Would appreciate some advice or thoughts on what to do in this scenario. A relative of mine is in the process of buying a house. Would you proceed ahead and purchase with PTSB mortgage or hold out for Rebuilding Ireland Home Loan (RIHL) http://rebuildingirelandhomeloan.ie/ based on info below?
One view would be you cannot plan based on something you do not have and have no guarantee of getting. Therefore it is best to move on from RIHL and proceed with PTSB. However, the savings to be made with RIHL are massive, along with possible Help-to-Buy (HTB) scheme 5% back, and the security of guaranteed 2.5% rate for 30 years is something we would all love!
Background
* First time buyer
* Deposit of 95k
* Buying new build house for 280k
* Sale agreed and at the point of signing contracts
* PTSB approved 185k (with exception). Other banks approving around 145k mark
* Qualify for RIHL based on salary
* Currently rejected for RIHL but can appeal\reapply
* They are in no immediate rush to own a house (i.e. they do not have to move out of current accommodation)
* They really want a house in this particular estate
* The estate will have more houses developed in it on a continuous basis over the next year or two
Rebuilding Ireland Home loan
* Application was for 206k based on Councils calculations
* A sum of 196k would allow buyer to avail of HTB scheme giving 5% back https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx
* Rate is fixed at 2.5% for entire mortgage of 30 years
Rebuilding Ireland Home loan Rejection
* The application was rejected as 12 months savings was not shown
* The problem was the person only had a monthly saver set up for the last 6 months prior to application (say for 1000e a month)
* However, their bank balance for the previous six months before they set up the monthly saver increased by the same as their monthly saver over 6 months (say 6000e).
* But the Council were not happy to accept increasing bank balance of current account as evidence of savings
The Problem
* They are now at 9 months savings with their monthly saver. The council suggested reapplying when they have 12 months savings in this savings account.
* So they can close on sale using PTSB mortgage right now. Or wait 3 months, reapply to Rebuild Ireland Home Loan (RIHL) and hopefully get accepted.
* There are trade-offs with both approaches, so which to go for?
Solution One: Close with PTSB now
* Pro: The PTSB loan was with an exception, if they let this go and do not get the RIHL Mortgage they are not guaranteed to get 185K in the future from a bank. So using it now would be a pro as they cannot afford this house at 280k without the 185k mortgage.
* Pro: They secure house now at 280k, prices may increase next year
* Con: They miss out on the 2.5% from RIHL. PTSB is 3.2% fixed for 5 years, even if they averaged 4% on 185k over 30 years this would cost them 50k more than getting the 185k from RIHL at fixed 2.5% for 30 years.
* Con: They miss out on the 5% back from Help to Buy (if RIHL approved them for 196k)
Solution Two: Reapply to RIHL
Wait another 3 months until they have 12 lodgements in their monthly saver account then reapply for RIHL.
* Pro: If they get approved for even close to the 185k PTSB offer, they will save 50k+ over 30 years.
* Pro: If they get approved for 196k they can avail of HTB grant which will be with 14k
* Con: They will need to pull out of sale at this late stage. If they do this, the developer may not be interested in selling them a house in a few months time. They really want to buy in this estate
* Con: It is possible the house prices will go up from 280k by start of next year (but no way they will increase by the amount you'd save with a 2.5% fixed mortgage for 30 years)
* Con: They could get turned down by the RIHL
* Con: They might get offered much less than 185k from RIHL
* Con: RIHL may be cancelled by the time they reapply\get a decision. They would have to wait until December to reapply, and would not receive response until March 2019.
* Con: If they get turned down by RIHL they are back to square one. They might not get an exception with a bank next year, house prices may have gone up, and they cannot afford to buy the house the want.
* Con: Close to 70% of applications to RIHL have gotten rejected so far. So the odds are stacked against you.
Solution Three: Appeal RIHL decision
Try and appeal the decision with rationale that balance of current account increasing by 6k over a 6 month period is evidence of savings.
