Lending limits - Obtaining exemption

G

Gordon Gekko

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Good morning

I'm hoping to get an exemption from the 3.5 times income multiple. Is there an optimum time of year to apply? And is there one bank that's preferable to the others?

Many thanks.
 
Yes. The quotas operate on a calendar year basis. All the lenders have used up their quotas for this year and are worried about exceeding them.

So you should wait until January to apply. And you should probably get in as early as possible in January.

Brendan
 
Thanks Brendan. I thought that they might have quarterly quotas, making the summer (quietest time) the optimum time to act. Although they may flex their quotas accordingly.
 
No, they are annual quotas and the lenders are in trouble with them.

More of their approvals for exemptions have been drawn down than they expected.
They have lent less overall than they expected.

So they are a fair bit ahead of the 15%.

It's possible that the Central Bank might do something to smooth the implementation before the end of the year.

Brendan
 
It is definitely the case that the new regulations restrict lending for PDH purposes to no more than 20% (the 15% exemption relates to the LTV restrictions) of the monetary value of all home loans advanced for PDH purposes in each twelve month reporting period.

So, this clearly an annual limit and the Central Bank has clarified that there is no carry over from one annual reporting period to a subsequent annual reporting period of any "un-used" lending capacity.

However, this post on Karl Deeter's blog from last August seems to imply (although it's not entirely clear) that in practice lenders are applying a de facto quarterly quota on exemptions.

http://www.mortgagebrokers.ie/blog/...lk-into-a-bar-one-qualifies-the-other-doesnt/

Also, where a lender grants €50m or more in residential mortgage lending in any six month period ending on 30 June or 31 December in any calendar year, the Central Bank requires it to submit a monitoring template for that period, in addition to the aggregate annual data.

[broken link removed]

Putting this altogether, I think Brendan's advice to submit the application as early as possible in January would seem to make a lot of sense. It may even make sense to submit the application just before Christmas so it will be top of the pile for consideration in early January.
 
Many thanks.

We're looking for 4.2 times our income.

Is that feasible?

We're comfortable that it's affordable.
 
It's hard to know to be honest.

I'm pretty sure that in practice a borrower can be exempted from either (but not both) the LTV limit or the LTI limit in respect of a particular application (although I'm open to correction on this point).

Beyond that it's really down to what a particular financial institution considers prudent. My understanding is that banks' underwriting criteria is now more focused on assessing an applicant's disposable income and their ability to meet mortgage payments, which are stress tested to allow for increases in interest rates.

4.2 times your joint gross income sounds very high to me but I suppose it depends on your individual circumstances. I would guess a younger applicant that can borrow for a longer term would have a higher repayment capacity.
 
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