Why do renters equate the ability to pay rent to mortgage eligibility?

Donald Trump · 11-06-2021 11:12am

Leg End Reject wrote: »

The Mighty Quinn wrote: »

On this point - I completely agree by the way - I've often wondered, if you bought the house for say 300K, borrowed 260K for it. Paid mortgage for a decade, you now owe 190K. House has gone up in value to 320K. You lose your job, stop paying mortgage. In repossession case, does the bank sell house on the market to fund what they're owed? In which case, of the 130K surplus here, after solicitors fees and this and that, does the person who took the mortgage out get 100K back for themselves or does the bank keep it, as the asset is theirs until fully paid for?

I think any equity is returned to the previous owner, but the bank might look for a quick sale and not the full market value.

Yes, it happens quite often, although maybe not so much with residential property. It would have been very common with farms - especially because many others would not want to buy under those circumstances. So the price would be depressed.

The bank's concern would solely be in recovering what is owed to them. If they are owed 200k and the property should be worth 300k but there is an expected-to-be-temporary blip in the market and they get offered a best bid of 200k, then they will take it. If the owner was selling it themselves then they might decide to hold on for a few months.

Tacitus Kilgore · 11-06-2021 11:13am

The DayDream wrote: »

There are bigger questions to be asked here, like how did we get to the point where housing is unaffordable and insecure for so many.

We cannot and should not allow the psychopathic greed that fuels capitalism be the driving force behind necessities like housing, water and healthcare. But we have.

As a single person you have to basically be on a 6 figure income now just to rent a 1 BR fkn flat in anywhere that isnt Leitrim. And when you get old who knows where you'll end up.

Oh a lot of people can rent one without the 6 figure salary, that's what the OP and others are saying - but you better not have the aspiration of wanting a bit of comfort or enjoyment in your life - you have a roof over your head sure - what else do you want?

Donald Trump · 11-06-2021 11:16am

Finty Lemon wrote: »

Whats gotta give
Foreign holiday x2 every year
The beauticians bill
Weekend takeaways
PCP cars
Takeaway coffee bullshxt
Asos
Premier league 'pilgrimages' (pis$ups)
De fags
There's a chunky deposit to be had within 40 months for most mid earning couples out of this junk. Just sayin.

If you want to be honest you really need to take into account the unprecedented and prolonged period of low and very low interest rates since the inception of the Euro. These made it extra easy for those that bought into the market earlier to repay, while also inflating the price of what they had bought.

Flinty997 · 11-06-2021 11:28am

Donald Trump wrote: »

If you want to be honest you really need to take into account the unprecedented and prolonged period of low and very low interest rates since the inception of the Euro. These made it extra easy for those that bought into the market earlier to repay, while also inflating the price of what they had bought.

The market has been up and down since then.

Donald Trump · 11-06-2021 11:36am

Flinty997 wrote: »

The market has been up and down since then.

The market has been up and down but the price at which that person would have bought is fixed. And their repayments are affordable. You are considering face value only. Not ability to obtain or repay mortgage

If you have a lot of savings then you are kinda stuck. The next few years will bring some inflationary pressure which will be then controlled with increasing rates.

Inflation is great for those buying with debt or who have their mortgages nearly paid off. It is not great for those trying to build up savings to buy or for those with a chunk of savings.

What is ideal is to buy just before interest rates drop, and for the low rates to unexpectedly persist for much longer than normal. Which is what a lot of people who bought since the introduction of the Euro benefited from. Most are oblivious to it though! Even those that bought at the height of the boom often locked in extremely cheap tracker rates even if the face value of their property dipped.

JizzBeans · 11-06-2021 12:03pm

Tork wrote: »

So tell me, when did you buy your house OP? What is your job?

3 years ago, I am a teacher.

JizzBeans · 11-06-2021 12:06pm

markodaly wrote: »

Please tell us how a person or couple paying 1300 a month rent CANNOT afford a mortgage of 700 a month..

Go on.. I think Ill be waiting a while.

I didn't suggest they couldn't, it just doesn't equate to mortgage eligibility.

Donald Trump · 11-06-2021 12:09pm

markodaly wrote: »

Please tell us how a person or couple paying 1300 a month rent CANNOT afford a mortgage of 700 a month..

Go on.. I think Ill be waiting a while.

Ability to repay has to be stress tested.

Renting is also a short term commitment. Especially in Ireland given that, from what you read, it can be optional for a lot of people........

JizzBeans · 11-06-2021 12:09pm

listermint wrote: »

Unsure how you can make this argument from one of the rooms upstairs in your parents house

I am a homeowner.

Tacitus Kilgore · 11-06-2021 12:11pm

JizzBeans wrote: »

I am a homeowner.

All paid off in 3 year on a teachers salary or does the bank own it?

JizzBeans · 11-06-2021 12:17pm

Tacitus Kilgore wrote: »

All paid off in 3 year on a teachers salary or does the bank own it?

Relevance? Where are you going with this?

11-06-2021 12:18pm

Shebean wrote: »

It use to be the case that you could aspire to home ownership without being laughed at. The way it's working out now is that if you work hard you can aspire to paying rent to a vulture fund.
People feel lied to maybe. Certainly left behind.

once upon a time it could be done on a single wage, you could raise a whole family too. Many from that generation have the cheek to mock those in todays situation

oh and mortgages of 12, 15 and 20 years were a thing and 25 yrs was a big one

Doctor Jimbob · 11-06-2021 12:20pm

Finty Lemon wrote: »

Whats gotta give
Foreign holiday x2 every year
The beauticians bill
Weekend takeaways
PCP cars
Takeaway coffee bullshxt
Asos
Premier league 'pilgrimages' (pis$ups)
De fags
There's a chunky deposit to be had within 40 months for most mid earning couples out of this junk. Just sayin.

Yeah all those are the issue all right. Not the fact that rent can easily be double the cost of a mortage on a similar property.

Allinall · 11-06-2021 12:20pm

Tacitus Kilgore wrote: »

All paid off in 3 year on a teachers salary or does the bank own it?

I would imagine "Neither" is the answer to that.

JizzBeans · 11-06-2021 12:21pm

Tacitus Kilgore wrote: »

All paid off in 3 year on a teachers salary or does the bank own it?

Relevance? Where are you going with this?

Leg End Reject · 11-06-2021 12:23pm

Tacitus Kilgore wrote: »

All paid off in 3 year on a teachers salary or does the bank own it?

You still own the house if you have a mortgage, the bank just have a charge on it.

That's not as much an issue now as owner occupiers have been afforded protection if they default.

Tacitus Kilgore · 11-06-2021 12:29pm

Leg End Reject wrote: »

You still own the house if you have a mortgage, the bank just have a charge on it.

That's not as much an issue now as owner occupiers have been afforded protection if they default.

Yera I know how it works, but 3 years into paying a mortgage I don't think I'd be so smug as to look down my nose at those who aren't currently paying off their own mortgage - but are paying someone else's with a premium on top - like the OP does in their OP.

Stamp duty my hole

mohawk · 11-06-2021 12:33pm

Zaney wrote: »

Both rents and mortgages suffer from our increasing protection of the tennant/occupier. Evictions and reposessions are next to impossible and expensive in legal fees even if they do happen. So landlords factor in a certain amount of non-payment when Settings rents and banks are unwilling to give a mortgagage to people they perceive to be a risk.

Not saying we should have lots of evictions/repossessions, just that there are consequences in the market.

Majority or renters and mortgage holders will make sure rent/mortgage is first thing paid every month. Most will continue this even if there is a temporary job loss. However, there are a few selfish morons out there who for whatever reason don’t pay what they owe. If you lose you job take a mortgage break to give yourself a chance.
I know one family with kids who decided to stop paying their mortgage because they ‘couldn’t afford it’. Miraculously, they can still afford to change cars and go on weekends away etc. A few people have said they deserve the house be taken off them. I don’t understand how they could do this to the kids. The actions of the few can have a big effect on everyone else.

Leg End Reject · 11-06-2021 12:35pm

Tacitus Kilgore wrote: »

Yera I know how it works, but 3 years into paying a mortgage I don't think I'd be so smug as to look down my nose at those who aren't currently paying off their own mortgage - but are paying someone else's with a premium on top - like the OP does in their OP.

Stamp duty my hole

No, neither would I. Nor do I see the relevance of one off payments like deposit, solicitor's fees and stamp duty.

I have a mortgage from before the madness started and I don't see why rent payments shouldn't be used as proof of ability to meet repayments on a mortgage. I can also see the difficulty in saving the deposit while simultaneously paying rent too.

Whiff of smugness off the OP to be fair.

JizzBeans · 11-06-2021 12:36pm

crooked cockney villain wrote: »

What a lot of these people are saying, in dog whistle form, is this.

"I went to school with a lad who never did a tap of work, dropped out with barely a junior cert, while he moved from warehouse to cash in hand to warehouse I and my now missus were doing four years of business studies, a year of travel, an unpaid internship and now we both have been 5 years in Irish Life/ AIB/ Allianz Insurance/ insert "good job" name company here.

Your man from school did a bricklaying apprenticeship at some point and he and his hairdresser missus have two kids and bought a house three years ago."

Quite a lot of people were sold a lie in school. The dosser, the lad who showed up half the time, might not have even done a JC, often due to various current economics was on a much better path than the lad who was told to go to college.

The primary problem in this instance is that the corporate world has minimal union coverage and, to my knowledge, SEO minimum rates don't exist in the majority of it.

Many graduates, after 4 years, are offere an unpaid internship, or a salary that the blurb describes as competitive.

25K is not competitive. And a raise of 3 or 5% a year is not competitive either.

It's bull****, and Deco your man who dropped out would laugh at anybody who tried offering him that to sweep floors on a building site, never mind do a trade.

Excellent point, highlights the begrudgery. "Deco" should be congratulated in this instance. He put in the work and sacrifice.

I don't agree people were "sold a lie", what lie? By who? It doesn't say anywhere you have to go to college, get a degree in mickey mouse studies and then a masters, just so you can "have a better life"

Why do people have this notion that spending x years in college, then x years developing a professional career will somehow result in walking into homeownership in a location of their choice.

All these years are a massive expense.

Avon8 · 11-06-2021 12:53pm

With the 'housing crisis' really ramping up and the severe shortage of tradespeople in the country, the earnings for such tradespeople are going through the roof. It'll be like the early noughties once again for plasterers and electricians, taking in 70-90k or so won't be uncommon. Fantastic opportunity for any young person unsure of a route, and will be much more stable and sustainable than the Celtic Tiger years.

Ireland has become middle class however, and the shortage is ramped up by parents especially who couldn't imagine their offspring doing anything but going the undergraduate route.

Mackwiss · 11-06-2021 12:55pm

JizzBeans wrote: »

Excellent point, highlights the begrudgery. "Deco" should be congratulated in this instance. He put in the work and sacrifice.

I don't agree people were "sold a lie", what lie? By who? It doesn't say anywhere you have to go to college, get a degree in mickey mouse studies and then a masters, just so you can "have a better life"

Why do people have this notion that spending x years in college, then x years developing a professional career will somehow result in walking into homeownership in a location of their choice.

All these years are a massive expense.

The joys of the internet is that you can create a thread like this, write a comment like this, and on top of all of this, pretend to be a homeowner teacher to try and validate your point.

Well done OP. You win the internet today.

Corvo · 11-06-2021 1:56pm

What a stupid post. Honestly.

ineedeuro · 11-06-2021 2:32pm

In the last crash the plan was to move away from home ownership. The days of getting "a foot on the property ladder" was supposed to be over. people laughed at everyone in the 2000-2008 buying houses for stupid high prices. Everyone talking about how stupid XYZ was because the house was never worth it. People going around saying what idiot came up with 100% mortgages.

The government decided to move towards a rental system, which is in place all around Europe. Hence why large rental companies got introduced to the market .

Its now 2021, we have people paying stupid money for houses. We have people desperate to get "a foot on the property ladder". The companies brought in to buy houses and rent out are now evil empires that are wrestling homes from the hands of the Irish people. Now people asking why they can't get a mortgage, I seen someone recently ask why we can't reintroduce 100% mortgages.
Anyone see a small problem with what is happening here?

Davrbarrystea · 11-06-2021 2:56pm

JizzBeans wrote: »

A common argument renters make, is that because they can afford to pay their rent regularly , they would be able to service a mortgage as it would be a similar amount. The inference being that they should somehow be eligible for a mortgage.

Another argument that renters/prospective buyers make is that "they done everything right" by going to college, getting the masters and attempting to land a higher paying job etc, etc.

Are they valid points? Its a little more complicated that points suggest I would have thought.

Because the ability to pay for housing in the form of rent - directly equates to the ability to pay for housing in the form of a mortgage.

In other words I am paying for housing so I can pay for housing.

JizzBeans · 11-06-2021 3:21pm

Davrbarrystea wrote: »

Because the ability to pay for housing in the form of rent - directly equates to the ability to pay for housing in the form of a mortgage.

In other words I am paying for housing so I can pay for housing.

I think you are describing making monthly re-payments in this example. That does not equate to a mortgage. In any case, this is an example of my OP.

Tacitus Kilgore · 11-06-2021 3:23pm

Davrbarrystea wrote: »

Because the ability to pay for housing in the form of rent - directly equates to the ability to pay for housing in the form of a mortgage.

In other words I am paying for housing so I can pay for housing.

You are forgetting the fact that a "renter" is almost a seen as class position these days, being a "renter" myself I experience regular snobbery from my neighbors who pay the bank for their lodgings as opposed to little povvo me who pays a landlord.

Note the OP refers to these "renters" as people who should know their place in society as those who pay for other peoples houses and should accept not being allowed a fair shake at buying a house of their own.

JizzBeans · 11-06-2021 3:52pm

Tacitus Kilgore wrote: »

You are forgetting the fact that a "renter" is almost a seen as class position these days, being a "renter" myself I experience regular snobbery from my neighbors who pay the bank for their lodgings as opposed to little povvo me who pays a landlord.

Note the OP refers to these "renters" as people who should know their place in society as those who pay for other peoples houses and should accept not being allowed a fair shake at buying a house of their own.

Hmmm, have you really experienced rent snobbery from your neighbors?? I feel like your projecting your own insecurities on this thread. You have been taking swipes at me all along. Now your resorting to slander

Tacitus Kilgore · 11-06-2021 3:56pm

JizzBeans wrote: »

Hmmm, have you really experienced rent snobbery from your neighbors?? I feel like your projecting your own insecurities on this thread. You have been taking swipes at me all along. Now your resorting to slander

I have, they tell me where to park, give out to us for having pizzas delivered, constantly ask us when we are moving on, etc. etc.

I feel you took a swipe at me and other "renters" tbh.

Not sure where the slander is Jizzy - hope you don't teach english anyway.

ineedeuro · 11-06-2021 3:57pm

Tacitus Kilgore wrote: »

You are forgetting the fact that a "renter" is almost a seen as class position these days, being a "renter" myself I experience regular snobbery from my neighbors who pay the bank for their lodgings as opposed to little povvo me who pays a landlord.

Note the OP refers to these "renters" as people who should know their place in society as those who pay for other peoples houses and should accept not being allowed a fair shake at buying a house of their own.

I think some people want to think people have a problem with them. Why would a home owner care if you are a renter or not as long as you are a good neighbour?

