Bank want me to pay off personal loan before drawing down mortgage

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pint6

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Hello there,

Just got a call from my solicitor today, as he received a letter from bank stating to fulfill certain things before the mortgage cheque is issued. Conditions were to complete and activate insurace(life and home) and the other condition was to clear my existing personal loan with the bank of ireland.

I have already paid my deposit, i was not expecting bank to put this condition. Loan is amounting to 10K. What my mortgage broker is saying is to get the loan from other bank and payoff bank of ireland loan. I am doing the following per his advise :

a. called couple of banks this morning, everybody declined my application
b. original loan was 13k but I cleared 3k today, again they want to clear every bit of it.

I am in a fix now, any help greatly appreciated. Please help me.

REgards,

Pint 6
 
I feel your pain! I had to do the exact same thing, like you, I had my deposit paid and everything. It was my car loan I had to pay off. I got a member of my family to "buy" the car off me until I got my cheque and then I "bought" it back off them....

Thing it's fairly common now for the mortgage co's to request that loans are paid off. I though it was just me, but my sister (who would be alot financially sounder) was asked to do the same thing.
 
Sago,

See I cant pay off myself as I cant get loan else where as I currently have loan. are there any pvt.lenders whom i can go with(i know that they are exorbitent)

Please advise,

Pint 6
 
Have you approched the credit union with the problem, if your a regular saver and discuss it with them they may draw up a plan for you. If you wanted 10k you could agree to pay it off over 2 or 3 years (at a lower rate than you would be paying in the BOI.
 
Are the banks allowed to do that? Surely it would have made more sense for them to tell you that you had to get rid of this loan BEFORE they approved you for a mortgage? Not at Drawdown.......You could have gotten yourself sorted out then........Sounds like shut gate after horse has bolted. On the mortgage application, did you tick the box that said "are you planning to clear this loan as part of the mortgage agreement?"
Good luck with it but its a bit unfair IMO.
 
If this is true, I better contact BOI as I have a car loan with them, and in the middle of buying a house,and they are my mortgage providers too, can't afford to pay the loan off, or ask the CU for a loan to clear it, as my savings there are not regular. I hope this is not true, because the situation is extremely stressful as it is, with several deals falling throught on the vendors end, etc etc, and I can't take it any more!
 
Ditto Im in the same situ (BOI Car Loan) and I wouldnt be able to pay it off until I sell my house which Im planning to do anyway as well as the credit card. I think its very very unfair that you have been hit with this at the last minute. Plus I get the impression that the Lender isnt BOI ??? only that the car loan is BOI.
 
pint6 said:
Will I be loosing the house, deposit etc?
Click to expand...
Is the deposit refundable? If you can't afford the house then presumably you will lose it. Did you have mortgage approval (in principal or otherwise) before putting down the deposit? Have you tried other lenders?
 
pint6 said:
Hello there,

Just got a call from my solicitor today, as he received a letter from bank stating to fulfill certain things before the mortgage cheque is issued. Conditions were to complete and activate insurace(life and home) and the other condition was to clear my existing personal loan with the bank of ireland.

I have already paid my deposit, i was not expecting bank to put this condition. Loan is amounting to 10K. What my mortgage broker is saying is to get the loan from other bank and payoff bank of ireland loan. I am doing the following per his advise :

a. called couple of banks this morning, everybody declined my application
b. original loan was 13k but I cleared 3k today, again they want to clear every bit of it.

I am in a fix now, any help greatly appreciated. Please help me.

REgards,

Pint 6
Click to expand...

Your mortgage offer will have specified that the loan be repaid prior to completion and your solicitor should have drawn your attention to this condition before you signed contracts. Can family help out in the short term? If it's a car loan could you sell the car and repay the loan? Could you negotiate a lower repayment on the loan now that you've reduce it by €3k.

Lenders calculate borrowing capacity as a % of your net income (35-45% depending on the lender) so it's probably the case that your mortgage plus the loan payment takes you over the limit. Who is your mortgage offer from? Are you borrowing 100% or less?

Sarah

www.rea.ie
 
Same thing happened to me - I'm just going to sell the car and buy a cheaper one! Priorities have to change when buying a house in Ireland. Lots to be said for having a company car!
 
LollyMc said:
Ditto Im in the same situ (BOI Car Loan) and I wouldnt be able to pay it off until I sell my house which Im planning to do anyway as well as the credit card. I think its very very unfair that you have been hit with this at the last minute. Plus I get the impression that the Lender isnt BOI ??? only that the car loan is BOI.
Click to expand...

Your solicitor can give an undertaking to pay off all loans from the balance of funds from your home sale which would be standard practice if you are selling and buying.

For anyone not in this buying/selling situation, have uyou considered contacting another lender to see if you can get the mortgage and keep the loan, as not all have the same issue with this
 
LollyMc - It's not a question of the Banks closing the door after the horse has bolted, it's a question of paying a deposit before receiving the written loan approval with its attached conditions. While I have sympathy for Pint6, it's advisable to wait until you have a written loan offer so you can check to see if you can comply with the conditions.
 
Did I miss something here ...

it's a question of paying a deposit before receiving the written loan approval with its attached conditions
Click to expand...

You might have paid a refundable booking deposit before receiving your loan approval, but you would not have been allowed by your solicitor to sign contracts (and therefore not have paid your non-refundable deposit) until you had the written loan approval with its attached conditions.
 
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