Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all,
Vanilla are planning an update to the site on April 24th (next Wednesday). It is a major PHP8 update which is expected to boost performance across the site. The site will be down from 7pm and it is expected to take about an hour to complete. We appreciate your patience during the update.
Thanks all.

Applying for Mortgage question

Options
  • 08-09-2018 1:07pm
    #1
    theballz
    Registered Users Posts: 1,272 ✭✭✭


    Hi,

    I am looking at applying for a mortgage with the intention to buy in January 2019.

    Property value: 520,000
    Deposit saved: 52,000
    Loan Term: 35 years

    According to the KBC calculator repayments would be 1,934.20 over a 35 year period.

    My financial situation:
    - I work in Software Sales (permanent)
    - Single
    - Base salary 68,000, additional 68,000 in bonuses (consistently exceeding.)
    - No outstanding loans

    I know the above does would not equate for a mortgage of that size, however for the last 12 month I have been paying 1,942.00 in rent (which is higher than the proposed mortgage) - would the bank take my propensity to spent into consideration when applying for a mortgage or is is strictly down to salary?


«1

Comments

  • Options
    #2
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    theballz wrote: »
    Hi,

    I am looking at applying for a mortgage with the intention to buy in January 2019.

    Property value: 520,000
    Deposit saved: 52,000
    Loan Term: 35 years

    According to the KBC calculator repayments would be 1,934.20 over a 35 year period.

    My financial situation:
    - I work in Software Sales (permanent)
    - Single
    - Base salary 68,000, additional 68,000 in bonuses (consistently exceeding.)
    - No outstanding loans

    I know the above does would not equate for a mortgage of that size, however for the last 12 month I have been paying 1,942.00 in rent (which is higher than the proposed mortgage) - would the bank take my propensity to spent into consideration when applying for a mortgage or is is strictly down to salary?


    Sounds like you're miles off.


  • Options
    #3
    jodaw
    Registered Users Posts: 691 ✭✭✭jodaw


    Computer says no

    I would imagine

    Also how is it only possible to have 52K saved when you are earning in excess of 136K Gross per year. This would say that your living costs have matched your earnings every year before the past year.


  • Options
    #4
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    You should talk to a good broker; some banks include bonuses in which case you’d be almost bang on 3.5 times.


  • Options
    #5
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    First question, are you a first-time buyer?


  • Options
    #6
    RunRoryRun
    Registered Users Posts: 476 ✭✭RunRoryRun


    Unfortunately the bank will give you a max approval of 3.5 times your guaranteed salary. This excludes your bonus, whether you're exceeding consistently or not. Can go up to 4 times salary with an exception.


  • Advertisement
  • Options
    #7
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    Andrew Beef wrote: »
    You should talk to a good broker; some banks include bonuses in which case you’d be almost bang on 3.5 times.


    Do you know which banks?


    I thought they could only calculate guaranteed bonus's which by the nature would be few and far between.


  • Options
    #8
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    RunRoryRun wrote: »
    Unfortunately the bank will give you a max approval of 3.5 times your guaranteed salary. This excludes your bonus, whether you're exceeding consistently or not. Can go up to 4 times salary with an exception.

    The above is not accurate.

    Ulster Bank, for example, will include bonuses.


  • Options
    #9
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    Some banks take the average of the last three years’ bonuses but it’s not accurate to say that it’s just your salary that’s taken into account.


  • Options
    #10
    theballz
    Registered Users Posts: 1,272 ✭✭✭theballz


    limnam wrote: »
    Sounds like you're miles off.

    Very helpful and insightful feedback. Thank you.
    jodaw wrote: »
    Computer says no

    I would imagine

    Also how is it only possible to have 52K saved when you are earning in excess of 136K Gross per year. This would say that your living costs have matched your earnings every year before the past year.

    The nature of my provision, this year I have made well in excess of my salary + bonus package.

    Andrew Beef wrote: »
    You should talk to a good broker; some banks include bonuses in which case you’d be almost bang on 3.5 times.

    A few people have advised the same. If you have any suggestions that would be fantastic.
    Avatar MIA wrote: »
    First question, are you a first-time buyer?