Tacitus Kilgore · 11-06-2021 3:59pm

ineedeuro wrote: »

I think some people want to think people have a problem with them. Why would a home owner care if you are a renter or not as long as you are a good neighbour?

Would love to know the answer to that myself, even the residents association facebook page regularly refers to 'renters' as temporary residents who should not be added to the estate watsapp group (there's about 400 houses in the estate btw)

The attitude shown by the op both in the thread title, and subsequent posting - shows a disdain for "renters"

Doctor Jimbob · 11-06-2021 4:17pm

Tacitus Kilgore wrote: »

Would love to know the answer to that myself, even the residents association facebook page regularly refers to 'renters' as temporary residents who should not be added to the estate watsapp group (there's about 400 houses in the estate btw)

The attitude shown by the op both in the thread title, and subsequent posting - shows a disdain for "renters"

A WhatsApp group with potentially hundreds of people? That policy is a blessing in disguise for renters TBH. Feck that noise.

JizzBeans · 11-06-2021 4:50pm

Tacitus Kilgore wrote: »

I have, they tell me where to park, give out to us for having pizzas delivered, constantly ask us when we are moving on, etc. etc.

I feel you took a swipe at me and other "renters" tbh.

Not sure where the slander is Jizzy - hope you don't teach english anyway.

If multiple residents have issues, isn't possible your just just an unpleasant/ unsightly neighbour?? Your posts are generally smart alec-y. Are you like that in person? Do you think a quiet renting family would attract the same attitude?

Also
OP refers to these "renters" as people who should know their place in society as those who pay for other peoples houses and should accept not being allowed a fair shake at buying a house of their own.

I made no such reference. Attributing a false statement to a person is slander is it not? Am I missing something?

Davrbarrystea · 11-06-2021 4:54pm

JizzBeans wrote: »

I think you are describing making monthly re-payments in this example. That does not equate to a mortgage. In any case, this is an example of my OP.

Yes it is an example of your OP because paying rent demonstrates the ability to make monthly repayments for housing - which is what a mortgage is. Can you explain the difference in making a monthly repayment in rent and paying a mortgage monthly Because the above make no sense at all.

JizzBeans · 11-06-2021 4:57pm

Tacitus Kilgore wrote: »

The attitude shown by the op both in the thread title, and subsequent posting - shows a disdain for "renters"

How exactly? Where is the disdain? I asked a legitimate question in my OP. If there is to be a legitimate discussion around the housing crisis, then all aspects of it must be included.

An element of the of the problem is in fact a sense of entitlement and unrealistic expectations. These are just facts.

Why are you choosing to take offense here?

JizzBeans · 11-06-2021 5:03pm

Davrbarrystea wrote: »

Yes it is an example of your OP because paying rent demonstrates the ability to make monthly repayments for housing - which is what a mortgage is. Can you explain the difference in making a monthly repayment in rent and paying a mortgage monthly Because the above make no sense at all.

A mortgage also consists of substantial savings/deposit, solicitors fees, stamp duty etc, etc. Making monthly re-payments does not reflect these elements in the eyes of the bank.

For Forks Sake · 11-06-2021 5:20pm

Deleted User wrote: »

once upon a time it could be done on a single wage, you could raise a whole family too. Many from that generation have the cheek to mock those in todays situation

oh and mortgages of 12, 15 and 20 years were a thing and 25 yrs was a big one

So were interest rates of 13-18%, so swings and roundabouts.

11-06-2021 5:38pm

Nika Bolokov wrote: »

Your spot on.

Deco if he qualified as en electrician at say 21 or 22 would be on about 55k these days in no time working for someone else and then doing nixers on top of that. If he works for himself hes likely earning even more.

Fintan who has a Business degree gets 2% pay rises every now and again at Big Box company X, earns less than Deco and is treated much worse but feels superior.

His day to day job involves producing TPS reports that nobody reads or can remmber asking for and he is at a loss as to how Deco who does something actually useful is earning more given he did everything right. (Likely has a Masters too).

