Saving/Applying for a mortgage 2020-22 Edition

Springy Turf · 29-06-2020 6:01pm

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* · 29-06-2020 6:53pm

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 · 29-06-2020 8:38pm

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 · 30-06-2020 8:16am

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 · 30-06-2020 8:23am

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 · 30-06-2020 8:29am

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 · 30-06-2020 8:33am

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 · 30-06-2020 8:42am

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 · 30-06-2020 8:55am

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 · 30-06-2020 8:58am

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 · 30-06-2020 9:10am

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 · 30-06-2020 9:16am

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 · 30-06-2020 9:26am

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 · 30-06-2020 10:25am

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 · 30-06-2020 10:29am

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 · 30-06-2020 10:38am

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 · 30-06-2020 10:50am

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 · 30-06-2020 11:19am

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!

30-06-2020 11:44am

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 · 30-06-2020 11:48am

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.

errlloyd · 30-06-2020 11:51am

Springy Turf wrote: »

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.

This is mad to me. Most EAs around here won't even let me view a property without mortgage approval!

For what it is worth, it seems banks are becoming much more strict on any disqualifying criteria. I work in a start up that is less than a year old, but is a subsidiary of a larger company that is very well capitalized. I am a professional that hasn't been out of work since graduating 5+ years ago and I work in insurance. Broker called me yesterday to say he didn't think he'd be able to get it across the line right now because the banks kept asking about my job security.

klose · 30-06-2020 7:16pm

Quick one, for those who were having wages topped up by covid payments, (I believe my partners workplace were still paying 80% of her wages while they were forced close during the height of the pandemic), and has since returned to work, are we looking at being told to wait another while to re-apply?

Queenio · 30-06-2020 7:40pm

I'm not sure how accurate this is but multiple friends who have been through the process have said a viewing cycle is the normal time frame. So 4ish weeks. Anecdotally we have two bids from the same day. Heard back from both vendors within a week, both rejecting for being too low (4-5% under asking each). The cheaper of the two said we are highest bidders but vendors holding out for more and they would get back to us. Almost 2 weeks later we followed up by email.... No update to give. The other are rejecting outright and want another very close to asking which is too tight for us.

I would love to know eg if you pay another 10k we would go sale agreed but they just aren't giving anything away. I hoping to close a sale very very quickly. And rapidly losing hope in this whole process

Aurelian · 30-06-2020 8:49pm

klose wrote: »

Quick one, for those who were having wages topped up by covid payments, (I believe my partners workplace were still paying 80% of her wages while they were forced close during the height of the pandemic), and has since returned to work, are we looking at being told to wait another while to re-apply?

I think as long as the Covid payment is gone off the wage slip you are ok.

tolow · 01-07-2020 12:50pm

Hi,

I have seen the news about aib refusing applicants with covid payments but have they stopped exceptions also? I thought I saw a poster here saying they got an exception for LTI? I have AIP with PTSB and BOI but if AIB still are doing exceptions I might apply there also.

Thanks

LoonyLovegood · 01-07-2020 1:26pm

The bank says they'll have confirmed my mortgage by Friday, and I've just put a bid in for a house that I'd love. Crossing my fingers this goes smoothly, but we all know how likely that is!

lir6777 · 01-07-2020 1:33pm

tolow wrote: »

Hi,

I have seen the news about aib refusing applicants with covid payments but have they stopped exceptions also? I thought I saw a poster here saying they got an exception for LTI? I have AIP with PTSB and BOI but if AIB still are doing exceptions I might apply there also.

Thanks

AIB are still doing LTI exemptions yeah

Dylan94 · 01-07-2020 2:31pm

lir6777 wrote: »

AIB are still doing LTI exemptions yeah

EBS are also doing exceptions. Minimum income needed is €84,000 and are willing to give x4.5 income.

lir6777 · 01-07-2020 2:42pm

Dylan94 wrote: »

EBS are also doing exceptions. Minimum income needed is €84,000 and are willing to give x4.5 income.

You may well be correct but just to note someone in EBS told me you need about 70k income to qualify- that seemed to be from playing around with the calculator though so your higher number might be what the underwriters actually look for

Astro127 · 01-07-2020 3:13pm

Springy Turf wrote: »

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.

