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Saving/Applying for a mortgage 2020-22 Edition

Graham

Continued from here: https://www.boards.ie/vbulletin/showthread.php?t=2057501206

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Humour Me

Going by this, I think exemptions could be off the table for months until we have a better understanding of how COVID will impact the economy.

AIB introduces frightening mortgage rules.

https://www.irishtimes.com/business/financial-services/aib-introduces-frightening-mortgage-rules-and-halts-lending-to-covid-payment-recipients-1.4290956

Conrad83

lir6777 wrote: »

Some banks with stricter criteria do have them, I just called them all and asked. Didn't work out for me as the ones who are best for single buyers don't have them but AIB and EBS said to me in the last week that they have LTI ones available (not LTV though) and are assessing case by case. Might be harder than usual to get one with them but might be worth a shot!

Yes, we got a LTI exemption from AIB last week!

Prezatch

Conrad83 wrote: »

Yes, we got a LTI exemption from AIB last week!

Also got LTI exemption last week 4.5x with AIB. Bonus was not considered as I have switched employer recently.

Markitron

Humour Me wrote: »

Going by this, I think exemptions could be off the table for months until we have a better understanding of how COVID will impact the economy.

AIB introduces frightening mortgage rules.

https://www.irishtimes.com/business/financial-services/aib-introduces-frightening-mortgage-rules-and-halts-lending-to-covid-payment-recipients-1.4290956

Perhaps I read this incorrectly but it seemed to me that exemptions were still on for FTBs.

lir6777

Markitron wrote: »

Perhaps I read this incorrectly but it seemed to me that exemptions were still on for FTBs.

Yeah they are to my understanding, I think maybe the poster was just meaning in general that things are only looking like they're getting tighter? Also I think LTV exemptions are pretty much totally off the table all round so STBs will be in a much tougher position. Crazy times ðŸ˜£

Astro127

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

Springy Turf

Astro127 wrote: »

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

Well that really depends on the house!

30k would be a 10% deposit on a 300k house, which is a 270k mortgage. The repayments on that are in excess of 1000 euro per month.

As most of the deposit is not your own savings, there would need to be other ways of showing a consistent ability to service this mortgage. They stress test it so you would need to show that between rent and monthly savings, you are able to afford well in excess of the mortgage repayment amount.

If you talk to a mortgage provider they will look at your financial situation and give you a better idea of where you need to be in terms of deposit, savings and demonstrating your ability to repay.

Also, you might know this already, but be careful with the tax implications of such a gift. You are allowed a maximum of 3k per parent per year tax free in gifts. Anything more will have tax implications.

Renjit

Astro127 wrote: »

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

That 30k may attract some tax.

Each parent can give up to €3,000 to a person in a given tax year. That means your two parents can legitimately gift you up to €6,000 between them with no tax liability, either for you or your parents. In fact, they could also gift up to a further €6,000 to your partner on the same basis.

https://www.irishtimes.com/business/financial-services/aib-introduces-frightening-mortgage-rules-and-halts-lending-to-covid-payment-recipients-1.4290956

You should also start saving regularly. Say, if your mortgage comes down to 1000. Then it will be good if you can show regular savings of 1000+ for past 6 months. It helps in making your case stronger in case of repayment capacity calculation.

For example, you can start fixed regular deposits in mortgage saver account or other saving accounts.
Bank also include your regular house rent too as part of your repayment capacity. If you have any loans, that may reduce your repayment capacity and overall mortgage too.

Keep you credit history clear too.

Sonrisa

Springy Turf wrote: »

Well that really depends on the house!
Also, you might know this already, but be careful with the tax implications of such a gift. You are allowed a maximum of 3k per parent per year tax free in gifts. Anything more will have tax implications.

This is not quite correct- your parent can gift you 335,000 over your lifetime free of tax. They can also give you 3k per year in outside of that limit.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cat-treatment-receipts-by-children.pdf

cython

Sonrisa wrote: »

This is not quite correct- your parent can gift you 335,000 over your lifetime free of tax. They can also give you 3k per year in outside of that limit.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cat-treatment-receipts-by-children.pdf

It's still true to say that gifts over the €3k per annum carry tax implications though, as while tax may not be owed/payable on them when gifted, you may find on the parent's passing that (depending on the size of the inheritance, obviously!) the cumulative value renders you liable for tax on the inheritance that otherwise would not have been payable.

Springy Turf

Sonrisa wrote: »

This is not quite correct- your parent can gift you 335,000 over your lifetime free of tax. They can also give you 3k per year in outside of that limit.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cat-treatment-receipts-by-children.pdf

I would class that as a tax implication!

Fitz*

Humour Me wrote: »

Going by this, I think exemptions could be off the table for months until we have a better understanding of how COVID will impact the economy.

