FTB's Mortgage Declined

[rocket68]

Myself and my girlfriend have recently been declinded a mortgage from AIB due to the fact that she hasn't been made permanent in her job yet. I am permanent and we have the 8% deposit but as she is not they will not take her salary into account. We also visited BOI but they voiced similar concerns and we are expecting them to decline us on the same grounds.

They told us that we had more than enough disposable income and that this was our only stumblin block. She is also due to be made permanent by the end of this year and has been assured that she will be. The repayments are not very high and we know we can easily afford it but it seems like we are out of luck. It would actually cost us more to go and rent so its a bit of a sould destroyer!

Does anyone know is it possible to get a mortgage if you are a contractor or has anyone had a similar experience with the banks?

 

[CCOVICH]

She is also due to be made permanent by the end of this year and has been assured that she will be.

Can she get a letter from her employer to verify this statement?
Might be worth trying-or asking for her employer to make her permanent now?

Do you have a particular property in mind that you want to buy now or are you still looking?

 

[NorfBank]

Most employers will not give such an undertaking due to the current environment but it's worth asking.

How long has she been in contract work for, is it a long term rolling contract in an industry where contract work is common? Are most people made permanent after a certain period?

 

[rocket68]

Can she get a letter from her employer to verify this statement?
Might be worth trying-or asking for her employer to make her permanent now?

Do you have a particular property in mind that you want to buy now or are you still looking?

No unfortunately they wont accept anything other than a letter saying thats she is already permanent. Her employer even volunteered to speak to them over the phone to explain things but they wouldnt consider that and they cannot make her permanent at the minute.

We have a particular property in mind that we thing would suit as it is not a massive mortgage and we know that we could easily afford the repayments.


She has been contracting for her company for almost a year and it is seen as the norm before you are made permanent in the company. There is no certain period but it is usually after about a year or so.

 

[DerKaiser]

What's the rush?

 

[PaddyW]

I think it's because, as the OP stated, renting now would cost them more than the mortgage would.

 

[senni]

what is her line of work exactly ? Although AIB and BOI have decliened same you may find other lenders may take you on. I would try a reputable broker and go on a variable rate and when she is permanent move back to AIB. Legal costs to transfer should be no more than 1000. so factor the loss of 1000 into the house Purchase price and go back to the seller and renegotiate it cheaper by 1000. Good Luck

 

[rocket68]

What's the rush?

Yes as PaddyW said its going to cost more to rent and the property we have in mind is exactly what we were looking for. Although we could wait and go for a different property down the line, we may not get something that suits us just as well.

what is her line of work exactly ? Although AIB and BOI have decliened same you may find other lenders may take you on. I would try a reputable broker and go on a variable rate and when she is permanent move back to AIB. Legal costs to transfer should be no more than 1000. so factor the loss of 1000 into the house Purchase price and go back to the seller and renegotiate it cheaper by 1000. Good Luck

Thanks for the advice. We are going to look into applying to a broker so may end up doing something like this.

 

[finty]

Yes as PaddyW said its going to cost more to rent and the property we have in mind is exactly what we were looking for. Although we could wait and go for a different property down the line, we may not get something that suits us just as well.






Thanks for the advice. We are going to look into applying to a broker so may end up doing something like this.

Not sure how renting in a market where property prices are falling can cost you more? maybe in monthly outgoings for the next year, but if prices fall 20% surely having a 20% smaller mortgage by waiting a year would make more sense than having a few hundred euro extra a month for the next year and probably a heap of negative equity this time next year.

Don't fool yourself into thinking there is only one house in the country that would suit you and you have to go get it now.

It's that sort of thinking that caused the stampede to buy overpriced houses in the first place. Something everybody who bought a house in the last few years knows all about!!

 

[DerKaiser]

Yes as PaddyW said its going to cost more to rent and the property we have in mind is exactly what we were looking for. Although we could wait and go for a different property down the line, we may not get something that suits us just as well.

I wouldn't be too quick to compare current mortgage repayments with current rents.

For starters a lot of FTBs are being offered 1 year discounts so you should look at the repayment levels after this discount period.

Secondly, whilst the overnight interest rate is 2%, assumed interest rates in 5 - 10 years time are closer to 4% so you would expect your repayments to increase to this level.

If you thing the longer term repayment levels compare favourably to rents then there is value in buying.

I wouldn't worry about availability of suitable properties in 6 to 12 months. Why do you think half the country is in negative equity?

Many people did foolish things such as borrow at subprime rates simply because they couldn't wait 12 months for their credit records to clear. Many are now locked into paying interest rates up to 6% higher than standard. I dare say that such people could now get very suitable properties for similar repayments had they not had the attitude that they would never again get the chance to buy a suitable home

 

[CCOVICH]

Many people did foolish things such as borrow at subprime rates simply because they couldn't wait 12 months for their credit records to clear. Many are now locked into paying interest rates up to 6% higher than standard. I dare say that such people could now get very suitable properties for similar repayments had they not had the attitude that they would never again get the chance to buy a suitable home

I agree-if AIB or BOI won't lend, then you may very well have to pay a premium to get a mortgage in your present situation. Unless there were very strong reasons for doing so (aside from the slightly higher cost of renting for the next 6-8 months), then I would be inclined to wait.

 

[mosstown]

take this as a sign to "wait". i know you dont see it as a good thing to be turned down but i would see it as a positive thing and you are actually very lucky believe or not. save more money, play your cards later in the year or early next year and then pitch up for a good quality property. you will save yourself thousands. Ireland is stuffed and will not recover for many years to come. there will be fantastic bargains to come. nothing is selling and nothing will sell for the foreseeable future. sorry to be gloomy everybody but all the signs are there. titanic away. far too many people overstretched themselves financially trying to keep up with the neighbours and now disaster has struck and the hole is very deep.
i am moving back end of next year to the Midlands after living in London since 1987. I left when there was nothing and I am now going back when there is nothing, over 20 years later. The main difference between now and then was people back then were not loaded to the hilt with heavy duty debts, they had nothing, which funnily is probably a better situation than what exists now.

 

[DerKaiser]

I agree-if AIB or BOI won't lend, then you may very well have to pay a premium to get a mortgage in your present situation. Unless there were very strong reasons for doing so (aside from the slightly higher cost of renting for the next 6-8 months), then I would be inclined to wait.

Just to put in context. If AIB lend at 3.5% the repayment on a 35 year mortgage is €1250pm on a €300k mortgage. If EBS lend at 4.5% you can only afford a €262k mortgage for the same level of repayment.

 

[Senna]

As some have said before you can go to a broker and probably get a sub-prime mortgage or or even a non sub-prime bank. But you will be stuck with them, i can guarantee you that. In one years time you might be thinking of changing to one of the main banks, but as you are looking for funding of 92% now, the house value only needs to fall by 1% and you will no longer qualify of the likes of AIB or BOI. Of course if it was only 1% then you could work around it, but its much more likely to be 10% minimum.

You should look at this as an opportunity to get an even better deal, you can pay rent for a year, watch and study the market, in a years time your 8% will grow and suddenly it might be worth more (10%/15%/20%) of the purchase price even without adding cash. In the current market its very rare that the amount you would pay on rent for the year is more than the amount the house value has dropped.

 

[Havana]

Does anyone know anything about the Homechoice Loans avaliable from Local Authorities? I believe its available for FTBs declined by 2 lenders.



Would people consider it an option in The OPs situation - I don't know enough about it to recommend it but could it be an option?

 

[foghorn]

Does anyone know anything about the Homechoice Loans avaliable from Local Authorities? I believe its available for FTBs declined by 2 lenders.



Would people consider it an option in The OPs situation - I don't know enough about it to recommend it but could it be an option?

Home Choice Loan - "Subprime for People Who Can't Get Subprime"®

OK, it's not the actual tagline but if they want to buy the rights to it, I'm open for cash offers.

Only 4 people have applied for this scheme in total ([broken link removed]) which has already cost €300K in admin, suggesting that it's a bad idea and they might as well have just given people who asked €75K each.

Oh, and it's only available for new houses, not second-hand. That is, it's a dig-out for developers.

 

[Havana]

Home Choice Loan - "Subprime for People Who Can't Get Subprime"®

OK, it's not the actual tagline but if they want to buy the rights to it, I'm open for cash offers.

Only 4 people have applied for this scheme in total ([broken link removed]) which has already cost €300K in admin, suggesting that it's a bad idea and they might as well have just given people who asked €75K each.

Oh, and it's only available for new houses, not second-hand. That is, it's a dig-out for developers.

Interesting! What makes it such a bad deal?