Saving/Applying for a mortgage 2020-22 Edition

Noah G wrote: »

Hi just wondering a friend wants to get a mortgage but doesnt have a savings account, they just get there weekly pay from there job. I said you need to save for 6 months with money going into a savings account.

But they seem to think that a gift from parents is enough to get a mortgage with them just getting weekly pay but not having a savings account.

There in there early 20s and just cant get them to understand.

Very high level, but checklist for a mortgage is:

• 10% of mortgage required as deposit
• mortgage shouldn't exceed 3.5 times salary (exemptions exist)
• You need to have evidence of repayability, either rent payments or savings in bank statements

Easiest thing to do if they don't listen is get them to go talk to someone and get shot down

Ikozma wrote: »

I was thinking of buying a site with cash instead of using it as a depisit for a mortgage and then apply for a mortgage to build

I think from a practicality point of view, you're better off keeping the cash, as you don't know yet if you'd get planning permission? Also, you may need the cash buffer for some lenders?

2up2down wrote: »

Hi all, great thread, new to this Also.
I have 2 questions if anyone can help I'd be delighted.
Ftb, don't have much of a deposit saved as we were paying back a loan and monthly rent.paid loan off 18 months early. We have over enough for the fees stamp duty etc but will qualify for the full htb for deposit.
We have just fully paid off a very big loan and have no other loans. Will the proof/ability to repay the loan we have just finished and our monthly rent payments be enough for the banks with just the legal fees and htb for deposit? Thanks for any help.

Think it would depend on the bank. I'd chat to a broker who'd be better able to advocate for you.

Quick question
What do banks prefer these days,savings in an actually "savings account" or money you have saved in your actually account ,
Lets say you have 40 grand in a saving account or 40 grand in your current account which would be more appealing to them ?

SteelyDanJalapeno wrote: »

From a mortgage perspective, transferring 1-2k per month to a savings account and not dipping into it looks good and is more structured.

In general, having that much in a current account is never a good idea

Out of interest why would you say its not a good idea to have in a current account ?

Lots of people would have far greater sums in there current account

yourdeadwright wrote: »

Out of interest why would you say its not a good idea to have in a current account ?

Lots of people would have far greater sums in there current account

Current account could get cleared out pretty easily if you got scammed or fraud occurred. Couldn't happen to a savings account given the funds normally cant be transferred externally from a savings account.

I normally keep no more than 100 or so in the current account for that reason. Everything else is kept secure.

CBear1993 wrote: »

When you say your savings accounts do you all mean with a separate bank?

I’m with AIB and just have a savings account alongside the current account. But sure it’s very handy to just transfer between the two even on the phone app?

I divide savings each month into a northern Irish bank account, AIB down here and credit union. Can’t see how that would be frowned upon my future mortgage application reviewer?

When I transferring the deposit to my solicitor (you don't transfer any money to your bank), it was transfer from my KBC savings (instant) and credit union (one day) to my current account then do transfer from current account to solicitors bank account.

The bank doesn't really care where you save your money as long as it's simple for them to see where the money is going. compare and contrast:

person 1: saves 1500 a month on the 12th of every month, and it goes into a single savings account, which shows zero withdrawals.

person 2: saves 1500 a month on the 5th of every month, it's split evenly between Credit union, Bank A savings account, Bank B savings account.

person 3: lumps everything into the current account and builds up a balance, some months they have 1500 a month left over, but other months 1200, and other months 1334.53.


Which scenarios are easier to see a record of regular savings? 1 and 2 right? Person 3 you have to run through each transaction to see where the savings are happening in-between Penney's, Ladbrokes, Boohoo and the local chipper transactions.

With Person 1 and 2, savings is thought of when they get paid, it's first and foremost top of mind; Person 3 is saving but it looks like an after thought.

CBear1993 wrote: »

Am I correct in saying there are different types of savings accounts offered by your bank? i.e. one that you have to request to withdraw from?

There are many types of savings accounts, some offer instant-access savings (like that AIB account you mention), some require 30-60 days notice that you want the money, you'll need to chat with the bank / look on bonkers.ie to see which accounts are best for you.

