FTB Mortgage questions

D

Dannal

Registered User
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We are FTB in our mid 30s. I earn 45k gross from a permanent role in the public sector, my husband is unemployed and not receiving a SW payment. We have 2 small kids. We are looking to buy a house for approx 250k and have 50k as a deposit.

We have so far approached AIB to ask about a mortgage and they said they would on paper be willing to lend us 260k. We have no loans, or debts, no credit card balances and save 250 a month plus pay 800 rent.

My question is how likely is this to translate into an actual mortgage when we go through the approval process? I've seen figures that say when stress tested we would need 2,500 monthly on top of the mortgage but we won't have anywhere near this?

We are currently getting our documentation together but I'm just interested to see if what a bank says it is willing to lend usually translate into an approved mortgage.
 
In short you won't get it. Not sure where you got the 260k figure as this is outside of their 3-4x multiples that they now offer.

AIB require a net disposible income of 2000 for a couple + 250 for each child. They also stress test the mortgage at +2% of current rates or 6%, whichever is higher.

200k mortgage @ 6% is 1140 per month
45k a year using married credits gives 3,023 per month (before any of the pension levies)
That leaves 1883 which is lower than their cut off.

As strange as it is, AIB have a lower NDI threshold for single people of 1250 + 250 for children and you'd probably qualify under it. BOI do similar figures as well although I haven't rechecked with them since the last rate increase.
 
Thanks Ryaner, that's very disappointing but I did suspect as much.

The 260k is a number that she gave us there and then when she plugged in our details. We were delighted as we are only looking for 200k.

Does deposit size have any impact? We currently have 20% but potentially that could be more.

Is it common place for banks to say they will lend x amount and then in reality not approve it or anything near it?

I guess we will send in all the documentation and wait to see what they say before wasting any more time on it.

Is there any point in starting the process with any of the other banks?
 
Dannal said:
I guess we will send in all the documentation and wait to see what they say before wasting any more time on it.

Is there any point in starting the process with any of the other banks?
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Better to send in the documentation and see how you get on and lob in an application to a couple of other banks while you're at it.

How much would the repayments be, what is the mortgage term and amount. Have you stress tested yourself to what the repayment would be with a 2% rise in interest rates?
 
Bronte said:
Better to send in the documentation and see how you get on and lob in an application to a couple of other banks while you're at it.
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You need to be careful on this one as each application can and most likely will result in a search on your ICB file. Banks then ask questions as to why there is so many searches and think you were refused by the other banks.

Do you have other income other than your salary? I'm still surprised at that figure. AIB also only let you borrow until your are 65. i.e. the mortgage has to be finished by this age. Mid 30s would restrict things further, my original maths were based on a 35 year term.

It won't hurt to complete the application and see where it goes. They'll give a proper yes or no once the first lot of documentation goes in.
 
ryaner said:
Do you have other income other than your salary? I'm still surprised at that figure. AIB also only let you borrow until your are 65. i.e. the mortgage has to be finished by this age. Mid 30s would restrict things further, my original maths were based on a 35 year term.
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No other income...well child benefit of 280 a month but I don't know if that counts. She said the term would be 28 years as my husband is 37.

Thanks for all the advice, we'll gather all we need and see if AIB flat out decline and can decide how to proceed.
 
ryaner said:
You need to be careful on this one as each application can and most likely will result in a search on your ICB file. Banks then ask questions as to why there is so many searches and think you were refused by the other banks.

.
Click to expand...

Why is a search a bad thing, what if you 'searched' your own file each year would this be a bad mark on your file?
 
You most likely won't get a blank refusal, they will just tell you how much you can have. However be prepared for an approval of significantly less than what you requested. I figure they will offer you around €130k based on my amateur personal experience.
We are in our mid forties, 2 kids and approved by AIB. Single income of 43k. Early this year AIB approved us for 100k (we went through the full approval process), just a few weeks ago we re-applied as approval had lapsed and this time were only approved for 69k! And when pressed they said that was the absolute max we could have, based on the €2500 per month needed before mortage repayment and stress-testing. (Term would be 18yrs based on eldest applicant). However, we have significant savings (more than 50% of house value) and they probably wanted us to use more of our savings rather than them take more of a risk.

