What's an Indemnity bond?
- Thread starter teatimer
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dockingtrade
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is it through a broker?
i got charged this through a broker buying my 1st house, i questioned it and it eventually got waived, i cant remember exact details. i think its charged if you a 95% + mortgage. fight it anyway they wont let a mortgage go for the sake of 300 euro
i got charged this through a broker buying my 1st house, i questioned it and it eventually got waived, i cant remember exact details. i think its charged if you a 95% + mortgage. fight it anyway they wont let a mortgage go for the sake of 300 euro
I was wondering if these were still charged. An indemnity bond is an insurance bond which insures the lender for the possibility of you reneging on the mortgage and normally (at least in the past) was usually required if your mortgage was over a certain LTV (Loan To Value) ratio - usually c. 90%+ I think. You might be able to avoid it by shopping around and haggling.
LDFerguson
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There are far more lenders out there who don't charge their customers the cost of an indemnity bond than those who do. Unless your lender has truly wonderful interest rates or your application is so weak that they're the only lender who will give you the required amount, go elsewhere. But first tell them that you will, unless they waive the cost of the bond.
Liam D. Ferguson
www.ferga.com
Liam D. Ferguson
www.ferga.com
LDFerguson
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As it's the lender that charges for the indemnity bond (or doesn't) I think it's probably more relevant to say which lender, if you want.
its IIB. Broker checked - they say they have to insure themselves once they pass 80% and pass on an MIG (don't say what this is) to the customer. Option is pay it or go on a slightly higher rate which works out much worse in the long run.
Should I get the broker to check around again for a better deal or just pay it? Time runing out now...
thanks everyone for all the helpful advise
Should I get the broker to check around again for a better deal or just pay it? Time runing out now...
thanks everyone for all the helpful advise
LDFerguson
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I'd be inclined to ask the broker to check if you can get a better interest rate from a lender other than IIB. If you want to post your chosen interest rate here (e.g. 2-year fixed at X.X%) I'll show you the alternative lenders' offerings.
But your broker should be equally well able to do that - probably better as s/he has all your financial details on file.
But your broker should be equally well able to do that - probably better as s/he has all your financial details on file.
You shuln't have to pay the indemnity bond, most lenders stopped passing this cost onto lenders in recent years. Ask your broker to contact IIB again and tell them that you will be taking your mortgage out with another lender. Also, what rate are you paying? you may be able to do better than with IIB.
Sorry! got caught up there for a few minutes and crossed posts with LDFerguson.
Sorry! got caught up there for a few minutes and crossed posts with LDFerguson.
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IIB have always had to apply indemnity bonds to loans over a 90% LTV. They raise funds to lend onwards by securitisation and it is those companies that stipulate the bonds be applied to certain loans. This should cease now given their parent bank KBC has given them an injection of funds (announced a few weeks ago as far as i can remember) and they dont have to look externally to raise funds, therefore no more bonds.
My broker queried this twice with IIB. He even included the last poster's explanation with it the second time. IIB will apparently say nothing about this - just continue to insist that it's the rules. Extract from my reply to broker:
<<<
Okay thanks. Didn't realise you'd sent the quote. Thanks for trying on my behalf, anyway.
Did you notice he doesn't answer the question and say why IIB still continue with this. Neither does he even say if my information is accurate or not, something I specifically asked for. In fact he gives no reason at all to counter it, just repeats that they want the money despite what seems a plausible explanation as to why the basis for this practice is now removed? Not exactly transparent of them, is it? Are you satisfied with no explanation by a lender to a client's query?
FWIW you can tell him I have copied his (non)response to AskAboutMoney.com, the finance bulletin board site with almost 20,000 Irish members, plugged by Eddie Hobbs on his TV shows. There is plenty of interest in this stuff on the Mortgages and Home Buying forum. There should be a rationale behind every policy, wouldn't you agree? Of course if IIB were to put their hands up and agree that the facts are as I have stated they wouldn't be able to charge this bond any more - perhaps that's it? I imagine it will generate a reasonable amount of posts among AAM's members, some of whom are in finance/broking/lending etc. Of course if he answers the question I'll post that too!
