Mortgage : ICB

Hello -

Wife and I are looking to get a joint mortgage for in the region of 150K to 200K.
We have good saving records and have a large deposit - approx 200K.
I'm full time employed on 77K
Wife is part time employed on 26K
no kids. no debts. Presently renting 1300 month. saving about 1K a month. So we pass all the stress tests.

The houses we are looking at are in the region of 350K to 410K So we would have a healthy LTV ratio.

Bad news is that I have a ICB rating. 5 years ago I lost job, returned to education for 18 months to upskill in my profession, I failed to keep on top of loan\credit card and they went in to bad debt. It was a difficult time we struggled to pay rent and needed to get loans from family and friends.. The loan was full repaid about 12 months ago and the credit card (1K) long before that.. The revoked credit card will be removed from ICB in Nov-16 but the other loan(circa <2K) will not be removed until 2019.

We have engaged with one bank at length and the application was eventually refused. I was told to reapply in 1 year.

We've also contacted some brokers who seemed initially enthusiastic about our chances of getting a mortgage but were told no.

Does anyone have any information anecdotal \ professional or otherwise that could help us find a way to getting credit to purchase home?

Regards

Kant.

1. Get docs to show you were unemployed.
2. Get docs to show you went back to education to upskill.
3. Get statements from lenders, highlight that up to unemployment you are a good payer,highlight that on getting employment you repaid all debts.
4. Get letter from lenders that show you repaid.
5. Get statements that show a healthy onward saving trend.
6. Show all rent paid.

Ask that they consider your 2 year (flaw) as a consequence of circumstances beyond your control.

Keep the above tight and concise and take it directly to each lender.
And , good luck.

Hi-
Thanks for post Gerry.
Looks like the Credit union is the institution that will deal with us. Although, we have not exhausted all the banks yet.
The Credit Union APR is ~5.5% whereas the initial rate we'd get through a bank as first time buyers would be ~ 4%.
Also - the Credit union typically want the term of the loan to be shorter ~20 years as opposed to 35 years which we'd opt for with bank.
These changes would mean a much larger monthly repayment.
On a Loan of 170K:
BANK 35 Years, 4%APR = €753 Monthly
CU 20 Years, 5.5% APR = €1169 Monthly

1. If we opted to CU We can transfer mortgage to another institution when ICB is cleared (in 2 years). Is this a problem???
2. Does anyone have any experience of mortgaging up

any thoughts\advice welcome.

K

I find it very informative that your Credit Union (who did not go bust) will help you.Yet Mr Bank who went bust, who we bailed out cannot see that your old issues have been resolved.
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I would be thinking that over a mortgage term Cu rates will probably balance out V Banks.
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20 years (if you can carry it) is long enough to be in hock.
...............................................................................................................

I would be sure that in a couple of years with good payments/loan to value ratio down.Mr Other Bank will look at transfer.
I would also be fairly sure C U will change rates to adapt as they get going.
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On rates. 4% seems a lot worse than 5.5% but for your info

Cu over 20 years @ 5.5 = 1169.
Bank over 20 years @ 4 = 1030.
...............................................
Difference = 139.per month.
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Cu over over 35 years @ 5.5 = 913 (I know they wont do it )
Bank over 35 years @ 4 = 753
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Differnce = 160 .per mth.

There are plenty of threads in AAM about trading up.
But for now see, will any Bank look at you , and if not go for CU if you can afford the payments.
And if possible go no more with either than 20 years.

Good luck.

Hi Gerry\AAM-

We got full approval from Credit Union for an amount of 220K. Their Rate is 5.28% (Approx). We're very happy about this. Who wouldn't be happy about paying 160K in interest over 20 years.. Sure Look!

I'd like to quantify the exact cost of going with CU for 1..2...3 year(s) and then moving mortgage to bank.
Costs are in 3 categories (That I can think of)
1. Additional Interest:
Additional interest because CU charge a higher Rate. Considerations are that CU use a Simple Interest Calculation not a Compound Interest. Other Considerations --- Looks like banks will be lowering Rates shortly before General Election. Banks give a lower rate for good LTV ratio and we have a good LTV Ratio.
2. CU don't treat us differently because we are FTB's
3. Cost of Moving Mortgage to another lender when\if time comes

1. This comes to approx ~€1600 per Annum. Thats just an excel calc using PMT formula
2. Not sure of cost
3. Not Sure of Cost


Any ideas of 2 and 3? Are there any other costs\disadvantages I am missing?

Thanks

K

Kant said:

Hi Gerry\AAM-

We got full approval from Credit Union for an amount of 220K. Their Rate is 5.28% (Approx). We're very happy about this. Who wouldn't be happy about paying 160K in interest over 20 years.. Sure Look!

I'd like to quantify the exact cost of going with CU for 1..2...3 year(s) and then moving mortgage to bank.
Costs are in 3 categories (That I can think of)
1. Additional Interest:
Additional interest because CU charge a higher Rate. Considerations are that CU use a Simple Interest Calculation not a Compound Interest. Other Considerations --- Looks like banks will be lowering Rates shortly before General Election. Banks give a lower rate for good LTV ratio and we have a good LTV Ratio.
2. CU don't treat us differently because we are FTB's
3. Cost of Moving Mortgage to another lender when\if time comes

1. This comes to approx ~€1600 per Annum. Thats just an excel calc using PMT formula
2. Not sure of cost
3. Not Sure of Cost


Any ideas of 2 and 3? Are there any other costs\disadvantages I am missing?

Thanks

K

Click to expand...

Hi,

Can I ask you what credit union approved you for this loan ?

Pm me if that suits.

I never knew credit unions did mortgages.

Bigger credit unions definitely do the equivalent of a mortgage, they are usually called secured loans rather than mortgages and are secured on the property. Rates are higher and terms shorter but other than that a good option if someone has no other option.

Another thing is the CU rate is fixed I assume but still has the benefit that you can repay quicker if you're able without penalty.
Also you say that interest is simple rather than compound. I think you are mistaken in this?

Monbretia said:

Bigger credit unions definitely do the equivalent of a mortgage, they are usually called secured loans rather than mortgages and are secured on the property. Rates are higher and terms shorter but other than that a good option if someone has no other option.

Click to expand...

Thanks, this is something I wasn't aware of, if one was to say build a house(site owned) would it be possible for these larger credit union to lend to complete the building of a house?

No reason why not provided the house was not already mortgaged elsewhere and obviously subject to income requirements.

Kant said:

We got full approval from Credit Union for an amount of 220K. Their Rate is 5.28% (Approx). We're very happy about this. Who wouldn't be happy about paying 160K in interest over 20 years.. Sure Look!

Click to expand...

Hi Kant, I am in a very similar situation. Can you tell me which Credit Union gave you the loan?

Hi Kant do you mind advising me what credit union you approached as this may be an option for us we are un similar circumstances. Thanks in advance

Kant said:

We got full approval from Credit Union for an amount of 220K. Their Rate is 5.28% (Approx).

Click to expand...

CUs normally only lend some multiple (usually up to 4x) of what a member has in shares.
In fact I thought that they were required to insist on this?
Is this not the case here?
If it is and you have to keep c. €55K in shares then your effective cost of borrowings will be significantly higher than the quoted rate.

The property rather than shares is the security for the secured loan.

OK - but the CU might still also require shares?
Best for the original poster to clarify as it's pertinent to the overall question.