Whats this got to do with who can or can't get a house in the present market? The op didn't specify anything about plumbers vs office workers.

11-06-2021 5:40pm

JizzBeans wrote: »

I think you are describing making monthly re-payments in this example. That does not equate to a mortgage. In any case, this is an example of my OP.

If somebody can afford to make payments on very high rent he can afford a lower mortgage. Same thing.

Yes, they have to make the deposit and stamp duty, and the relatively insignificant solicitors fees, but plenty of people who can afford all of this still can't get cheaper mortgages.

AbusesToilets · 11-06-2021 5:42pm

JizzBeans wrote: »

A mortgage also consists of substantial savings/deposit, solicitors fees, stamp duty etc, etc. Making monthly re-payments does not reflect these elements in the eyes of the bank.

Yes, however most of these are up front costs, which could easily be made up in the difference between a monthly rental cost vs a monthly mortgage payment.

11-06-2021 5:42pm

For Forks Sake wrote: »

So were interest rates of 13-18%, so swings and roundabouts.

When interest rates were 13-18% income was increasing at about that level per year. Inflation made those payments insignificant after a while. I am ten years into a mortgage and paying about the same percentage of my income as I was ten years ago.

Flinty997 · 11-06-2021 5:45pm

He watched "Office Space" hence the TPS reports...lol

nolivesmatter · 11-06-2021 5:59pm

JizzBeans wrote: »

A mortgage also consists of substantial savings/deposit, solicitors fees, stamp duty etc, etc. Making monthly re-payments does not reflect these elements in the eyes of the bank.

Obviously it should be understood that the person would have to have those things in place first. Once those things are established monthly rent payments are as good an indicator that someone can meet similarly priced monthly mortgage payments. Unless you need to see them actually pay a full mortgage first to know whether or not they can pay a mortgage.

Flinty997 · 11-06-2021 6:00pm

[Deleted User] wrote: »

If somebody can afford to make payments on very high rent he can afford a lower mortgage. Same thing.
...

Great now just go convince the banks of that....

Flinty997 · 11-06-2021 6:02pm

nolivesmatter wrote: »

Obviously it should be understood that the person would have to have those things in place first. Once those things are established monthly rent payments are as good an indicator that someone can meet similarly priced monthly mortgage payments. Unless you need to see them actually pay a full mortgage first to know whether or not they can pay a mortgage.

I wonder if you went looking for a 20yr rental would the deposit be the same as normal...

11-06-2021 6:07pm

nolivesmatter wrote: »

Why the bolded part? Paying a high rent over a long period of time shows reliability. That money would then be freed up to go towards a mortgage. Surely it's less impressive to have been just living at home for free?

Yes. If two couples on 80k are looking for a mortgage, both couples with savings of 50k the banks will clearly look more favourably on the renters.

11-06-2021 6:08pm

Flinty997 wrote: »

Great now just go convince the banks of that....

The banks are (rightly) constrained by the central banks. Nevertheless paying X in mortgage is the same as paying X in rent.

ineedeuro · 11-06-2021 6:09pm

Tacitus Kilgore wrote: »

Would love to know the answer to that myself, even the residents association facebook page regularly refers to 'renters' as temporary residents who should not be added to the estate watsapp group (there's about 400 houses in the estate btw)

The attitude shown by the op both in the thread title, and subsequent posting - shows a disdain for "renters"

Sorry but why would anyone want to be added to a watsapp group with 400 houses in it? :eek:

nolivesmatter · 11-06-2021 6:10pm

Flinty997 wrote: »

I wonder if you went looking for a 20yr rental would the deposit be the same as normal...

Don't be silly.

ineedeuro · 11-06-2021 6:16pm

Flinty997 wrote: »

Great now just go convince the banks of that....

The Central Bank was asleep at the wheel in the last crash. They have implemented some guidelines to the bank to stop this sh*tstorm that happened here the last time,.

Doesn't seem to be working does it?

Why do renters equate the ability to pay rent to mortgage eligibility?

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