Of course I don't want to pay it unnecessarily - would you? - but neither do I want to go onto 1.35 over ecb. So IIB want customers to pay this as the lesser of two evils? Well, this is where I depend on you as my Independent Broker to have got the best deal for me, as no mention was made of this when the IIB proposal was outlined. So, based on the premise that it is still the best deal according to you, I guess I'll pay it. But I note that, when questioned no justification was provided by IIB for this charge.
>>>
The deal involves remortgaging our ppr to release equity to finance an investment property. I'll be on ecb plus 1.25
<<<
Okay thanks. Didn't realise you'd sent the quote. Thanks for trying on my behalf, anyway.
Did you notice he doesn't answer the question and say why IIB still continue with this. Neither does he even say if my information is accurate or not, something I specifically asked for. In fact he gives no reason at all to counter it, just repeats that they want the money despite what seems a plausible explanation as to why the basis for this practice is now removed? Not exactly transparent of them, is it? Are you satisfied with no explanation by a lender to a client's query?
FWIW you can tell him I have copied his (non)response to AskAboutMoney.com, the finance bulletin board site with almost 20,000 Irish members, plugged by Eddie Hobbs on his TV shows. There is plenty of interest in this stuff on the Mortgages and Home Buying forum. There should be a rationale behind every policy, wouldn't you agree? Of course if IIB were to put their hands up and agree that the facts are as I have stated they wouldn't be able to charge this bond any more - perhaps that's it? I imagine it will generate a reasonable amount of posts among AAM's members, some of whom are in finance/broking/lending etc. Of course if he answers the question I'll post that too!
Of course I don't want to pay it unnecessarily - would you? - but neither do I want to go onto 1.35 over ecb. So IIB want customers to pay this as the lesser of two evils? Well, this is where I depend on you as my Independent Broker to have got the best deal for me, as no mention was made of this when the IIB proposal was outlined. So, based on the premise that it is still the best deal according to you, I guess I'll pay it. But I note that, when questioned no justification was provided by IIB for this charge.
>>>
The deal involves remortgaging our ppr to release equity to finance an investment property. I'll be on ecb plus 1.25
Ask the broker to pay the fee from the 1% commission he is going to get paid by IIB, or take your business elsewhere.
There are various other lenders who will not charge you the indemnity fee, most lenders absorb this fee. In fact IIB did not charge this fee in the past, surprised they are charging it now.
There are various other lenders who will not charge you the indemnity fee, most lenders absorb this fee. In fact IIB did not charge this fee in the past, surprised they are charging it now.
I
irishpancake
Guest
Indemnity bonds are certainly not mentioned on the web-site:
eg, here are details of their first-time buyer package:
I would certainly query this again with the Broker.
BTW, is this broker truly independent and not affiliated with any particular lender?
eg, here are details of their first-time buyer package:
I would certainly query this again with the Broker.
BTW, is this broker truly independent and not affiliated with any particular lender?
I
irishpancake
Guest
I have discovered a couple of mentions regarding "Indemnity Bonds" in this document from IIB.
In both cases it makes reference to "Residential Investment Loans"
Under heading "Agencies":
Under Heading "Fees":
I would urge you to ask your broker whether these fees are payable by you, as apparantly you are taking out an Investment Mortgage.
Looks as though the fees are payable, unless you drop your mortgage amount below 85%.
In both cases it makes reference to "Residential Investment Loans"
Under heading "Agencies":
Under Heading "Fees":
I would urge you to ask your broker whether these fees are payable by you, as apparantly you are taking out an Investment Mortgage.
Looks as though the fees are payable, unless you drop your mortgage amount below 85%.
Good news! IIB will waive their MIG fee. Got copy of amended letter of offer today from broker. "Based on overall LTV" they say, presumably averaging my two mortgages or something? Still no explanation of the basis for the charge in the first place, mind, but I did promise to post any favourable developments here. So thanks IIB and broker...
Go AAM!!!! Thanks to all for advice.
Go AAM!!!! Thanks to all for advice.
I
irishpancake
Guest
Very good result teatimer
However, as for the basis for the charge, have you read my previous post, where i quote exactly what the basis is, basically >85% LTV Residential Investment Mortgage. So I suppose it is down to how they are calculating the LTV.
It just shows, there is nothing to be gained by staying quiet and accepting whatever they offer you initially.
FAir play to you and good luck with the investment