    Yes, I am a first time buyer.
    RunRoryRun wrote: »
    Unfortunately the bank will give you a max approval of 3.5 times your guaranteed salary. This excludes your bonus, whether you're exceeding consistently or not. Can go up to 4 times salary with an exception.

    AIB have told me they will take into consideration 50% of my bonus. Bringing my salary calculation up to 102,000 euro.


  • Options
    #11
    theballz
    Registered Users Posts: 1,272 ✭✭✭theballz


    Re propensity to buy: It is also worth mentioning that AIB did say they would take into consideration previous loans etc. For 6 months I was paying 400 euro on a car loan on top of the 1,942 a month rent - bringing up to 2,342 a month.

    However the 3.5 times still stands.


  • Advertisement
  • Options
    #12
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    Andrew Beef wrote: »
    Ulster Bank, for example, will include bonuses.


    Had no interest in doing it for us a few months back.


  • Options
    #13
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    theballz wrote: »
    Very helpful and insightful feedback. Thank you


    Sorry.


    I'd make a terrible broker.


  • Options
    #14
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    One other thing which would help indirectly.

    You would appear to be in a strong position (making a fortune for your employer) to renegotiate your deal to a payment model that includes a higher basic salary.


  • Options
    #15
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    limnam wrote: »
    Andrew Beef wrote: »
    Ulster Bank, for example, will include bonuses.


    Had no interest in doing it for us a few months back.

    They included mine.


  • Options
    #16
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    Andrew Beef wrote: »
    They included mine.

    Would be on a case by case basis.

    I suspect in the OP's case the level of bonus to get to the required level would be too high. Worth a discussion tough.


  • Options
    #17
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    Andrew Beef wrote: »
    They included mine.


    So I'd say the safest thing to say is they _might_ include it.


  • Options
    #18
    bleary
    Registered Users Posts: 495 ✭✭bleary


    I never really understand the argument that people are paying as much in rent as this mortgage would be. Yes maybe but rates are historically low.
    Over 35 years they will increase and small rises can make a big difference to affordability .
    Also agree if you are earning 120 grand and more a year you should have more than 50 grand saved


  • Options
    #19
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    bleary wrote: »
    I never really understand the argument that people are paying as much in rent as this mortgage would be. Yes maybe but rates are historically low.
    Over 35 years they will increase and small rises can make a big difference to affordability .
    Also agree if you are earning 120 grand and more a year you should have more than 50 grand saved


    There's not many things in how banks calculate affordability that makes sense.


    I guess the case is that he's shown over a sustained period of time that he can "afford" the repayments.


    But I think in this case it doesn't make much difference the base wage against the overall cost of the house are miles apart.


    Even if they took a % of the bonus into consideration and an exception you'd still find it hard,that's even before any sort of stress testing.


  • Options
    #20
    somesoldiers
    Registered Users Posts: 13,845 ✭✭✭✭somesoldiers


    Avatar MIA wrote: »
    Would be on a case by case basis.

    I suspect in the OP's case the level of bonus to get to the required level would be too high. Worth a discussion tough.

    Yes me too, it is far too much. If he was on 130k base and needed to show bonus of another 10 to top it up, there would be less of an issue


  • Options
    #21
    Esse85
    Registered Users Posts: 8,236 ✭✭✭Esse85


    Your obviously incredibly good at what you do to be on a salary of €60k plus and making that again in bonuses.
    I presume in bonuses alone your making well over €120k gross to be taking home €68k net.

    Would there be an opportunity to change employer and acquire a higher base salary?


  • Advertisement
  • Options
    #22
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    limnam wrote: »
    Andrew Beef wrote: »
    They included mine.


    So I'd say the safest thing to say is they _might_ include it.

    Just admit you were wrong.

    Ulster Bank and some other banks include bonuses as a matter of course.

    It wasn’t some wild one-off just for me.


  • Options
    #23
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    Andrew Beef wrote: »
    Just admit you were wrong.

    Ulster Bank and some other banks include bonuses as a matter of course.

    It wasn’t some wild one-off just for me.


    Wrong of what?


    I didn't make the original statement.


    So now that we've cleared up your mistake.


    What I said was, they didn't do it for me.


    Which means they're not doing it for everyone.


    Which means we can clearly state they "may" take it into consideration.