AIB introduces frightening mortgage rules.

https://www.irishtimes.com/business/financial-services/aib-introduces-frightening-mortgage-rules-and-halts-lending-to-covid-payment-recipients-1.4290956

That is really disheartening to hear that if anybody is working but seeing their company paying their wage through the COVID payments basically not be told they can apply for a mortgage.

Let's just say that two people want to apply together and both were in receipt of the COVID payment and saw their salary topped up by companies so continued to work and save all year. One person moves back onto a full salary paid by their company and the other is still working full time but is being paid by COVID payment and a top up. So that means that application for a mortgage will have to be delayed for at least 6 months and maybe more depending on how long the company keeps availing of the COVID payment, while the applicant keeps working.

Springy Turf

The fact that they are receiving the payment means their employer would have been unable to pay them without the subsidy. From the POV of a bank, I can see why they would see that as a warning sign.

If in a years time, the loan book goes bad, people would be blaming the banks for losing the run of themselves.

Pivot Eoin

Springy Turf wrote: »

The fact that they are receiving the payment means their employer would have been unable to pay them without the subsidy. From the POV of a bank, I can see why they would see that as a warning sign.

If in a years time, the loan book goes bad, people would be blaming the banks for losing the run of themselves.

That's not true. The only requirement for a company to have qualified for the Payment was if they had Revenue drops of over 25%.

That doesnt mean they dont have the cash in the bank to cover wages, a lot of start-ups work off Funding, where they are working off the same pot of Cash all year and not reliant on operational revenue in their early stages.

That's a scenario where the blanket refusal at times doesn't make any sense. Our company just had its best ever month, but technically qualifies for the Subsidy until its over. But yet, Banks look unfavourably on everyone.

Graham

Pivot Eoin wrote: »

That's not true. The only requirement for a company to have qualified for the Payment was if they had Revenue drops of over 25%.

That doesnt mean they dont have the cash

That not quite the official guidance for the scheme:

To qualify for the scheme, employers must
be experiencing significant negative economic disruption due to Covid-19

be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover

be unable to pay normal wages and normal outgoings fully

and
retain their employees on the payroll.

https://www.revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx

Pivot Eoin

Graham wrote: »

That not quite the official guidance for the scheme:

https://www.revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx

Granted, but Proviso there is probably that the company is covering all its own bills with Revenue. Very few start-ups do that, so technically they would be able to prove that they "wouldn't be able to pay the wages normally" if they're talking about Incomings vs Outgoings... but thats just part of the plan in a lot of start ups.

Graham

Sorry PE, I'm not sure what you're suggesting there/

To claim the subsidy it appears a company is essentially claiming to "be unable to pay normal wages and normal outgoings fully".

I can't think of many ways to re-interpret that.

Bluefoam

Companies don't get the subsidy for their employees because they have run out of money... They get it based on turn over reducing by 24%... That's very different and does not mean they can't afford to pay salaries.

Graham

Bluefoam wrote: »

Companies don't get the subsidy for their employees because they have run out of money... They get it based on turn over reducing by 24%... That's very different and does not mean they can't afford to pay salaries.

How do you reconcile that with

be unable to pay normal wages and normal outgoings fully

Pivot Eoin

Graham wrote: »

Sorry PE, I'm not sure what you're suggesting there/

To claim the subsidy it appears a company is essentially claiming to "be unable to pay normal wages and normal outgoings fully".

I can't think of many ways to re-interpret that.

There's plenty of ways to re-interpret that.

What company can afford to keep paying wages and all Outgoings normally with 0 coming in? Does their revenue cover it or is it just draining away Cash?

For How Long (nobody knew when this scheme was launched how long COVID would last)? For 3-6 Months, sure! For any longer - I dont know. Where does that company fall?

Graham

It would appear any company claiming the subsidy is automatically claiming to "be unable to pay normal wages and normal outgoings fully".

It is prudent for a bank to consider an applicants employers circumstances when making lending decisions.

Bluefoam

Graham wrote: »

It would appear any company claiming the subsidy is automatically claiming to "be unable to pay normal wages and normal outgoings fully".

It is prudent for a bank to consider an applicants employers circumstances when making lending decisions.

That is crap. The stimulus package is just that... It is a away to inject cash into businesses to encourage economic prosperity... The criteria are that your turnover should be down by 24%... Nothing to do with not being able to pay wages and the blanket ban on mortgages for those on the subsidy is absolutely unfair.

Graham

Bluefoam wrote: »

That is crap. The stimulus package is just that... It is a away to inject cash into businesses to encourage economic prosperity... The criteria are that your turnover should be down by 24%... Nothing to do with not being able to pay wages and the blanket ban on mortgages for those on the subsidy is absolutely unfair.

Companies claiming the subsidy are under distress. No slur against any companies making a claim, this is a situation not of their making.

