Are the bank's criteria OTT?

baywindow

Registered User
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HI

I know the bank when bananas during the boom, giving out mortgage's llike biscuits and I can understand CB incentives prevent re- occurance but do you think the Banks are gone too restrictive handing out mortgages. Take our situation : €1250 monthly proven repayment capacity ( €650 rent / €600 savings), close to €30,000 in savings, absolutely no debt and looking for a mortgage of €95,000. Good numbers you might think, but the bank ( all of them) think we can't afford it because we are a single income family with 3 children. They say we need to have something like €2500 per month even though our finacial statements prove contrary. Its frustrating really, we are mature people who make a little go a long way. Why do banks not look at things like the mortgage and insurance to pay will be less than the current rent, no childminding fees as one person is at home, steady savings record from €0 to €30, 000- no lump sum payments, €650 pm for last 10 years, always have money in current account. Is there any avenue for us to take or are we destined to rent forever...
 
It might be worth going through a broker who could argue your case with the banks.
Which banks have you approached yourself?
 
Definitely go to a broker. The bank is crazy not to lend the money in your circumstances.

Maybe the bank would give you a personal loan of €95000 instead of a mortgage.?
 
The problem for the lender is that many people with figures similar to yours are going deep into arrears and the banks must treat them with kid gloves under the CCMA.

Brendan
 
This is crazy stuff. Your record of paying rent of €600 and saving €650 would be able to pay your mortgage over 20 years at over 14% and pay your Insurance and property tax. I cannot understand it as I know a single girl has been approved for €115k with a salary of about 30k and not near as good a savings record as op. Less than 3 years in a private sector job and about 12.5% of value house in savings. She got mortgage with AIB dealing directly. I cannot understand OP's refusal.
 
Good numbers you might think, but the bank ( all of them) think we can't afford it because we are a single income family with 3 children. ..

How much is the single income according to the earners P60 ?

How long is the earner in the current job and how secure is it ?

Could the explanation for the refusals be in the above ?
 
Definitely try a broker. I've been approved 132k on 30k salary, 8 years in the job, 10+ % deposit saved over 7 months. I know this is on the high end, but obiously it is happening.
 
HI folks thanks for the replies,

To answer twofor1
Earnings on 2013 P60 are E36,972. This includes a 20% shift premium which I been on since I started in 1997.
I am 17 years in the same private sector job (healthcare multinational).
No bad credit etc

Its the affordability that's catching us. Banks ( face to face)have told us this along with some brokers ( over the phone). As soon as I mention industrial wage , single income with 3 dependents the door closes. The banks don't seem to care about savings record,proven prudent financial management etc.. They simply say we can't be living on my earnings- we fall below the set criteria. We find it frustrating because we know best what we can afford ourselves, we've always cut our cloth to our measure and feel we have proved when looking at our documentation.
 
Doesn’t look like there are many options in our case outlined above only to keep saving. I’ll ring them tomorrow but do you think are the CU’s open for business as sss suggested. Another option I have been considering it to approach the seller about the possibilities of renting to eventually buy. I know a lot may have reservations ( myself included) about such an arrangement but I’ve being trying to weigh it up and can see some benefits to both parties in this case.
Benefits to seller.
He sells his house. We know they want to get shut of it they will let it go for €100K (20K below asking), I was thinking as well I could add a further 10K as a sweetener.
I would take over all the maintainance, LPT etc ( as if he had actually sold it).
Benefits to us:
We agree the sale price now. Our rent chips away at the final cost price and not dead as it is renting today
We eventually buyout (in 3 yrs) the house we want and can afford today in a rising market ( albeit slowly) and no need to wait for the bank’s to entertain us.

I’ve done the maths. We pay the seller a deposit and rent of €650pm today and continue to save €600pm (same as today and for the last 5 yrs. odd) ) We have 30K in savings today and along with this €600pm, by the end of 3 yrs from now we would have €75,000 paid off the sale price, leaving a balance of 35K which we should be able to meet easily with a term loan as by then as our rent and savings burden will be gone.
I know there would be plenty of other costs- maintenance, services, insurance etc but assuming my job situation doesn’t change I think we would be ok. I would really be grateful if ye could look over these figures, is it a bad idea?, are there any pitfalls we have overlooked to catch us up- tax/legal impacts etc ( seller –rental income,for example). The big downside for us is that if thing did go “ tits up” for us on the income front for example, we would lose all we put into the house as the seller could take our deposit/rent and house after the 3yrs
.
Generally, Rent to buy ( in my opinion ) is a bit of a “scheme” for builders to sell otherwise “unsellable”house in a falling market but I just wonder can there be advantages from our perspective. Thanks and looking foward to your comments. J
 
A credit union 'might' give you a secured loan on the security of the house but the rate will be higher than mortgage rates and the term shorter. Worth asking anyway.
 
If the seller will let it go for €20k less than asking would you not get a mortgage for €70k? Is it an investment property that is being sold?
 
HI and thanks for your replies

I'd love to go for a mortage of 70K but the bank's don't entertain us as we fall at the first fence ie affordability. even though our repayment capacity and LTV is extremly in our favour.
 
Your take home pay is about the amount of disposable income they are looking for.

The headline of The Independent this morning is about a woman who says she is a slave to bills

We are slaves to our bills and our taxes. It got to the point where we looked at each other and asked what on earth we were working for. There were months after paying our mortgage and over €1,000 on childcare costs that we had nothing left. When one of my children got sick I sat on the landing and cried because I was worried about them and worried about what I was going to do about work. I know we are not alone - there are tens of thousands of other Irish families in exactly our position. Ordinary working people are in a prison of bills, debts and taxes. People who never took a gamble on the property or stock markets. There comes a time when yet another bill arrives to be paid and you say 'enough is enough'. What is the point of working to pay State bills or taxes when you feel that the real losers are your own children? Like thousands of others we are caught between a Government that wants us to pay taxes and employers that don't want workers absent because of their children.

That is what the banks want to avoid. People having nothing left after they pay their bills and their lives being miserable. it seems that you are one of the black swan cases that sits outside the bell curve.


Steven
www.bluewaterfp.ie
 
That is what the banks want to avoid. People having nothing left after they pay their bills and their lives being miserable.
I wouldn't say the banks are too pushed about people's lives being miserable, more like they want to avoid not being paid back ( understandably). Curiously in our case, banks have suggested, to strengthen our application, we should put ourselves in that situation ie herself to get employment and get the kids into childcare.From the outset we had always agreed that this was a non runner feeling the importance of a full time parent.
 
You obviously are one of those families who can live on well below the standard requirement for a family of your size. I accept that you have proven this by your savings record to date. however, you are now falling victim to the mortgage regulations which specify that banks should assess repayment capacity using a standardised level of living expenses for family size. As previous posters have advised, seek out a good broker who may be in a better position to make a case for you with a Bank that is prepared to agree approvals on a policy exception basis. Perhaps if you gave your location some posters may recommend a suitable broker.
 
Thanks for your replies. I'm in the midlands and would love to hear from somebody who could suggest a suitable broker. As suggested earlier I enquired around today about applying for a secured load( the house as security) for 70K- I think they thought I was mad. Also, I sent an application into my local council but won't hold my breath on that one either. I'm still considering approaching the seller about rent to buy- has anybody any further comments on this as an option?? Thanks J
 
One comment on that option is that the owner would pay tax on the rental income so that might lessen the attraction for him. Is it an investment property & would he be prepared to wait three years. What would happen if the value went up in the next three years? Who would benefit? You'd need a watertight legal agreement if that's possible.
How do councils operate the rent to buy scheme. Could you base your proposal on that?
 
Thanks Butter for your replies. According to Revenue's website, the seller has to pay tax on rental income but this lessens the amount of CGT paid (invesment property) when the house is sold in 3 yrs- this is kind of what I was hoping the 10K swetener would complement. I heard from a good source that they are eager to dispose of the house, also the EA has told me there has been an offer of 95K so I don't think price rise would matter too much. At least with my way, they would be getting 15K more ( albeit with 3yrs messin' around). Thanks again for your comments so far and I would love to hear from some current landlords- Is this rent to buy something ye would get into ?, Has anybody here tried this before?
 
The tax paid on rental profits by landlord does not reduce his/her eventual CGT liability. They are two completely separate taxes and do not impact one and other.


Sent from my iPhone using Tapatalk
 
Have you not tried your County Council for a mortgage, my cousin got one a few months ago from them as the banks all said they did not have a long enough savings record even though they had proof of rent and the rent payments way exceeded the mortgage payments. it was for the same amount that you are looking for with a lower SVR than the banks.
 
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