Thanks for the help. We are also thinking of waiting a year or two as we are not in a rush so to speak .

I have been thinking of buying a house now for around 200k just to rent If out . I still live at home so I see it as a long term investment which i will be looking into .

The rent from the house will pay off the mortgage and still make profit each month which can be used for saving for the house we will live in which will most likely be built on family land in kildare .

I know you need a 20% deposit for a second property
Again I see it as a long term investment.
Is it a stupid idea or would it be actually possible?

Any advice is welcome.

cant26 · 01-07-2020 3:27pm

lir6777 wrote: »

You may well be correct but just to note someone in EBS told me you need about 70k income to qualify- that seemed to be from playing around with the calculator though so your higher number might be what the underwriters actually look for

Do you know if that is single or joint income? Seems very low for joint.

ELM327 · 01-07-2020 3:31pm

cant26 wrote: »

Do you know if that is single or joint income? Seems very low for joint.

70-80 for joint is the minimum you need for an exception.

Draco · 01-07-2020 3:33pm

Astro127 wrote: »

Thanks for the help. We are also thinking of waiting a year or two as we are not in a rush so to speak .

I have been thinking of buying a house now for around 200k just to rent If out . I still live at home so I see it as a long term investment which i will be looking into .

The rent from the house will pay off the mortgage and still make profit each month which can be used for saving for the house we will live in which will most likely be built on family land in kildare .

I know you need a 20% deposit for a second property
Again I see it as a long term investment.
Is it a stupid idea or would it be actually possible?

Any advice is welcome.

Have you factored in income tax on the rent (remembering that it is on the gross rent not rent less the mortgage)?

lir6777 · 01-07-2020 4:07pm

cant26 wrote: »

Do you know if that is single or joint income? Seems very low for joint.

That was single

lir6777 · 01-07-2020 4:08pm

ELM327 wrote: »

70-80 for joint is the minimum you need for an exception.

Depends on the bank though, they all seem to have different criteria about even qualifying to apply for an exemption. Some base it on your net disposable income which would not just depend on salary but any loans, dependents etc too. Always worth just giving the bank a ring in my opinion, nothing to lose!

Conrad83 · 01-07-2020 4:13pm

lir6777 wrote: »

Depends on the bank though, they all seem to have different criteria about even qualifying to apply for an exemption. Some base it on your net disposable income which would not just depend on salary but any loans, dependents etc too. Always worth just giving the bank a ring in my opinion, nothing to lose!

I would second this. Different banks have very different criteria and figures on net disposable income, loans etc. AIB have made it a condition of our mortgage to clear a very small personal loan (1k)!! Prior to loan offer. BOI dont even factor this into loan conditions!

mayota · 01-07-2020 4:16pm

Astro127 wrote: »

Thanks for the help. We are also thinking of waiting a year or two as we are not in a rush so to speak .

I have been thinking of buying a house now for around 200k just to rent If out . I still live at home so I see it as a long term investment which i will be looking into .

The rent from the house will pay off the mortgage and still make profit each month which can be used for saving for the house we will live in which will most likely be built on family land in kildare .

I know you need a 20% deposit for a second property
Again I see it as a long term investment.
Is it a stupid idea or would it be actually possible?

Any advice is welcome.

If the family land is farmland I’d be looking to get the ball rolling on PP sooner rather than later, one off housing is under threat from environmentalists.

ELM327 · 01-07-2020 4:17pm

Conrad83 wrote: »

I would second this. Different banks have very different criteria and figures on net disposable income, loans etc. AIB have made it a condition of our mortgage to clear a very small personal loan (1k)!! Prior to loan offer. BOI dont even factor this into loan conditions!

I found AIB a right pain in the hole to deal with. Went with BOI last time and now PTSB a couple of years later.

AIB wanted a ream of documents, including tax clearance certs (which cannot be obtained by PAYE employees)

ELM327 · 01-07-2020 4:18pm

mayota wrote: »

If the family land is farmland I’d be looking to get the ball rolling on PP sooner rather than later, one off housing is under threat from environmentalists.

