Saving/Applying for a mortgage 2020-22 Edition

8-10 · 19-06-2020 11:10am

Creamy Goodness wrote: »

Generally if you’re on a variable rate mortgage you can overpay to your hearts content, fixed mortgage rates some banks allow a portion of overpayment and some don’t allow any overpayment without penalty.

Fixed rates are always for a fixed period anyway right? So even if you were in a position to overpay you could just take that lump sum or extra monthly amount and save or invest it until the fixed period is up and then pay it in lump right?

Luluk · 19-06-2020 2:46pm

Quick update on my situation in case anyone else finds themselves in similar circumstances. Basically I had changed jobs after obtaining a mortgage offer from BoI, but before drawing down. I spoke to them today and was told that if my salary hasn't reduced and I have passed my probation, then the offer will not be withdrawn. I'm hugely relieved. Will finish my probation in September and house will be finished in late October, so barring any unforeseen circumstances I should be fine. I have to say BoI have been terrific to deal with at every stage.

Renjit · 19-06-2020 7:38pm

Luluk wrote: »

Hey, looking for some advice if anyone can help. I bought a house off plans in March, paid deposit (with HTB) and signed contracts. I had approval with BOI (including an exemption). The house is due for completion in October. I was furloughed from my job and was on the pandemic unemployment payment for six weeks in April - May. I then changed jobs in June as I needed a full income. My new job is for the exact same salary as my old one. I will complete my probation in August.

I understand BOI will ask for up to date payslips before draw down and will question the new job. I suspect they may insist on starting my application afresh, in which case I could lose my exemption and the sale could fall through. They may not even consider my application until I have completed another six months in the new job. Does anyone have any advice for me? I have not yet spoken to the bank about my change in circumstances. I viewed the house today and loved it so would be very disappointed if I don't get it.

The bank will definitely be asking for payslips after 6 weeks or so and when they deem it necessary.

Is the approval in principle? Then exemption may be renegotiated.

For probation, could you tell your employer to reduce it? Because banks are fine as long as the salary cert doesn't show you are on probation.

Renjit · 19-06-2020 7:46pm

Luluk wrote: »

Quick update on my situation in case anyone else finds themselves in similar circumstances. Basically I had changed jobs after obtaining a mortgage offer from BoI, but before drawing down. I spoke to them today and was told that if my salary hasn't reduced and I have passed my probation, then the offer will not be withdrawn. I'm hugely relieved. Will finish my probation in September and house will be finished in late October, so barring any unforeseen circumstances I should be fine. I have to say BoI have been terrific to deal with at every stage.

The banks have to adjust due to current pandemic induced circumstances. Good to know the update on this.

Luluk · 19-06-2020 11:16pm

Renjit wrote: »

The bank will definitely be asking for payslips after 6 weeks or so and when they deem it necessary.

Is the approval in principle? Then exemption may be renegotiated.

For probation, could you tell your employer to reduce it? Because banks are fine as long as the salary cert doesn't show you are on probation.

I have full approval and the official offer was signed and returned to the bank back in March. I'm okay with the probation period as I'll be finished probation on 1st September and the house will not be finished until October.

IvoryTower · 20-06-2020 7:07am

If you have 6 months good saving now 2 months later, no overdraft in that time , I'd say you would be fine

Otherwise you will have the same problem as getting the loan

Dylan94 · 20-06-2020 4:43pm

Does anyone know if it is possible to pay a deposit on a new build without having the full funds in place?

Say a new build development is releasing a new phase now, but it won't be ready until Feburary. They cost €400,000 but right now I only have €385,000 and know that I will be able to get up €410,000 by Januray. Would it be possible to pay the booking deposit and sign contracts?

Or would I likely run into problems with the developer or mortgage?

Renjit · 20-06-2020 7:00pm

Dylan94 wrote: »

Does anyone know if it is possible to pay a deposit on a new build without having the full funds in place?

Say a new build development is releasing a new phase now, but it won't be ready until Feburary. They cost €400,000 but right now I only have €385,000 and know that I will be able to get up €410,000 by Januray. Would it be possible to pay the booking deposit and sign contracts?

Or would I likely run into problems with the developer or mortgage?

You can certainly book the house with initial deposit. This is completely refundable until you sign the final contract.

