Exemptions from Central Bank Rules

Discussion in 'The Central Bank's 2016 review of mortgage limits' started by JohnJay, Aug 16, 2015.

  1. JohnJay

    JohnJay Frequent Poster

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    Are banks giving exemptions to the CB rule for anyone other than applicants in negative equity?

    I'm looking to sell and buy something slightly more expensive, however the restrictions are killing me. I'm not currently in NE. my new mortgage would be over a longer term and my repayments would be roughly the same as they are now. I have a clean repayment record on my current mortgage and am saving an additional 400pm for the past 2 years. the new mortgage would be approx. 4.2 times my salary.

    I know the banks have scope to break the rules for 15% of their applicants, but is this 15% restricted to applicants in NE?
     
  2. Sarenco

    Sarenco Frequent Poster

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    The LTI limit of 3.5 times annual income can be exceeded by no more than 20% of the euro value of all housing loans for PDH purposes. The relevant LTV limits can be exceeded by no more than 15% of the euro value of all such loans. The percentage of applicants is not a factor.

    The above limits (and exceptions) do not apply to borrowers in negative equity applying for a mortgage on a new property.

    In addition, lenders can obviously apply stricter requirements than those set out in the Central Bank restrictions.

    I would have thought it is very unlikely that any lender would advance a loan with an LTI as high as 4.2 without a very low LTV or some other compelling factor such as an impending inheritance.
     
  3. JohnJay

    JohnJay Frequent Poster

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    so does that mean the banks can extend to 3.5 x 120% under certain circumstances? I assume they have to adhere to guidelines to go to this level.
    The loan I would want would be around 70% LTV.
    Its also bizarre to see that on the websites of our 2 main banks, their "how much can I borrow" calculators both tell me that I can borrow a figure equal to roughly 4.6 times. I'd love to know how they calculate this! Other banks websites are almost exactly 3.5 X
     
  4. Sarenco

    Sarenco Frequent Poster

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    Well, the limits are set at the level of each bank's overall PDH book in any given year rather than being set at the level of each individual applicant. In other words, not more than 20% of the value of all PDH loans written by a particular bank in any year can exceed the 3.5 LTI ratio.

    It might be worth talking to loan officers in a few different banks given your target LTV but, to be honest, I wouldn't be very optimistic about your chances. An LTI ratio of 4.2 is really very high unless you have an unusually large income. Are you sure you can really afford this move at the moment?

    I certainly take your point about some of the online mortgage calculators. I'm surprised the Central Bank hasn't clamped down on this TBH.
     
  5. JohnJay

    JohnJay Frequent Poster

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    thanks again Sarenco. The repayments would be roughly the same as I am paying now, so wouldn't be an issue, it would just be spread out over a longer period. I've no dependents and a company car, so my outgoings are lower than typical. Repayments would still be lower than rent in most areas around the city.
    My last mortgage was issued about 5 years ago. That time I was being offered almost 5 x my income. it shows how things have changed!
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    HI John

    Did you apply for a mortgage? How did you get on?

    It might be worth making a submission to the Central Bank if you were affected by their limits. In fact, if you got an exception, you should also make a submission.

    Brendan
     
  7. JohnJay

    JohnJay Frequent Poster

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    816
    hi Brendan,

    I have approval for 4 x salary with AIB and Haven but have not drawn it down yet
     
  8. Brendan Burgess

    Brendan Burgess Founder

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    Thanks John

    If you get a chance today , you should send a short email about your experience to the Central Bank. Today is the deadline.

    If you would like to make a submission, please: