Second Time Buyer 10% Deposit

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laura28

Registered User
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Hi All,

Can I please ask if anyone has any direct experience with applying for a mortgage and getting an exemption from the Central Bank criteria?

We were hoping to avail of a negative equity tracker mover mortgage with AIB. We have approx. a 10% deposit saved (in the region of €35k). Due to increasing prices our property has now gone out of the negative equity zone and into positive equity, but not enough to cover the increased amount needed for a 20% deposit.

Do people apply directly for an exemption or how does this work? We have been approved in principal for a mortgage of €350k, we both have permanent jobs, it's just the deposit we don't have........
 
Hi Laura

I would imagine that AIB will facilitate you. If they approved a NE mortgage, they should approve a PE mortgage.

The exemptions are applied on a calendar year basis, so it might be better to hold off applying until the new year in case AIB has used up its exemptions for 2016.

Brendan
 
Thanks Brendan, yes it would be next year before we are properly applying as waiting for an appropriate property to come on the market !
 
Brendan Burgess said:
Hi Laura

I would imagine that AIB will facilitate you. If they approved a NE mortgage, they should approve a PE mortgage.

The exemptions are applied on a calendar year basis, so it might be better to hold off applying until the new year in case AIB has used up its exemptions for 2016.

Brendan
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Out of curiosity is there anyway of checking? Would AIB tell you that info?

What if they actually do have some left and someone misses out making the wrong assumption?
 
Ive just gone through the process
There is a list of criteria you need to fullfill with no exceptions to get the exemption.
 
Apprentice - would you mind telling us a little more about the process, what bank did you go through it with?
 
laura28 said:
Apprentice - would you mind telling us a little more about the process, what bank did you go through it with?
Click to expand...
I'm about to start into the process as a second time buyer but I've had a number of meetings with different banks and all of them have said I don't need the full 20% deposit. I don't know the exact formula they used but its based on a number of things (including the value of the house to be purchased and the ability to comfortably meet the loan repayments) - I think you are rated with how much disposable income you have left over after all the bills and new mortgage etc.
In my case on a circa 250k house I would need to have a 12.3% deposit with one bank, 10% with another and 13% with another... so not an exact science...
 
Does anyone here have any experience of getting an exemption for a second house, while holding on to the first one? Or would banks demand 20% deposit as we would have 2 properties?
 
PTSB (while have higher rates), are very clear on their criteria:

  1. You must have identified the house you want to buy ie give an address when applying for credit, not just looking for AIP.
  2. Your disposable income after making loan repayments must be higher than normal.
  3. You can only apply for 1 exemption ie you can't apply for the LTI exemption as well

Steven
www.bluewaterfp.ie
 
Thanks for the advice guys.

We will be sticking with AIB for our new mortgage as we have a tracker and are keen to retain. I guess the answer is that we will have to apply, state we are looking for a mortgage deposit exemption and hope for the best!

Our financial details have changed in the last few months - grandparent retired to cover the childcare cost and I returned to work full time and got a promotion. We feel the time is right to move and don't want to have to wait another year plus to save the full 20%.....
 
Yes, we have just done it. My husband is an FTB but I am not, one investment property probably c. 50k in NE but strong rental income. We have just bought a family home with a 10% deposit, lender is BOI, we chose the one year fixed rate of 3.55% in order to get the 2% cash back (this was worth €12,000) and if we can't get a better rate after a year we will look at switching.

Criteria;
1. Exception to the CB rule was on a property specific basis i.e. we had to identify the actual property before applying for the exemption. So we had no standard AIP letter. We did have verbal confirmation from the mortgage adviser that it wouldn't be an issue but nothing in writing.
2. Mortgage amount is only 2.5 times joint income - so the exception was on only one of the criteria, not both.
3. Provided lease agreement and proof of rental income for the IP.
4. We needed a minimum of €3,500 monthly disposable income post paying mortgage, life assurance & house insurance.

Lastly, we just did this in November and the exception was no problem so BOI clearly hadn't used up their quota for 2016 - I don't know whether this is common or not but it wasn't an issue. We also got approval from KBC with a slightly lower rate of 3.45% but no cash back so went with BOI.
 
2ndtimer said:
Yes, we have just done it. My husband is an FTB but I am not, one investment property probably c. 50k in NE but strong rental income
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So you got a second mortgage? That's good to hear. My situation is a bit complicated but basically we would have one other property with positive equity and enough rental to cover mortgage.
We would struggle to get anywhere near the €3500 a month disposable income though. Was that after living expenses, bills, food, childcare etc??
 
ce2016 said:
So you got a second mortgage? That's good to hear. My situation is a bit complicated but basically we would have one other property with positive equity and enough rental to cover mortgage.
We would struggle to get anywhere near the €3500 a month disposable income though. Was that after living expenses, bills, food, childcare etc??
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Yes, we didn't have a problem although we do have good incomes and stable jobs. No, the €3,500 was just after payment of mortgage, life assurance and house insurance - so basically they want you to have a minimum of €3,500 for everything other than house related costs. We don't have kids yet though so I don't know if they would want a larger amount if we had to factor in childcare. We were well clear of this with around €8,000 a month post payment of those items so that probably helped us.
 
Ok,thanks.
Sounds like a big mortgage if the Cashback was €12000! We'd be looking at a smaller mortgage. Also, I think that Cashback has to be paid back if you switch within 5 years. Best check that out though.
 
ce2016 said:
Ok,thanks.
Sounds like a big mortgage if the Cashback was €12000! We'd be looking at a smaller mortgage. Also, I think that Cashback has to be paid back if you switch within 5 years. Best check that out though.
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Nope the CB forced them to take out that condition so you can literally switch whenever you want :) So as long as you're prepared to put in the work involved to actually make the switch then cashback offers are pretty good right now.
 
2ndtimer said:
Nope the CB forced them to take out that condition so you can literally switch whenever you want :) So as long as you're prepared to put in the work involved to actually make the switch then cashback offers are pretty good right now.
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That's good to hear. Also it's encouraging that you got a 2nd mortgage. We'll have to save hard for next 12 months or so but we'll be looking for a smaller mortgage than yours and we'll have positive equity on the other house so hopefully it'll all work out.
 
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