Refused Mortgage, anywhere to go from here?

helpful mate

Registered User
Messages
11
We were refused mortgage by BoI, AIB and a broker. (we got approved by all these but were refused when we went to draw down on mortgage) Reason been I have an apartment that I bought in 2005.

Summary of our situation:
€220K left on mortgage on apartment and it's worth about €200K, this is currently rented and the rent almost covers mortgage repayments. Apartment is rented to Local Authority of there's 2 years left on lease so rent guaranteed for 2 years. In the current market it doesn't make sense to sell it. Anyway is anyone buying one bed apartments?
Single income family of over €50K but this job is secure.
€110K in cash (Keeping €15K of this to cover any unforeseens in relation to apartment). We are regular savers and also have been.
Have no other personal debt, loans, credit card paid off monthly, excellent credit record etc
Looking for mortgage of approximately €200K, we just want to buy our own home. Our rent is currently €1200 and repayments of €200K would be €1000 so we can prove we can repay mortgage.

Is there anywhere we can go to appeal the banks decision? Is there anyone we can turn to? I am so annoyed that we have this much cash and still can't buy! We don't want to continue paying our LandLords mortgage when we could be paying for our own property.
 
Not sure if this is any good to you. Is there any chance you would move to a cheaper house for say 12 months and save aggressively in that time and re apply. You will have more cash and you may need to borrow less.
You would be exposing yourselves to 420k on a salary of 50K which is excessive. To be fair the bank is only protecting itself when it didn't in the past.

Also you say it doesn't make sense to sell, but if you want a home of your own, your sick of paying someone else's mortgage instead of your own and the bank won't lend the money because of the apartment, it makes great sense to sell.
 
Income €50k & Current Mortgage €220k
That's why nobody would lend you anymore.
 
The apartment may be a complicating factor in more ways than one. For starters, it's subject to a fixed tenancy, so anyone who buys it can't just boot out the current occupants. The buyer would need to be looking at it as an investment for the foreseeable future and be ok with the current set up.

Also, and this may the banks thinking, are you sure the figures you've quoted in relation the potential selling price are accurate? 200k for a one bed? The rent almost covers the mortgage currently, would this be the case on the private market? When the local authority lease ends, and if their budget and rent levels are cut, how much will the rent cover then? These are things that need to be considered by both yourself and any lender.

The lender may suspect that the apartment may be subject to further price falls and possibly declining rents.
 
Thanks everyone for your replies. I am just annoyed that we had this much savings and still can't buy.

I know most of you are suggesting selling the apartment, but it doesn't make logic sense to sell it while the rent is covering the mortgage. Also as Bugler said it probably wouldn't get €200K as is anyone buying one beds at the moment?

It's in a good area (Harold's Cross), walking distance to city centre and it has 2 parking spaces so I honestly do believe that even after DCC's lease runs out that it shouldn't be difficult to rent.

We are stuck in rut and as someone else said it's probably for the best that the bank won't give us a mortgage we just can't see that at the moment as the house we have found is worth alot more than what we are paying for it as the bank is forcing the owners to sell.
 
Help me understand. The banks offered you a mortgage then then refused drawdown beacuse you own an apartment since 05.

Did they not know you had the apartment when they assessed you and gave you the approval in the first place??
 
Help me understand. The banks offered you a mortgage then then refused drawdown beacuse you own an apartment since 05.

Did they not know you had the apartment when they assessed you and gave you the approval in the first place??
They did, I was completely open and honest with them. it was the branch that gave the approval, to be honest I don't think the branches have any say any more. Both banks thought we would have no problems getting the mortgage.
 
Thanks everyone for your replies. I am just annoyed that we had this much savings and still can't buy.
Keep saving.
I know most of you are suggesting selling the apartment, but it doesn't make logic sense to sell it while the rent is covering the mortgage. Also as Bugler said it probably wouldn't get €200K as is anyone buying one beds at the moment?
If it's all but paying for itself - your in a good position. This may not be ideally what you want but in the long run they may be doing you a favour by turning you down.

I tried something similar recently ie. obtain mortgage on a second property on the basis that enough rent is being accumulated on the first. I wasn't looking for a whole lot to borrow and had significant savings - but no joy. I'm all the happier for it. I will continue to accumulate savings and review again in 6-9months. I'd imagine this is your best plan too.
 
Help me understand. The banks offered you a mortgage then then refused drawdown beacuse you own an apartment since 05.

Did they not know you had the apartment when they assessed you and gave you the approval in the first place??

There are many reports of banks giving approval in principle, but withdrawing or amending once the purchaser attempts to draw down. I'm thinking of AIB's "we say 'Yes' to xxx mortgage applications every day" schtick.
 
They did, I was completely open and honest with them. it was the branch that gave the approval, to be honest I don't think the branches have any say any more. Both banks thought we would have no problems getting the mortgage.

Had you signed a mortgage agreement?
 
Have you tried to sell it? If you have €110k in savings like you say you would be able to clear the negative equity with part of that and leave yourself freer to take on another mortgage. Might stick in the craw to pay out but if you want to be clear of it and move on it might be best.
 
I am interested to know did you sign anything with the bank.? I though branches are only taking or decided who can make an application. I though all actual decisions were made by bank mortgage sections. Did you get a list of conditions precedent?
 
Back
Top