Low-earner getting mortgage

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SidTheDweeb

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I understand that the rule of thumb for getting a mortgage is roughly multiply gross salary by 4 (am I wrong?)...

My question is do lenders take into account future earning potential?
Situation is I will be starting on 21.5k next Sept. with a big4 accountancy firm.
Within 3 years, provided I pass, salary will be 45-55. And will increase incrementally before then.
My gf is doing a phD (currently 16k p/a tax free, minimum 30k p/a in ~2 years)

Is there any lender that might consider giving us a decent mortgage now?
 
You also asked these questions which are covered to some extent in the thread that I linked:
I understand that the rule of thumb for getting a mortgage is roughly multiply gross salary by 4 (am I wrong?)...

Is there any lender that might consider giving us a decent mortgage now?
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By the way - please reregister with a different username as the one above is unacceptable. When you do this let me know and I can merge your existing posts into your new profile. [Update - user registered with different name and previous posts attached to new registration].
 
Not true. A friend of mine working for KPMG back in 1999 got a mortgage with Ulster Bank for a house in Dublin when his salary was IEP 8k - the house cost over IEP 100k at the time - I can't remember the exact amount.

I realise that house prices have increased exponentially since then but your salary is also more than double what his was at the time. You will need the company to give you a letter with the estimate of earnings over the course of your contract. He approached each of the institutions directly rather than going through a broker. I suggest that this is what you do too. Try Ulster Bank first as they look favourably on accountants.
 
Not true.
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That's great for your friend, but you are referring to one piece of anecdotal evidence.

Do you honestly think a lender will advance a sum larger than that which you could afford to repay out of your current salary, in the expectation (hope?) that you would some day be earning several times your current salary. As the OP said
provided I pass
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- how is the bank to know he will pass?

I'm pretty sure the brokers who frequent this site will agree that, while there are of course always exceptions, it is unlikely a lender will advance monies based on what your income should/could/might be in 3 years time.
 
I accept that this is only one example and is the only one I know of someone in the first year of their contract who were granted mortgages.

Having worked in one of the Big 4 myself, I know of numerous other people who got mortages in the 2nd and 3rd year of their contracts BEFORE they passed their final exams, when they were earning relatively small salaries (circa IEP13k). As I said before, they also require letters from the firms indicating what their salaries would be when they qualified.

I'm sorry if this contradicts what some people believe but it is a fact - I have no reason to mislead.

Finally Sidthedweeb/Syphilis - if you speak to anybody working in the big 4, they will be aware of people who have obtained significant mortgages without parental help and despite their relatively small salaries.
 
I'm sorry if this contradicts what some people believe but it is a fact - I have no reason to mislead.
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I'm not saying you do, Art. However, my personal experience, as well as that of friends, is that future large increases in income were not taken into account - my broker explained that to give a mortgage based on a large increase in future income, i.e. upon qualification as an accountant, would breach Central Bank lending rules.
 
Accountants (I speak as one) are generally looked favourably upon by lenders, as are other professionals, so the OP may have a chance of getting a higher mortgage than most other 'low' earners.

Only way to find out is to ask directly, as I am pretty sure each case is different (based on what I have seen myself).
 
Accountants (I speak as one) are generally looked favourably upon by lenders, as are other professionals, so the OP may have a chance of getting a higher mortgage than most other 'low' earners.
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I know they are looked upon more favourably, but the lenders are restricted in just how favourably they can act.

I could be wrong, but I feel it is highly unlikely that a mortgage lender will offer a mortgage to a trainee accountant based upon their post-qualification salary of say €45,000, while the trainee is still earning say €25,000. I assume a trainee's training contract is just that - a contract for the duration of their training period, nothing more, and not a guarantee of a job post-qualification.

I take on board what people are saying but I just find it hard to believe that any mortgage lender is going to lend based on a qualified accountant's salary to someone who may/could/should qualify a couple of years down the line.

How would they keep up the mortgage payments in the interim?
 
Look, there is going to be no resolution to this in the near future. Sherman-I understand your point as I have taken the same attitude to issues on AAM myself, i.e. "even though you say it's true from experience, I find it hard to believe".

The CBOI may not take the same view of giving a 'generous/favourable' mortgage to an accountant as to a factory worker if , say, statistics can prove that 90% of accountants who commence training go on to qualify as accountants.

I know of a recently qualified accountant who received a mortgage for 6 times their sole earnings around a year ago.

Lenders may not lend on the basis of €45k, but rather take an average of projected earnings over the three year period.

Obviously a lender will have to take account of what the applicant will earn in the immediate future as well as 2-3 years down the line.

Maybe one of our brokers can give their take?
 
As I have said before lenders give more money to accountants. It does not appear to matter if Central bank guidelines are breached.

As I said in my original post, one has to approach the lender directly as brokers don't seem to be able to get the same quantities of money. I don't know why they banks lend more money to accountants, the simple fact is that they do and I know plenty of people who can attest to this.

I am sorry if this shatters your unique view of the world but it is true as CCOVICH also points out.
 
No need to get testy Art, I'm merely trying to understand if/why they do this.

You'll have to excuse my scepticism, I am not trying to put down anyone's experiences/profession.

As CCOVICH said, I'm sure one of the brokers who posts here will clarify matters.
 
Sherman said:
As CCOVICH said, I'm sure one of the brokers who posts here will clarify matters.
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Not necessarily, I was merely asking for their opinion, which may or may not bring us closer :) .

Anyway, let's not get so heated over this issue-there are many more important things to get worked up about.
 
To be fair most people would probably accept that professional people such as accountants would be treated differently by financial institutions but the point is the op is not an accountant and might never qualify as one. That said my own personal experience with financial institutions re. mortgages both residential and commercial, is substantially different to that which you might expect on the basis of commonly available information.
 
Just to put another angle on this I personnally recieved a mortgage in excess of 6 times my salary through a broker because of whom I was employeed with at the time (Major software company).

I also know that they look favourably on civil servants and semi state employees through personal experience. I don't believe there is a hard and fast rule on earnings to loan but that a number of things are looked at by banks.
 
I was talking to 2 guys from Northern Ireland about mortgages here in the Republic. They were shocked at the 'average' amount people pay, per month for a mortgage. The average for them was £400 per month.

When you think about it - there are alot of people out there that are stretching themselves ridiculously thin... and the Banks aren't discouraging it. Someone I knew, whose take-home pay was €2000/month (after tax), was offered by a financial institution, a mortgage that would cost them €1300/month! Where's the sense in that? That means this person would have €700/month to live on!

Don't they say, in order to be financially secure, one's mortgage repayment should be <50% of monthly take-home pay?

People are treading on VERY thin ice, just to get on the property ladder.

-soc
 
soc said:
That means this person would have €700/month to live on!
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Why do you seem to assume that somebody could not live on €700 p.m. as long as they live with their means?
Don't they say, in order to be financially secure, one's mortgage repayment should be <50% of monthly take-home pay?
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Who's "they"? I've never heard that rule of thumb before.
People are treading on VERY thin ice, just to get on the property ladder.
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Interesting mixed metaphor.
 
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