Saving/Applying for a mortgage 2015/16/17/18/19

hanaimai wrote: »

So we have approval in principle and are bidding on a house – I just wanted to check what happens in terms of the mortgage when we go sale agreed? Do we apply for a loan offer at that stage? Can we apply for a loan offer from a few banks or is this the stage where we are meant to stick with only one application? Are contracts signed before or after the loan offer comes?

Apologies if this seems super obvious, but I was so focused on the AIP stage, I just realised I’m not 100% clear on the next steps!

EDIT: Sorry, one other question! At what stage do you arrange mortgage protection insurance? After receipt of loan offer?

If you go sale agreed on the property, go back to the bank that gave you AIP and get formal approval, if AIP was recent then you shouldn't need any additional supporting documents. You can go to different bank but you will need to go through the whole process all over again.

You will need your loan offer letter before you sign contracts for the house.

to secure the houe at sale agred you will pay the agent a booking deposit, normally €5,000 and then you will need the balance of 10% of the cost of the property for signing contracts.

You can arrange life cover & home insurance closer to the closing date - only take a phonecall and normally sorted quickly, unless there is an underlying medical condition which may require a medical report from a doctor.


The offer letter will have any other conditions that may need to be satisfied.

Thank you awec and TheShow, very helpful information. Just one further point I want to clarify - say I only applied to one bank for AIP and was in the process of applying to others when I go sale agreed on a property. Can I still apply to all banks for a loan offer (i.e. with the property address) or will I just have to pick one at this stage and hope they have no issues? I know the ideal is to have all your AIPs in order before purchasing but we have found a property we are very interested in and just trying to understand our options in the event we go sale agreed before getting all the AIPs!

I suppose the key question is - is a loan offer binding i.e. do I HAVE to drawdown with that bank or is it still 'change your mind' territory?

You can get approval from as many banks as you want, nothing is binding until you draw it down.

Instead of all of the hassle of going to every bank, I'd recommend using a broker, let them do all that for you.

Thank you all, I'm happy that I know what our options are now, no matter what way things end up!

MrStuffins wrote: »

Guys, when should I seek to see a broker?

We have the vast majority of our deposit saved up. In fact, we'd have enough if we wanted to buy a house on the lower end of the scale.

We're not entirely sure exactly where we want to live yet, so we only have a general idea of how much we actually want to borrow.

Is it advisable to wait until you have an exact figure in mind and the relevant deposit before seeing a broker?

Moved in last Thursday. Thanks for all the advice throughout the thread

Cows Go µ wrote: »

Are the bank aware of the fact that there is that amount of land? I remember that when I was initially looking for approval in principle I mentioned that I wanted land and the tsb said they wouldn't give me a mortgage for a house with more than 2 acres. I only wanted an acre or so, so it made no difference to me

AIB have a 5 acre limit, PTSB is 2, BOI is 1 I think.
You won't get a residential mortgage with 10 acres of land.

ELM327 wrote: »

I'll wager dollars to doughnuts you'll need a farmland mortgage with 10 acres of land, meaning you'll need to produce accounts etc.


Or if not, please let me know which bank so I can go there next time!!

You wouldn't as you are not a farmer, but you also wouldn't get the remaining 8 acres on a residential mortgage. Could probably look at a variable rate Personal loan for the 8 acres with the land as security, but rates would be a lot more than a mortgage rates and over a shorter term which could make it too expensive to finance.

awec wrote: »

What's the reason for the limit? The land doesn't provide enough security against the loan from the banks point of view?

More to do with not wanting a load of land with questionable value on the resi mortgage books. 8 or 10 acres on its own, while sizable, is a small land holding and is not worth much to anyone else, also could possibly be land locked by the house, rendering no access to the land at the back.

ELM327 wrote: »

I was told by the bank that I would have to apply for a farm loan if I wanted to buy a house exceeding the 5 acre limit.
So you can take that "you wouldn't as you are not a farmer" and put it somewhere else, because that's what was told to me and I'm most certainly not a farmer. The opposite.

they were just fobbing you off.

Question for people here:

When you get to the stage of signing the contracts and paying the deposit how much do you typically pay? Is it the 10% if a First Time Buyer?

If you have a higher deposit saved up in excess of the 10%, when would you pay the remainder above that? Is that done at the draw down stage?