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Just to note to my previous post around instant access savings accounts, sure there can be a scenario where someone may get phone and transfer money from your instant savings to your current account and then rob it. Nothing is 100% fool proof but it's all about having enough safety layers on your money, you've worked hard for it, so don't make it easy

Markitron wrote: »

I have a savings account with AIB that requires 7 days notice, which is just right IMO. In case of an emergency you are not waiting too long, but its long enough that you won't dip into to it for an impulse purchase.

Sounds good. With this stuff there's no right or wrong answer by the way. everyone is different with this stuff and it's only through listening to others experiences and researching what's best for you do you get the best for you.

For me the best thing I learned when saving for a deposit (is knowing how much a month I could realistic live off). so when pay day came, I transferred out a regular amount to a savings account and not touch, kept my living money in my current account, and transferred the rest into another savings account/credit union so that it was there if I needed it but if I didn't it was saved and whilst it wasn't regular (i.e. sometimes needed to dip into it), it was a fund big enough to say pay for furniture or some appliances.

Doing this when I got paid meant I wasn't getting to the end of the month wondering where my full salary had vanished.

wassie wrote: »

Look at it from the point of view of the person assessing your application.

• If you have a dedicated savings account that shows regular monthly deposits and no withdrawls then you have clearly demonstrated your ability to repay a loan.
• If its in a current account intermixed with numerous transactions, it becomes harder to determine if you have not been 'dipping' into your savings which may negatively impact your application.

This is what lenders prefer and if you want their money then the easier you make it for them, the stronger your application becomes and may also mean a faster approval.

Oh I understand that saving account part it makes perfect sense but the blanket statement of its not a good idea to have that much cash in your current account at any time is what I don't get,

Fair point. I would agree with @Bubbaclaus post on the previous page.

Bubbaclaus wrote: »

Current account could get cleared out pretty easily if you got scammed or fraud occurred. Couldn't happen to a savings account given the funds normally cant be transferred externally from a savings account. I normally keep no more than 100 or so in the current account for that reason. Everything else is kept secure.

And this.

Creamy Goodness wrote: »

from a safety and security point of view, having a huge balance in your current account that's tied to your debit card is a risk. All it would take is for someone to clone your card, or grab your card at knifepoint etc and empty your account. Now you'll get this money back but will take time and I'd rather give them 200-300 euro rather than my lovely deposit for my house.

As long as you have done the right things you money will generally be returned if you are subject to fraud. Its more about minimizing what the fraudsters can get and inconvenience of time & hassle to get your money back.

DubLad69 wrote: »

I was advised by a brooker that if I apply for AIP now when exemptions are not avaliable then it would complicate matters when I am applying for an exemption.

The same might apply to your case?

Are exemptions not available at the moment?

Well poop! Maybe should pull back broker application then

dalex15 wrote: »

Last year around Christmas, my card got cloned and used in US in a gun shop.

Obviously, they first tried my card with a 6$ transaction in Walmart which I didn't pick as I did not check my bank account every day, and probably even if I would have checked, might not have spotted it as around Christmas, we all have lots of transaction.

The fraud department refunded me the money, however it took about 2-3 weeks.

There's an old say 'better safe than sorry'. Since then I check my current bank account daily. It only takes 1 minute.

Why not use a credit card then? It's the bank's money that is at stake. With debit card, the amount goes from your account.

wassie wrote: »

Friend just received approval in principle from Finance Ireland for 3 year fixed rate 2.4%.

Said from time the broker submitted the application to receiving the letter was 6 working days. Application was straight forward with no exemptions (i.e. 3.5x salary, 20% deposit, 12 months demonstrated savings).

that is a good rate , - I assume no cash rewards offer with that ?!

I wonder do the majority of Irish people have there saving accounts with the same banks as the current accounts,
Or do the majority people look around for the best saving accounts ,

SteelyDanJalapeno wrote: »

Afaik there's little to no monetary benefit in most savings accounts these days.

Probably the best incentive out there is BOI who offer 2k I think if you save your deposit with them, and if you draw down with them.

Yup and in fact, savings accounts in Ireland actually cost you money. any interest you gain is wiped out by DIRT and inflation rising. They are secure way of saving for a house, but if you want to actually grow your money they're useless.

the best savings account was the KBC when I joined it 4 years ago, they gave 2.5% up to 40k savings, they've slashed it back down to 0.75% over the last couple of years.