First mortgage, living overseas

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onekeano

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Hi,

I'm exploring the possibility of co-investing in a property with my son. He currently lives in the US and has done so for the past 3 years. When we contacted a financial advisor we were told that in order to get mortgage approval he would need to match at least two of three criteria:
  1. Living in Ireland
  2. Earning in Euro
  3. Have a previous property
We were told that unless he meets two of these we're highly unlikely to get mortgage approval, despite coming to the table with a strong LTV. Any advice on if certain banks are more willing to consider our application and/or what he should be focusing on to become elligible in the coming months?

Many thanks.
 
My understanding is as follows:

EU mortgage credit directive limits banks in lending where earnings are not in Euro. BoI and AIB seem to be the only lenders willing to take these on (others might not have the retail treasury set up to provide FX swaps to customers if needed).

High earners only need apply. I've heard a minimum of 75k+, but might be higher for non Euro earner.

The banks will discount salary by 20% to allow for FX fluctuations.

And because it's investment, you need at least 30% deposit.

So approach the banks above. AIB will deal with brokers via Haven, but you will need to approach BoI directly.
 
We live abroad and got sanction from AIB last year.

It's a BTL mortgage and they stress the hell out of the salary. We got approval for just under 2x our annual incomes which was enough for us. Minimum 30% equity required.

Lots of docs needed (salary & tenure certified by employer, W-2, credit reports, bank and broker accounts) but your son should have most of them from his US tax returns. Bonuses aren't included in calculations.

Overall the process wasn't bad, it just cost a bit to post original docs to AIB which always got delayed.
 
Hi keano

If your son is not planning to live here within the next two years, he should not buy a property in Ireland.

This is particularly so if he is a first time buyer. FTBs get privileges such as 90% LTV and Help to Buy so don't give those up for an investment property. (In the past they have been even better such as stamp duty exemptions.)

If the landlord is living abroad, there are complications such as requiring the tenant to withhold the tax on the rental income. And, of course, there are tax returns in America and in Ireland. It really is not worth these complications.

If he wants a stake in the housing market, he could buy shares in the IRES - a REIT which invests in Irish property.

Alternatively, you could buy the property in your own name. Then when he returns, he buys it from you at the current value. You may have a CGT exposure. And you will have double legal fees and stamp duty.

But all in all, he is better staying out of the Irish market until he is buying a home for himself to live in.

Brendan
 
Brendan Burgess said:
Hi keano

If your son is not planning to live here within the next two years, he should not buy a property in Ireland.

This is particularly so if he is a first time buyer. FTBs get privileges such as 90% LTV and Help to Buy so don't give those up for an investment property. (In the past they have been even better such as stamp duty exemptions.)

If the landlord is living abroad, there are complications such as requiring the tenant to withhold the tax on the rental income. And, of course, there are tax returns in America and in Ireland. It really is not worth these complications.

If he wants a stake in the housing market, he could buy shares in the IRES - a REIT which invests in Irish property.

Alternatively, you could buy the property in your own name. Then when he returns, he buys it from you at the current value. You may have a CGT exposure. And you will have double legal fees and stamp duty.

But all in all, he is better staying out of the Irish market until he is buying a home for himself to live in.

Brendan
Click to expand...

The tax issue isn't really that much of a complication.
You get around it by using a letting agent.

The online ROS self-assessment tax submission isn't that difficult.
Regardless of him buying an Irish property he still has to complete his US taxes. Everyone I know uses a tax accountant which costs about $400-$500 for a decent one (I'm sure turbotax or HR Block can probably do it cheaper).
We provide the self-assessment letter/receipt from ROS and the total rental income and rental expense to our tax accountant and he does the rest.
 
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