However, developer may ask you if you have approval in principle. Probably get a AIP letter from the bank for whatever amount the bank is read to give.

Try to delay signing the contracts until January. But I would say it will be difficult since it will be much closer to February. Talk with your solicitor on this. Developer may also be a bit more lenient here because of Covid 19 situation.

Meanwhile, I would advise that you get some gift from your parents, friends or relatives so that you will be ready much earlier.

Turkish1 · 21-06-2020 7:24am

Black_Knight wrote: »

When my wife was on parental leave (for a few months) and we were switching mortgage, the bank just wanted previous months payslips, and a letter from her employer stating that she's in full time employment and when she returns she will be on her existing salary etc. For 1 week, they probably won't mention it at all, and if they do, they'll be ok if it's parental leave.

Somewhat similar question but said I would ask (and also some other questions - hopefully not rehashing only ground but couldn't see them asked very recently on the thread)

Looking at moving houses, initially thinking early next year, however one house has appeared just recently which I want to go for. Wife is currently on maternity leave and will be taking unpaid 16weeks (from about October)

Few small questions:
Will question be asked about if she intends taking unpaid leave?
If so, will any of her income be taken into account for mortgage multiple?
Not sure if still done, there used to be an assumption around costs per month for children when looking at repayment capacity? Any ideas what those assumptions are?
Would wife's net income be taken into account for repayment capacity calcs?
Vast majority of my deposit will come from equity in current house, will it be looked at negatively that we only started saving in reality about 6months ago (bought family car about 9months ago)

Black_Knight · 21-06-2020 8:06am

Turkish1 wrote: »

Somewhat similar question but said I would ask (and also some other questions - hopefully not rehashing only ground but couldn't see them asked very recently on the thread)

Looking at moving houses, initially thinking early next year, however one house has appeared just recently which I want to go for. Wife is currently on maternity leave and will be taking unpaid 16weeks (from about October)

Few small questions:
Will question be asked about if she intends taking unpaid leave?
If so, will any of her income be taken into account for mortgage multiple?
Not sure if still done, there used to be an assumption around costs per month for children when looking at repayment capacity? Any ideas what those assumptions are?
Would wife's net income be taken into account for repayment capacity calcs?
Vast majority of my deposit will come from equity in current house, will it be looked at negatively that we only started saving in reality about 6months ago (bought family car about 9months ago)

Doubtful about being asked if she's taking unpaid leave. Even if they do ask, just say no. That's all assuming you get full approval before her unpaid leave starts showing up in payslips.

Her and your full salary should be taken into account for the mortgage.

Our bank said, iirc, that a child was equivalent to 250 extra a month in repayments.

I'd assume regular and consistent savings would be all they want to see, but perhaps consider how the new mortgage repayments would affect your ability to save. They'll also stress test you (add 2% to your interest rate and see if your repayments are feasible - with the extra bit for kids).

Duke of Url · 22-06-2020 1:06pm

Hi All

Can you get a Snag list done before you sign contracts on a new build?

awec · 22-06-2020 1:13pm

Duke of Url wrote: »

Hi All

Can you get a Snag list done before you sign contracts on a new build?

No. Why would you?

Is the house built?

Duke of Url · 22-06-2020 1:14pm

awec wrote: »

No. Why would you?

Is the house built?

Yes. The house is completed.It is a new build in a new estate.

awec · 22-06-2020 1:32pm

Duke of Url wrote: »

Yes. The house is completed.It is a new build in a new estate.

No harm in asking.

Bluefoam · 22-06-2020 2:02pm

Duke of Url wrote: »

Hi All

Can you get a Snag list done before you sign contracts on a new build?

No, but you can have an survey & valuation... snagging is a list of instructions that the developer is responsible to complete... So snagging is not relevant in a scenario where you have no contract with the developer.

A survey can be extensive as you want...

ClaptonBay · 22-06-2020 5:16pm

Question on the valuation survey..if they determine the value of the house is say 20k less than what you agreed, would the seller drop thee price based on valuation, has this ever happened? As assume bank will only give you loan then for their valuation.