Bank of Ireland are less strict (they don't have an amount for dependent children) and allow you to borrow up to age 70. So it would be worth your while seeking approval for them too, while you have all the documents handy. You would be allowed borrow more from them as you have longer to repay it. Chances are your husband will get work again in the coming years.

When you do get approval, make sure you go back to whoever before the approval lapses to get it extended or renewed. Once the approval lapses you have to re-apply all over again.
 
Thanks Sadie, that is very useful.

We could work with 150k I think...at least we could get something. So maybe BOI will be a better option for us.
 
Bronte said:
Why is a search a bad thing, what if you 'searched' your own file each year would this be a bad mark on your file?
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The banks count a search on your file as an application for credit as this is usually the only time it happens. Personal searches show up differently.
 
Thanks for all the replies on here...as advised AIB will not lend us 200k (nor 150k) we didn't bother asking any lower than that as it would not be enough to buy anything suitable.

The advice was to try and save another couple of hundred a month for 6 months and then come back and try again.

It's a relief in many ways...if we can't afford it...we can't afford it and now we know where we stand.

We will probably go to BoI as well in the coming months but we are not in any rush.
 
Dannal said:
Thanks for all the replies on here...as advised AIB will not lend us 200k (nor 150k) we didn't bother asking any lower than that as it would not be enough to buy anything suitable.

The advice was to try and save another couple of hundred a month for 6 months and then come back and try again.

It's a relief in many ways...if we can't afford it...we can't afford it and now we know where we stand.

We will probably go to BoI as well in the coming months but we are not in any rush.
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The banks are being quite conservative. It isn't necessarily a question of you not being able to afford it, they are simply taking a conservative view of what could go wrong and lending accordingly. For instance, interest rates rising to 6%.

Personally, because of the €250 pcm per child requirement I think families with 2 kids or more are better off going to BOI.

The market is currently highly dysfunctional. You have certain borrowers including speculators making no effort to repay anything to banks and seemingly having no action taken against them, while prospective borrowers are being stress tested at 6% with generous requirements of NDI income.
 
re sadie

sadie said:
Y


When you do get approval, make sure you go back to whoever before the approval lapses to get it extended or renewed. Once the approval lapses you have to re-apply all over again.
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Hi sadie,
how much time do you get.
im applying for a mortgage of 90k but i dont have a property in imnd. well i have a few but have to look at them.
Just worried if we get approval we'll be pushed to find somewhere quickly.

MO
 
sillyaboutmo said:
Hi sadie,
how much time do you get.
im applying for a mortgage of 90k but i dont have a property in imnd. well i have a few but have to look at them.
Just worried if we get approval we'll be pushed to find somewhere quickly.

MO
Click to expand...

We were told 3 months.
 
3 months is not bad considering we want to get it sorted b4 the new year and the tax relief is done away with.
 
sillyaboutmo said:
3 months is not bad considering we want to get it sorted b4 the new year and the tax relief is done away with.
Click to expand...

Just bear in mind that once you do by the house you will need to allow a min. of two months to:
a) get your mortgage finalised.
b) exchange contracts.
While you still have time to get in before the year end, you will more than likely need it.
 
Why would people put themselves under pressure in relation to 3 months. If you've been given mortgage approval you have an idea of what banks will lend, you take your time and find a suitable property and then again put in a mortgage application. No need to add unnecessary pressure. Property ain't goin nowhere fast !
 
I have a completely unrelated question, but cant find an appropriate thread to post in and Ryaner seems very knowledgeable in this so I hope the thread originator doesnt mind me asking my own question.

I am looking to buy a house from my mother so only paying 60,000 for it which is undervalued of the actual value of the house. I would then look to add on 30,000 for improvements. But I have family abroad in Spain, and have seen apartments and houses that are going for 50,000 to 70,000. And I'm wondering if it is possible to combine the mortgage cost of both and the renovation of max 160,000 euro, and get a mortgage worth that buying both houses?

Is that something that is done or no?

Sorry if it is an ignorant question.
 
I'm open to correction, but as I understand it banks do one mortgage to one property for their residential book.

An aside on Spain, be careful where you buy as even though the prices may seem low, the property could be worse than worthless. I've cycled through abandoned villages over in Spain. Places that were completely renovated and then just abandoned. Admittedly these were in the mountains somewhat, but still a crazy sight.
 
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