The fact remains to claim the subsidy a company is "unable to pay normal wages and normal outgoings fully".

It would be the height of foolishness for a bank to ignore the fact that an applicants employer is distressed to the point where a subsidy is required.

If the government decides the risk of lending to such applicants is appropriate, it should be the state that underwrites the risk. Not the bank and by extension the existing mortgage customers.

Aurelian

Just from experience, the banks aren't dealing with the Covid subsidy on a case by case basis. It is a blanket position.

I had full approval and just recently re-applied in order to reduce the amount borrowed. The bank said in writing, your individual circumstances don't matter, as long as Covid is on your wage slip.

Sonrisa

This just shows how fake mortgage assessments are anyway. Like, the only reason they can do this is because the subsidy shows on a wage slip. If they changed the scheme so that the subsidy was paid as a direct payment to the company (obviously might be harder to guarantee that it would make its way to the employee) and it didn't show on a wage slip, they wouldn't be able to do this.

cython

Pivot Eoin wrote: »

Granted, but Proviso there is probably that the company is covering all its own bills with Revenue. Very few start-ups do that, so technically they would be able to prove that they "wouldn't be able to pay the wages normally" if they're talking about Incomings vs Outgoings... but thats just part of the plan in a lot of start ups.

Could they really prove it though? Presumably the "normal" for them pre-COVID was to pay their expenses out of that cash (potentially due to not yet having sufficient revenues to cover same until they grow), then there's little to suggest that said normal couldn't continue, unless of course they are already scraping the bottom of their cash reserves. Basically "normal" in this context is arguably all relative.

Sonrisa

cython wrote: »

Could they really prove it though? Presumably the "normal" for them pre-COVID was to pay their expenses out of that cash (potentially due to not yet having sufficient revenues to cover same until they grow), then there's little to suggest that said normal couldn't continue, unless of course they are already scraping the bottom of their cash reserves. Basically "normal" in this context is arguably all relative.

You weren't required to use all your cash reserves before qualifying, but the guidance said that if you had cash reserves the Govt/Revenue expected you to top-up the subsidy so your employees were getting their full wage. You still qualified for the full subsidy if your turnover was down by that 25%.

mojesius

Hello there!

Long time lurker of Accommodation & Property and first time buyer

We applied for a mortgage through a broker, he said there should be no issues getting approved for the amount we're after and luckily we're not impacted by Covid payments. Got all paperwork in early last week, just waiting to hear back from bank

We went to view a few houses in our preferred locations over the weekend and found two that we like, both under our max., one being our 'dream home' but we'd happily take the other one as an option b.

Both houses have other bidders with bids gone in already after this weekend's viewings. On the 'dream home', the bid wasn't accepted by vendor as it was too low. Second house is already 5k over asking. At least we know what current bids are at on both houses, and both estate agents are keeping us in the loop.

My question is: How long do estate agents tend to keep the bidding open? Is it possible that they'd close it after a few days? We obviously can't put a bid in without some sort of proof of approval/AIP and it may be late this week or early next week by the time we get it. I asked broker to try to speed things up with the bank but I'm panicking that we'll be too late. Any experiences/advice would be really helpful!

[Deleted User]

mojesius wrote: »

Hello there!

Long time lurker of Accommodation & Property and first time buyer

We applied for a mortgage through a broker, he said there should be no issues getting approved for the amount we're after and luckily we're not impacted by Covid payments. Got all paperwork in early last week, just waiting to hear back from bank

We went to view a few houses in our preferred locations over the weekend and found two that we like, both under our max., one being our 'dream home' but we'd happily take the other one as an option b.

Both houses have other bidders with bids gone in already after this weekend's viewings. On the 'dream home', the bid wasn't accepted by vendor as it was too low. Second house is already 5k over asking. At least we know what current bids are at on both houses, and both estate agents are keeping us in the loop.

My question is: How long do estate agents tend to keep the bidding open? Is it possible that they'd close it after a few days? We obviously can't put a bid in without some sort of proof of approval/AIP and it may be late this week or early next week by the time we get it. I asked broker to try to speed things up with the bank but I'm panicking that we'll be too late. Any experiences/advice would be really helpful!

We're bidding with no approval. your man doesn't care because we're not impacted by covid and have been approved before.
suspect from reading posts on here we got fortunate though.
i was anxious about it but real life friends' experiences also said they bid then approval was after

Springy Turf

bluewolf wrote: »

We're bidding with no approval. your man doesn't care because we're not impacted by covid and have been approved before.
suspect from reading posts on here we got fortunate though.
i was anxious about it but real life friends' experiences also said they bid then approval was after

It depends on the estate agent - some do require an AIP letter to allow bidding. To be honest, as a bidder its good to know that the people you are bidding against have at least some evidence that they can actually follow through with a deal.