I presume whatever extra savings you have when you draw down can be added to the funds coming from the bank.

Toyotafanboi wrote: »

Solicitor got back to us and said we are on track for keys this day next week!

Got they keys 2 weeks ago. Paid holding deposit to the EA on March 16th, felt like an eternity.

Havn't made too many posts on here but done a lot of reading so thanks to you all for some great advice along the way and good luck to everyone else still in the process.

Now just a full top to toe renovation to contend with, we'd like to be living in the house within 12 months so expect plenty of posts ahead :pac:, heating, plumbing, wiring, insulation, kitchens, bathrooms, garden etc etc.

Glen_Quagmire wrote: »

There are houses I'm interested in being released in early September.

I'm am currently gathering the necessary documents to give to my broker to start looking for mortgage offers and also going through the HTB process.

Problem is I am not officially out of my 6 month probation on a new job (same industry and role) until mid September.

What options do I have to secure one of these houses when they are released early September or is it a lost cause?

Not a lost cause, but you will be cutting it tight. You can give the booking deposit. By the time they want the balance of the 10% you'll be out of probation. If you are not, then you get your booking deposit back.

Your issue is going to be will the estate agent take the booking deposit off you if the next guy in the Q doesn't have these problems, but I'd say your grand as long as you are not looking in Dublin 15.

Frank Castle wrote: »

Got AIP and current have a Valuation booked.

Need Life insurance or mortgage protection now for the loan offer. Any advice on which to go for?

mortgage protection runs the course of the mortgage only and should be the cheapest option.
It really depends on what you want, if you're just looking for the cheapest option and not concerned about financial planning, then go for mortgage protection.
If you think you need something else then go speak to a financial broker.

Frank Castle wrote: »

Thanks, was really looking to see if there was any reason to go with life insurance over mortgage protection but can't justify it myself.

I'll just plow on with the mortgage protection and get the loan offer asap.

On another note, I've had a great experience with TSB. first walked in to look for AIP 2 weeks ago, and already are at valuation stage. No problems with them re: help to buy, and a part gifted deposit. Minimal savings of our own, but all rent payments are shown. Also have taken out a personal loan and a new car on pcp within the last 6 months.
None of this has been an issue with TSB, they have been great to work with so far. (helps that all our banking is through TSB too).

Just wondering from your post, did you have a property already sale agreed before you had AIP? I note in the above that you got AIP and then immediately went to valuation in a short period of time.

Business Cat wrote: »

Soz, I'm having trouble understanding.



In simple terms

Mortgage payment is €100

Interest on that is €40

75% of that is €30 So we wouldnt have any liability for that €30.

The remaining €70 would be subject to 52% tax.

Is that right?

You're not being taxed on your mortgage repayment (€70). You're being taxed on your rental profit.

Rent is 500 per month. You can deduct any expenses from this before you calculate your tax due - so in your example, you can deduct the €30 relating to the interest portion of your mortgage repayment. You cannot deduct the full €100 Mortgage repayment.

You can also deduct other expenses, such as upkeep of the property, landlord insurance. Let's say these other expenses amount to €50 a month.

So you deduct €30 and €50 from your monthly rental income of €500. You get €420. This is when you apply the tax rate of 52% (assuming you are a higher rate tax payer). All other costs, which aren't tax deductible e.g. the remaining €70 Mortgage repayment, have to be funded with what is left after tax. And then what is left after that will go into your pocket.

Just heard from our solicitor today, contracts are to arrive from the developer's solicitor in the next 1-2 weeks. The Bank and the Agent have been in touch with their office just now.

The Bank has issued our Letter of Offer too, it'll probably be in the post when I get back home today.

Question - What has to be done with the Letter of Offer in order to be ready to sign the contracts? You obviously have to sign it to accept it I'm guessing, do they request any additional documents at the Letter of Offer stage?

I know Mortgage Protection and Home Insurance will be required, but I'm assuming they have to be in place by draw down not immediately?

Business Cat wrote: »

In terms of renting out a property, what's the tax liabilities?

I know the rate is 52% but 52% of what?

Say we rent out our place to someone for €1000 a month and the mortgage is €750. Are we liable for tax on the full amount or on the excess after expenses ie €250?

Tks.

Income tax rates in Ireland are 20% and 40%.

USC may also apply to net rental profits.