your replies. We do have 6 months of saving just not the required percentage. They say 5% in savings so that would be 12500 but as I said it was not long notice before I got the money. This is through a broker but these were the people who offered the most potentially. The broker is looking into other options.

Thanks again for your replies

I think I know the bank involved here... Ulster isn't it? I remember when I was looking around, they had this ridiculous rule in place even though I had the funds (via a gift) and was paying rent. I did get assistance from the help to buy scheme but as I've said I was paying rent and could well prove capacity to pay. I'd suggest you find a new broker if they can't get you a mortgage with the hand of cards you have (6 months savings, inheritance of half the price of the house, paying rent).

bilbot79

I couldn't get a mortgage from my bank, with whom I am currently laying a mortgage, because my last six months finances were a bit messy. Got approved with finance ireland though. A broker will get you sorted, they ring around all the lenders to find out which is cool with your type of repayments. I went with mortgage brokers.ie

JustAThought

Reversal wrote: »

Has this not consistently been shown to be false? I've seen multiple banks and brokers put out stuff recently in an effort to bust this myth. I've seen it stated numerous times that there is no impact on a mortgage application, whether you've never availed of a credit facility or not. Unless you've missed repayments of course.

Fairly arrogant statement.

This happened to me - all
my adult working life I lived within my means and paid my way and my rent. I had no loans, no debt, perfect credit history, big savings - refused for a mortgage by both banks I had banked with since a child because I had never demonstrated that I coild repay a regular debt. Even though I had a monthly regular salary going in and considerable savings. I went to Ulster Bank who I had never saved with and didn’t even have an account with and argued that paying a regular monthly set amount to them for postgrad fees was the same as saving - they accepted this on seeing the proof (monthly fee payment schedule from the accounts dept at the uni) and they gave me the mortgage I wanted.

Sometimes urban myths are true. I still am pissed off with ‘my’ banks that they wouldn’t loan to me on principle. AFTER I took out the mortgage I started getting pre-approved loan consents sent out to me in the post - which only pissed me off more.

Apart from half a car loan after I bought my house, which I paid back within the term I Havn’t had a loan since thankfully. No doubt when I want a house upgrade it will go against me again. In the meantime IP has shut down one of my accounts and so my decades of credit history is now lost/deleted. Which I am going to address soon as I am now angry and bored enough.

Banks really piss me off.

AngryLips

JustAThought wrote: »

No doubt when I want a house upgrade it will go against me again. In the meantime IP has shut down one of my accounts and so my decades of credit history is now lost/deleted. Which I am going to address soon as I am now angry and bored enough.

Banks really piss me off.

Well if you move house then your existing mortgage repayments will be viewed as capacity to repay, so it probably won't happen again

JustAThought

AngryLips wrote: »

Well if you move house then your existing mortgage repayments will be viewed as capacity to repay, so it probably won't happen again

thanks : ) That actually does make my day brighter and my little world a better place!!