1 bed apt policy in the banks

C

charlie MacZ

Registered User
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Hi,
So I went sale agreed on a 1 bed apt yesterday for €250,000. Today I informed my bank and I got a complete shocker of a response. Because it was a 1 bed and not 2 bed which my application was originally for the rules are different , the LTV is 75% meaning I need a deposit of €62500 for this apt. I was approved for a max mortgage of €236,500 and I have a deposit of €30000. So today I literally ran around to 2 other main banks and explained my situation. One of them was prepared to send in an application and make an exception for me so now I gotta wait until next week to see what happens. The EA was raging but prepared to wait an extra couple of days. I was never informed of the different rules for 1 bed apt and it is not on any of the banks websites explaining this. None of the banks were able to tell me today why the rules are different for 1 bed apts can anyone explain this ?? Raging.......

Thanks,
Charlie
 
Presumably the reason for the difference is 1-bed apartments were the 'starter' unit for people wanting to get on the Irish property ladder (**shudder**) and probably took the hardest hit on the death of the Celtic Tiger. This meant they proved to be unsuitable for anyone other than a single applicant or co-habiting couple. I presume the banks don't want to get caught out again so insist on a higher deposit for such properties.
 
No use to you now, but the online mortgage calculators on most of the bank websites include a negative adjustment parameter for single bed apartments. The irish market just don't have a track record of trading 1 bed apts. Everyone seems for some reason to want a tiny, overlooked 3 bed semi-d 20 miles from the city center. Planning design has ruined Dublin.

With growth in the Silicon docks type workers I would hope more buyers would come into this market i.e. those that would value location more and are accustomed to living with little space. We rent a very expensive apt here in the US and nearly every irish guest we have are shocked we don't move a further 10min from work for an extra bedroom for the 2/3 weeks a year we've guests. Until irish people start to reside in places suitable to their needs the banks will continue to see added risk in 1 beds.

To clarify, I'm not just criticizing young people not buying 1beds when it would best suit their lifestyle, I'm critical of elderly empty nesters remaining in large 4 beds.
 
[QUOTE="Andy836, post: 1435485, member: 82924"I'm critical of elderly empty nesters remaining in large 4 beds.[/QUOTE]

Really and why shouldn't they? Surely if they worked hard all their lives, PAID their mortgage and brought up families etc they have a right to remain in their own home until they die. There is very little in the way of purpose built accommodation for elderly people in Ireland so the alternative is a crappy shoebox on the 9th floor of an apartment block with little in the way of amentities for them. In the absence of such they perfectly entitled to remain in their four bedroomed house.
 
Ignoring your attitude, I agree with your point. My folks wouldn't consider moving out of their house because there is nothing suitable for them to move into. There's a lack of stock geared toward those who want, high end finishes & large living space but only two bedrooms. Most major cities supply this but sadly not dublin.
 
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The other problem is the one bedroom apartments. My brother in law was looking to rent one at the start of the building of apartments, and was shown one where you couldn't open the bedroom door fully because a double bed was too big for the room and blocked the doorway! My husband and I rented one in the city centre for two years, and it was fine, but small, with very little storage. If you were very minimal you could manage, but even finding room for clothes for two people was difficult. Apartments in Ireland have no storage facilities apart from in the apartment, and you need room for a washer and dryer too.
 
Sadly getting priced out of the 2 bed apt. market in where i would like to live.
The size is actually big for a 1 bed apt. at 58 sq.m. / 624 sq.ft which is why it appealed to me. For me its common sense you get mortgage approval from a bank for a maximum amount of cash it should NOT matter if the property is a 1 , 2 or 3 bed apt.
My mortgage offer will now run out at the end of July and if i don't buy within this time i will have to re-apply again with the new lending restrictions.
 
But it does matter what the cash is for, the property is what the cash is secured on so the bank are going to want to be sure that in the event of repossession it will sell easily allowing for price drops. The same applies to lots of different scenarios, some houses in the countryside are only allowed a lower LTV mortgage if they are on family land for example as the resale market might be limited. Banking policy re different properties has always been there, it's nothing new.
 
So BoI are willing to help me out and give me 85% LTV. Still 5000€ short on deposit and was advised to get the extra funds as a gift.

Am going to proceed, booking deposit paid.

Thanks for all reply's
Charlie
 
Hi Charlie

Well done. Was BoI your initial lender? Have they changed their policy on one bed apartments or did they make an exception for you?

Brendan
 
Thanks Brendan.

No Ulster Bank were my initial lender. I was told by BoI mortgage advisor that their policy was 80% but they made an exception for me for 85%. I told Ulster bank but they would not move on 75% even tho I've been banking with them my whole life. Disappointed with them.

Charlie.
 
Loyalty to a bank means nothing anymore, trouble with UB is policy is dictated from RBS and there is probably no one in Head Office that could make a policy decision to give you more than 75% or would put their neck on the line by doing so. It's a real computer says no culture.
 
I have a SVR mortage with KBC and recently tried to switch to AIB. Unfortunately was refused as I have a one bed apartment and they would only give a 75% LTV. This is despite my income is less than 2 times the mortgage that was to be drawn down. I could not believe how inflexible AIB were as they did not really review my situation as have been a customer with them for a long time and have over paid a large part of my KBC morgage.

My apartment is a large one bed and the market rent would comfortable cover the new AIB mortgage payment. I really do not know banks deal with risk as I would consider myself a reallly low bank risk based on income and credit history
 
That sort of lending though would require case by case decisions by local manager or staff and that's just not done anymore, policy is made and dictated. Although there was always some policy rules like this but they could be got around. I remember my first loan application, to a bank I previously worked for briefly, good income, good job etc, well known to local manager because of my now job in a related area. Anyway I wanted to borrow to buy a mobile home to live in briefly while building house, common practice in the countryside back in the day (30+ yrs ago). I was turned down because the bank had a policy of not lending for mobile homes, I was gutted as I felt whether I would repay or not should be the risk not what I was buying, it wasn't even a bad buy I sold it later for more than I paid for it. Luckily the manager told a few porkies on the application re the purpose of the loan as he wanted me to have it too and of course he was right, I paid it all back with no problems. No leeway like that these days, you couldn't be relying on someone on the ground who actually knew their job and the local people and environment :)

Although in hindsight maybe telling porkies on application forms was the cause of a lot of problems in latter years!
 
This is very interesting. My 1 bed is also large in 60sq metres. Does this mean that I may never be able to switch my mortgage and BoI are probably aware of this so they tie me in forever ??. Getting very close to signing contracts now.

Charlie.
 
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