Second question, has there been any details released in the media on the help to buy scheme under the new government? As I know FG were trying to extend it up to €30k,but any idea if it will just remain the same for the long term or amended? Think I read it would be extended in the programme for government whatever that means.

guyfawkes5 · 22-06-2020 5:20pm

ClaptonBay wrote: »

Question on the valuation survey..if they determine the value of the house is say 20k less than what you agreed, would the seller drop thee price based on valuation, has this ever happened? As assume bank will only give you loan then for their valuation.

Second question, has there been any details released in the media on the help to buy scheme under the new government? As I know FG were trying to extend it up to €30k,but any idea if it will just remain the same for the long term or amended? Think I read it would be extended in the programme for government whatever that means.

It's up to the seller if they would drop the price for you. It has happened before, but you're far from guaranteed it. The one thing going for you in this scenario is that the seller would know that valuers as a whole are typically pretty conservative and can work for multiple banks, so there's a very decent chance that even if they dropped you and went with another mortgaged buyer, they'd run into the same problem again.

You're correct that the banks will only loan you enough for their valuation of the house.

According to the prospective Programme For Government (which is far from guaranteed to pass - but we'll know by this Friday), the HTB scheme would just continue in its current form.

ClaptonBay · 22-06-2020 10:22pm

What's the general advice re mortgages, should you draw down the biggest mortgage you can get ie 90% or use savings to pay off a higher deposit and get a 75/80% mortgage considering the non existent interest rates at the moment for savings?

Dylan94 · 22-06-2020 10:41pm

ClaptonBay wrote: »

What's the general advice re mortgages, should you draw down the biggest mortgage you can get ie 90% or use savings to pay off a higher deposit and get a 75/80% mortgage considering the non existent interest rates at the moment for savings?

Id say the good advice is to get the smaller mortgage, my plan though is to get the max mortgage and use the additional money (savings) to fit out the house once we have it.

I would say most would say get the smaller mortgage and do the house up over time.

Creamy Goodness · 23-06-2020 9:39am

Dylan94 wrote: »

Id say the good advice is to get the smaller mortgage, my plan though is to get the max mortgage and use the additional money to fit out the house once we have it.

I would say most would say get the smaller mortgage and do the house up over time.

Banks will not allow you to borrow for house fit-out, you'll need to withhold some of your deposit and keep within the LTV/LTI rules to do what you want to do. They do however allow you to borrow for renovations but want to see proof of future value and it's taken into account.

Dylan94 · 23-06-2020 10:15am

Creamy Goodness wrote: »

Banks will not allow you to borrow for house fit-out, you'll need to withhold some of your deposit and keep within the LTV/LTI rules to do what you want to do. They do however allow you to borrow for renovations but want to see proof of future value and it's taken into account.

I think you took up my reply wrong.

The guy I was replying to was asking if he should get a 75% LTV mortgage by using up all of his savings or should he keep some of those savings and get a higher 90% mortgage.

What I meant was that while Im sure the prudent financial advice would be to use your savings to get a smaller LTV, what I would personally do is keep my additional savings and get a 90% mortgage, using my extra savings to fit out the house.

Renjit · 23-06-2020 11:00am

ClaptonBay wrote: »

What's the general advice re mortgages, should you draw down the biggest mortgage you can get ie 90% or use savings to pay off a higher deposit and get a 75/80% mortgage considering the non existent interest rates at the moment for savings?

I would say keep your savings in place. You never know when you may need it in case of emergency. Further, you can invest this for higher returns.

Get max mortgage. Keep your savings for rainy day.

whatever76 · 23-06-2020 11:23am

ClaptonBay wrote: »

What's the general advice re mortgages, should you draw down the biggest mortgage you can get ie 90% or use savings to pay off a higher deposit and get a 75/80% mortgage considering the non existent interest rates at the moment for savings?

tough one - I was in similar situation late last year - i opted to put as much a deposit I could and get mortgage down to under 200k ( single buyer) - main thinking with me is Age as am early 40's so tried to balance everything out and did not go max term year either so looked at what monthly payment look like and what I can pay . I took a 2 year fixed mortgage so planning to start over paying by 10% now and reassess options when this is up - while I can I want to chip away at it and get it down as much as I can over next 10 years . Also based on the current price of property its good to have some comfort in knowing that more than 10% of the house is yours ( I know this can all change based on market price and for me I know I purchased at peak but its a forever home and location was main criteria ) but it gives leyway that if anything does happen and you need to sell good part of sale is yours and not all going to bank. of course lots of different opinions out there on this but this worked for me .. weather right or wrong I just dont know so made best decision at time !