Local needs planning will usually be granted for one off

Astro127 · 01-07-2020 5:35pm

mayota wrote: »

If the family land is farmland I’d be looking to get the ball rolling on PP sooner rather than later, one off housing is under threat from environmentalists.

PP shouldn't be a problem there was 2 acrs sold on it which both have a house built on them .

Renjit · 01-07-2020 7:07pm

AIB reverses pause on mortgage applications from customers on Covid-19 payments

Creamy Goodness · 01-07-2020 7:20pm

Renjit wrote: »

AIB reverses pause on mortgage applications from customers on Covid-19 payments

Nothing but a good PR story. Article mentions that they may still refuse application if they fell like the customer may have problems making the repayments which I'd argue the COVID unemployed payment would put you at risk at anyways.

lcarrol3 · 01-07-2020 10:00pm

ELM327 wrote: »

70-80 for joint is the minimum you need for an exception.

Maybe I can shed some light on this. My partner and I are on 77k joint and have been rejected for an exemption by AIB and are waiting to hear back from EBS (apparently our application was borderline).

Might help someone somewhere!

lir6777 · 01-07-2020 11:15pm

lcarrol3 wrote: »

Maybe I can shed some light on this. My partner and I are on 77k joint and have been rejected for an exemption by AIB and are waiting to hear back from EBS (apparently our application was borderline).

Might help someone somewhere!

AIB and EBS are linked and I'm pretty sure they have very similar criteria to qualify. They do work off of net disposable income so other debts, dependents etc will be part of the calculations too (so a couple with 80k joint income, 2 kids, and 600 per month outgoings on loans may not qualify but a couple on the same income with no kids or other loans might). The monthly repayments of the mortgage will also affect NDI calculations so there's a lot of scope for variation. Best of luck with your application!!

LauraAaron · 02-07-2020 6:53pm

Just a quick question does rent count towards showing you can afford the mortgage repayments?

Duke of Url · 02-07-2020 6:59pm

LauraAaron wrote: »

Just a quick question does rent count towards showing you can afford the mortgage repayments?

Yes. It’s in the Mortgage Application with BOI anyway. The will look for proof of it also in your statements also

LauraAaron · 02-07-2020 7:10pm

Duke of Url wrote: »

Yes. It’s in the Mortgage Application with BOI anyway. The will look for proof of it also in your statements also

Thankyou we’re going with ulsterbank and also have an account with them so they’ll he able to see our statements of monthly rent. I’m worried as we only have 3 months of straight savings we’ve been saving since last year but that was also paying off a loan. We sold a car and put that into our savings too and have been gifted €15k from my parents just wondering if that will hinder us that the savings haven’t been longer?

Dylan94 · 02-07-2020 8:35pm

LauraAaron wrote: »

Thankyou we’re going with ulsterbank and also have an account with them so they’ll he able to see our statements of monthly rent. I’m worried as we only have 3 months of straight savings we’ve been saving since last year but that was also paying off a loan. We sold a car and put that into our savings too and have been gifted €15k from my parents just wondering if that will hinder us that the savings haven’t been longer?

You have to show it for at least 6 months. So if you only have 3 months savings now, you won't be able to apply until September at the soonest

bulmersgal · 02-07-2020 9:16pm

LauraAaron wrote: »

Thankyou we’re going with ulsterbank and also have an account with them so they’ll he able to see our statements of monthly rent. I’m worried as we only have 3 months of straight savings we’ve been saving since last year but that was also paying off a loan. We sold a car and put that into our savings too and have been gifted €15k from my parents just wondering if that will hinder us that the savings haven’t been longer?

Try a broker I'm similar to you have deposit mostly gift from parents but was paying off loan and also rent. So only savings 4 months and I got AIP with finance Ireland

LauraAaron · 02-07-2020 10:33pm

bulmersgal wrote: »

Try a broker I'm similar to you have deposit mostly gift from parents but was paying off loan and also rent. So only savings 4 months and I got AIP with finance Ireland

Thanks for the reply we have an aip with ulsterbank my husbands been in and spoke to them we’re now sending away our stuff to Dublin for our credit check we’ll hopefully hear from them in the coming weeks and then we’ll look to a broker if that doesn’t work x

Saving/Applying for a mortgage 2020-22 Edition

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