* Pro: This would be quicker compared to waiting 3 more months to apply again and another 10 weeks for a decision on the new application.
* Con: It seems after conversation with Council that this appeal would be unlikely to be successful.
One view would be you cannot plan based on something you do not have and have no guarantee of getting. Therefore it is best to move on from RIHL and proceed with PTSB. However, the savings to be made with RIHL are massive, along with possible Help-to-Buy (HTB) scheme 5% back, and the security of guaranteed 2.5% rate for 30 years is something we would all love!
Background
* First time buyer
* Deposit of 95k
* Buying new build house for 280k
* Sale agreed and at the point of signing contracts
* PTSB approved 185k (with exception). Other banks approving around 145k mark
* Qualify for RIHL based on salary
* Currently rejected for RIHL but can appeal\reapply
* They are in no immediate rush to own a house (i.e. they do not have to move out of current accommodation)
* They really want a house in this particular estate
* The estate will have more houses developed in it on a continuous basis over the next year or two
Rebuilding Ireland Home loan
* Application was for 206k based on Councils calculations
* A sum of 196k would allow buyer to avail of HTB scheme giving 5% back https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx
* Rate is fixed at 2.5% for entire mortgage of 30 years
Rebuilding Ireland Home loan Rejection
* The application was rejected as 12 months savings was not shown
* The problem was the person only had a monthly saver set up for the last 6 months prior to application (say for 1000e a month)
* However, their bank balance for the previous six months before they set up the monthly saver increased by the same as their monthly saver over 6 months (say 6000e).
* But the Council were not happy to accept increasing bank balance of current account as evidence of savings
The Problem
* They are now at 9 months savings with their monthly saver. The council suggested reapplying when they have 12 months savings in this savings account.
* So they can close on sale using PTSB mortgage right now. Or wait 3 months, reapply to Rebuild Ireland Home Loan (RIHL) and hopefully get accepted.
* There are trade-offs with both approaches, so which to go for?
Solution One: Close with PTSB now
* Pro: The PTSB loan was with an exception, if they let this go and do not get the RIHL Mortgage they are not guaranteed to get 185K in the future from a bank. So using it now would be a pro as they cannot afford this house at 280k without the 185k mortgage.
* Pro: They secure house now at 280k, prices may increase next year
* Con: They miss out on the 2.5% from RIHL. PTSB is 3.2% fixed for 5 years, even if they averaged 4% on 185k over 30 years this would cost them 50k more than getting the 185k from RIHL at fixed 2.5% for 30 years.
* Con: They miss out on the 5% back from Help to Buy (if RIHL approved them for 196k)
Solution Two: Reapply to RIHL
Wait another 3 months until they have 12 lodgements in their monthly saver account then reapply for RIHL.
* Pro: If they get approved for even close to the 185k PTSB offer, they will save 50k+ over 30 years.
* Pro: If they get approved for 196k they can avail of HTB grant which will be with 14k
* Con: They will need to pull out of sale at this late stage. If they do this, the developer may not be interested in selling them a house in a few months time. They really want to buy in this estate
* Con: It is possible the house prices will go up from 280k by start of next year (but no way they will increase by the amount you'd save with a 2.5% fixed mortgage for 30 years)
* Con: They could get turned down by the RIHL
* Con: They might get offered much less than 185k from RIHL
* Con: RIHL may be cancelled by the time they reapply\get a decision. They would have to wait until December to reapply, and would not receive response until March 2019.
* Con: If they get turned down by RIHL they are back to square one. They might not get an exception with a bank next year, house prices may have gone up, and they cannot afford to buy the house the want.
* Con: Close to 70% of applications to RIHL have gotten rejected so far. So the odds are stacked against you.
Solution Three: Appeal RIHL decision
Try and appeal the decision with rationale that balance of current account increasing by 6k over a 6 month period is evidence of savings.
* Pro: This would be quicker compared to waiting 3 more months to apply again and another 10 weeks for a decision on the new application.
* Con: It seems after conversation with Council that this appeal would be unlikely to be successful.
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