IvoryTower · 23-06-2020 11:47am

does anyone know can i buy my neighbours garden as part of my mortgage

say the house is worth 150k, the garden 10k, can i borrow 160k

Bluefoam · 23-06-2020 1:05pm

IvoryTower wrote: »

does anyone know can i buy my neighbours garden as part of my mortgage

say the house is worth 150k, the garden 10k, can i borrow 160k

As far as I could see, it is a seperate land transaction, therefore would require a seperate loan & unlikely to qualify for a mortgage.

IvoryTower · 23-06-2020 1:31pm

Okay thanks.

Can you increase the mortgage for "refurbishment"and then buy the garden instead?

I might have rhw cash to buy it, just checking options

Duke of Url · 23-06-2020 1:56pm

How long did it take people to get Mortgage protection after filling out the Mortgage protection application?

23-06-2020 3:07pm

Duke of Url wrote: »

How long did it take people to get Mortgage protection after filling out the Mortgage protection application?

Seemed like it was almost straight away (this is pre-covid). We didn't shop around, just went straight through our bank to Irish Life. Talked it out with the advisor and left with a policy selected and log-in details for the website.

He said they might get on to me about some hospital visits I had a couple years ago, but they never did. About three days after this meeting I used our log-in details for the Irish Life website, and there was a page there ready to go, asking for our start date.

A few weeks after that we were ready to start the policy and just popped the date in on the website, and the policy started immediately.

LoonyLovegood · 23-06-2020 3:12pm

Has anyone been asked for extra documentation? I have a couple of extra bits I've been asked for, dropping them in tomorrow. I'm assuming that means the 10 business days will start from tomorrow again?

Duke of Url · 23-06-2020 3:14pm

LoonyLovegood wrote: »

Has anyone been asked for extra documentation? I have a couple of extra bits I've been asked for, dropping them in tomorrow. I'm assuming that means the 10 business days will start from tomorrow again?

for your Mortgage application?

LoonyLovegood · 23-06-2020 3:22pm

Duke of Url wrote: »

for your Mortgage application?

Yeah, they needed an extra letter from work, and proof of some income.

ELM327 · 23-06-2020 3:26pm

We had AIP from last year and it expired during the start of covid.
Now they want all new docs (in fairness, I did take out a new car loan in the interim)

All gone back up to the underwriters for rereview.

HelpImAlive · 23-06-2020 3:35pm

This might be a question that has been answered before, but ideally looking to see if anyone has had personal experience.

Single first time buyer, aip for 160k. Say if I see a house for example at 70k that needs approx 30k work done to it. Is it possible to get the mortgage at 70k and then get some form of loan to cover the 30k works? Obviously factoring in that it will increase the value of the house etc. Tia.

hanaimai · 23-06-2020 7:24pm

LoonyLovegood wrote: »

Has anyone been asked for extra documentation? I have a couple of extra bits I've been asked for, dropping them in tomorrow. I'm assuming that means the 10 business days will start from tomorrow again?

Yes, the 10 business days only starts once all documentation has been received.

guyfawkes5 · 23-06-2020 11:01pm

Duke of Url wrote: »

How long did it take people to get Mortgage protection after filling out the Mortgage protection application?

I submitted on a Friday and heard back on a Saturday. I used a broker who was a reseller of an Aviva policy.

I didn't have any health complications to fill out in the application.

guyfawkes5 · 23-06-2020 11:09pm

IvoryTower wrote: »

Okay thanks.

Can you increase the mortgage for "refurbishment"and then buy the garden instead?

I might have rhw cash to buy it, just checking options

You can add refurbishment costs to your mortgage, but the work would be expected add to the value to your house (so it can only be structural improvements like rewiring and so on) and be certified each step of the way by an architect.

Jsmac67 · 24-06-2020 8:35am

Has there been any indication as to when exemptions may be back on the table?

We'll need an exemption, so we're reluctant to obtain approval in principle at 3.5x when not much use to us!

Markitron · 24-06-2020 8:52am

Jsmac67 wrote: »

Has there been any indication as to when exemptions may be back on the table?