  • Options
    #24
    hanaimai
    Registered Users Posts: 207 ✭✭hanaimai


    theballz wrote: »
    Re propensity to buy: It is also worth mentioning that AIB did say they would take into consideration previous loans etc. For 6 months I was paying 400 euro on a car loan on top of the 1,942 a month rent - bringing up to 2,342 a month.

    However the 3.5 times still stands.

    So what AIB have told you related to the affordability assessment. This is one aspect that is considered to qualify for a mortgage - essentially can you meet the monthly repayments. Banks must carry out an affordability assessment but they have leeway to determine the exact criteria for the assessment - hence why you'll hear different things from different banks in this regard.

    However, your problem is the Loan-to-Income (LTI) rule of banks only being able to lend 3.5 times your income (or up to 4.5 with an exception). This is a hard rule set by the Central bank i.e. no one is getting more than 4.5 in any circumstances. The banks have some discretion in relation to bonuses. Usually they will ask for proof of at least 2-3 years worth of bonuses and they will take an average of the total and add a percentage (depending on their own criteria) on to your gross salary for the purposes of the LTI calculation.

    You should talk to a broker who might be able to advise which banks are more likely to take a higher percentage of your bonus into account. As someone else suggested, you should also look into getting your base salary raised. It's super unlikely any bank would ever take 100% of a bonus into account for the LTI calculation so if you can get your base salary raised, this might push you closer to the amount you are looking for.

    Otherwise, keep saving to get your LTV down. The lower your LTV, the more likely the bank is to offer you an exemption too.


  • Options
    #25
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    limnam wrote: »
    Andrew Beef wrote: »
    Just admit you were wrong.

    Ulster Bank and some other banks include bonuses as a matter of course.

    It wasn’t some wild one-off just for me.


    Wrong of what?


    I didn't make the original statement.


    So now that we've cleared up your mistake.


    What I said was, they didn't do it for me.


    Which means they're not doing it for everyone.


    Which means we can clearly state they "may" take it into consideration.

    Unfortunately, you appear to have no idea what you’re talking about. I say unfortunately because it’s bad when anonymous posters mislead someone who’s looking for help. The OP’s best bet is to consult with a mortgage broker rather than rely on posters who seem to “blow in the wind” when it comes to their advice.


  • Options
    #26
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    limnam wrote: »
    Andrew Beef wrote: »
    You should talk to a good broker; some banks include bonuses in which case you’d be almost bang on 3.5 times.


    Do you know which banks?


    I thought they could only calculate guaranteed bonus's which by the nature would be few and far between.

    No, you’re wrong.


  • Options
    #27
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    Ulster Bank will include bonuses, not “may”, they will. A quick google search will confirm that. However, the ratio will be problematic for the OP. They’ll only allow bonuses at 20%.

    https://www.ulsterbankintermediaries.ie/lending-criteria/acceptable-income


  • Options
    #28
    limnam
    Registered Users Posts: 9,152 ✭✭✭limnam


    Andrew Beef wrote: »
    No, you’re wrong.


    So the statement by the other poster was this

    RunRoryRun wrote: »
    Unfortunately the bank will give you a max approval of 3.5 times your guaranteed salary. This excludes your bonus, whether you're exceeding consistently or not. Can go up to 4 times salary with an exception.


    I merely pointed out that I was under the impression it was only guaranteed.


    I never stated it was.


    I never gave anyone advice. I was actually asking you a question of what bank it was.



    Now get off your high horse.


  • Options
    #29
    Andrew Beef
    Registered Users Posts: 754 ✭✭✭Andrew Beef


    limnam,

    It’s okay to be wrong. Don’t worry about it.

    The OP should chat with a broker.


  • Options
    #30
    theballz
    Registered Users Posts: 1,272 ✭✭✭theballz


    Quick update here, a lot of you thought I was mad in thinking I could get the mortgage approval I outlined above.

    Well I did get it and more.

    To anyone is viewing this thread, do not be nervous when applying.


  • Advertisement
  • Options
    #31
    manatoo
    Registered Users Posts: 376 ✭✭manatoo


    theballz wrote: »
    Quick update here, a lot of you thought I was mad in thinking I could get the mortgage approval I outlined above.

    Well I did get it and more.

    To anyone is viewing this thread, do not be nervous when applying.

    Fair play. And FML, what do I need to do to get your kind of income


Advertisement