We'll need an exemption, so we're reluctant to obtain approval in principle at 3.5x when not much use to us!

Judging from posts on here, late this year/early next year is a safe bet

lir6777 · 24-06-2020 9:08am

Jsmac67 wrote: »

Has there been any indication as to when exemptions may be back on the table?

We'll need an exemption, so we're reluctant to obtain approval in principle at 3.5x when not much use to us!

Some banks with stricter criteria do have them, I just called them all and asked. Didn't work out for me as the ones who are best for single buyers don't have them but AIB and EBS said to me in the last week that they have LTI ones available (not LTV though) and are assessing case by case. Might be harder than usual to get one with them but might be worth a shot!

Ikozma · 28-06-2020 11:46pm

I'm hoping to have my 20% deposit saved by the end of this year, even though we will be selling the house we in now to move to a slightly bigger one and using money left over from that to go towards it also.
We will more then likely go through a broker but my question is when should we apply, I don't want to put our house up for sale and then not get a new mortgage, would the bank take into account the fact that we will be selling our current house and factor that in so when it does sell we can move forward, sorry for silly question but we've never sold a house before in order to try get another

Humour Me · 29-06-2020 8:22am

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

Conrad83 · 29-06-2020 8:30am

lir6777 wrote: »

Some banks with stricter criteria do have them, I just called them all and asked. Didn't work out for me as the ones who are best for single buyers don't have them but AIB and EBS said to me in the last week that they have LTI ones available (not LTV though) and are assessing case by case. Might be harder than usual to get one with them but might be worth a shot!

Yes, we got a LTI exemption from AIB last week!

Prezatch · 29-06-2020 8:37am

Conrad83 wrote: »

Yes, we got a LTI exemption from AIB last week!

Also got LTI exemption last week 4.5x with AIB. Bonus was not considered as I have switched employer recently.

Markitron · 29-06-2020 8:57am

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

Perhaps I read this incorrectly but it seemed to me that exemptions were still on for FTBs.

lir6777 · 29-06-2020 10:57am

Markitron wrote: »

Perhaps I read this incorrectly but it seemed to me that exemptions were still on for FTBs.

Yeah they are to my understanding, I think maybe the poster was just meaning in general that things are only looking like they're getting tighter? Also I think LTV exemptions are pretty much totally off the table all round so STBs will be in a much tougher position. Crazy times ðŸ˜£

Astro127 · 29-06-2020 12:04pm

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

Springy Turf · 29-06-2020 12:16pm

Astro127 wrote: »

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

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.

Renjit · 29-06-2020 2:24pm

Astro127 wrote: »

Hi not sure if in for right thread, but if can help would be great
I'm saving for a mortgage. first time buyer I have 10k saved my parents are going to help me and give me a gift of 30k , I think it's a bit much would 20k not be enough towards a mortgage?

That 30k may attract some tax.

Each parent can give up to €3,000 to a person in a given tax year. That means your two parents can legitimately gift you up to €6,000 between them with no tax liability, either for you or your parents. In fact, they could also gift up to a further €6,000 to your partner on the same basis.

https://www.irishtimes.com/business/financial-services/aib-introduces-frightening-mortgage-rules-and-halts-lending-to-covid-payment-recipients-1.4290956

You should also start saving regularly. Say, if your mortgage comes down to 1000. Then it will be good if you can show regular savings of 1000+ for past 6 months. It helps in making your case stronger in case of repayment capacity calculation.

For example, you can start fixed regular deposits in mortgage saver account or other saving accounts.
Bank also include your regular house rent too as part of your repayment capacity. If you have any loans, that may reduce your repayment capacity and overall mortgage too.

Keep you credit history clear too.

Sonrisa · 29-06-2020 4:14pm

Springy Turf wrote: »

Well that really depends on the house!
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.

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

cython · 29-06-2020 4:21pm

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

It's still true to say that gifts over the €3k per annum carry tax implications though, as while tax may not be owed/payable on them when gifted, you may find on the parent's passing that (depending on the size of the inheritance, obviously!) the cumulative value renders you liable for tax on the inheritance that otherwise would not have been payable.

Saving/Applying for a mortgage 2020-22 Edition

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