# Bankruptcy Over - Need to get a mortgage ASAP



## Alan1962 (23 Nov 2017)

Folks, we are a couple in our mid 50s just exiting Bankruptcy.

We are currently renting a nice 3 bed house in South Dublin, and have 2 house mates.

The rent we are paying would comfortably pay a €400K mortgage over 20 years, which is in and around the value of the house we are in, and the house is been sold by a financial institution.

If anyone has any experience of applying for loans after exiting Bankruptcy we would love to hear them.

Also if anyone is considering filing for bankruptcy and would like to know about our experience we would be happy to share them either here, or by PM.

We were assisted by the Irish Mortgage Holders Association and can not rate them highly enough.

Thanks


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## Bronte (23 Nov 2017)

Well done on exiting bankrupty. It would be great for others on here if you did a summary of how it went for you.  I suggest you try and experienced broker to see who will lend to you.  Maybe the IMHA can recommend someone.


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## Sarenco (23 Nov 2017)

This thread may be of some assistance -
https://www.askaboutmoney.com/threads/getting-a-mortgage-after-bankruptcy.199663/


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## RedOnion (23 Nov 2017)

Just bear in mind that apart from bankruptcy, your age will count against you. Unless you can prove affordability post normal retirement age, you'll have trouble getting a mortgage that brings you into your 70s.

Assuming you're 55, would you meet the criteria of a mortgage over 13 years? 

The main lenders have pretty hard rules around maximum age. In your circumstances I'd contact Pepper first as they seem to be most flexible.


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## Brendan Burgess (23 Nov 2017)

I presume you have a deposit of €80k saved? 

Under Central Bank rules, you will need a 20% deposit assuming you are a second time buyer. 

Brendan


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## Alan1962 (23 Nov 2017)

We are aware of the age issue and the normal deposit rules which makes the matter more urgent.

I am sure there are tens of thousands in the same boat as us.

Regards the 20% deposit that rule can be broken by banks in up to 10% of cases to the best of my knowledge.

The sad fact is that all the people in similar circumstances as us will become a huge burden on the state and social welfare if we can not get mortgages.

The rules need to be changed for people in our age bracket to take account of the fact they won't have more dependents (kids long grown up) have far less other expenses and can pay a much higher percentage if income on repayments.

The reality is that unless the state do in 15/20 years time thousands of people like us will need state housing unless the state plan on having OAPs sleeping rough.


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## renter45 (23 Nov 2017)

Alan1962 said:


> We are aware of the age issue and the normal deposit rules which makes the matter more urgent.
> 
> I am sure there are tens of thousands in the same boat as us.
> 
> ...


And young couple on less income also have to rent & try save deposits for a mortgage. so why should the rules be changed for your age bracket?
Either you fit the criteria for a mortgage or you continue to rent. If you can afford the rent comfortably in south Dublin then your a long way off the breadline, having gone through bankruptency. Also in years to come id hope your children would offer you shelter before the option of sleeping rough


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## Alan1962 (23 Nov 2017)

renter45 said:


> And young couple on less income also have to rent & try save deposits for a mortgage. so why should the rules be changed for your age bracket?
> Either you fit the criteria for a mortgage or you continue to rent. If you can afford the rent comfortably in south Dublin then your a long way off the breadline, having gone through bankruptency. Also in years to come id hope your children would offer you shelter before the option of sleeping rough



Large deposits for all owner occupiers make no sense and only are for the benefit of the wealthy.

The Central Bank would be far better restricting the amount that can be borrowed based on affordability.

Let me explain, many many years ago, banks only lent based on one salary for a mortgage, the first time buyer still got a basic 3 bed SD

Then they started to take two salaries into account, increasing the amount borrowed but still only getting the same type of house.

Eventually it got to the stage couples were borrowing much more money, over a much longer term to buy the same kind of house.

Who benefits from this, rich land owners and speculators.

The state needs to get builders building house to create supply,

Buyers should need to show affordability where they are going to be owner occupiers. IF they have been paying rent for a reasonable period of time, equal to or in excess of what the repayments will be there is no reason why they should not get 90/95% mortgages.

As regards our case, your post suggests we are looking for state help, we are not, we want to prevent the need for us to rely on state help in the future.

Prior to our bankruptcy we were employers, having an average 5/6 employees going back 20+ years, all well paid.

Do you really think that the state should be relying on kids to look after their parents in the future, just so that rich landlords and vulture funds can get richer?

Believe me the easy option for us would be to rely on social welfare to house us, and not to bother working. 

People our age needs are much lower than those starting out and having families etc.

We would live pretty comfortably on social welfare, and it would be the likes of yourself paying it.


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## Sarenco (23 Nov 2017)

Alan1962 said:


> Large deposits for all owner occupiers make no sense and only are for the benefit of the wealthy.


No, deposits are intended to protect banks. 

They provide a buffer in the event that a bank needs to realise their security interest following a borrower default.  They also ensure that a borrower has significant "skin in the game" and will be motivated to make the agreed repayments.

What may be affordable today for a borrower, may not be affordable tomorrow.  A borrower's circumstances can change quite dramatically, as you know from your own experiences.

I think you need to be realistic about the likelihood of obtaining a mortgage - from a lender's perspective you would be a very high risk prospect.  It's really not the end of the world if you can't secure a mortgage - there are plenty of retirees that rent, rather than own, their homes.


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## Monbretia (23 Nov 2017)

As far back as I can remember banks took into account more than one salary if there was a second one, it was usually once the higher plus half the lower by whatever multiple was being used at the time.    That's not to say the multiples banks ended up with were right!


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## Alan1962 (23 Nov 2017)

Sarenco said:


> No, deposits are intended to protect banks.
> 
> They provide a buffer in the event that a bank needs to realise their security interest following a borrower default.  They also ensure that a borrower has significant "skin in the game" and will be motivated to make the agreed repayments.
> 
> ...




For years building societies gave 90/95% mortgages, then greed took over, they nearly all converted to banks, and increased the size of loans inflating property prices.

The level or repossession was very low, as repayments were affordable and interest rates were a lot higher.

Owner occupiers are less likely to default as they need somewhere to live, what we have moved to in the last number of years is a rental society, which is driving home ownership out of the reach of a huge number of people.

This is not good for the country as a whole, as rents continually increase and people live longer and will be in receipt of OAP benefits longer.

Banks need to be able to repossess houses quicker rather than a higher deposit.

Anyway this argument does not give us answers as to anyone who may have been able to get a mortgage.


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## Sarenco (23 Nov 2017)

There's no doubt that banks had incredibly lax underwriting standards during the boom/bubble years and ultimately that led to an almighty crash.  No sane person wants a repeat of that disaster.

Other posters have given you some pointers where you might begin your search for a mortgage but I think you need to temper your expectations.


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## Monbretia (23 Nov 2017)

Banks/building societies used to lend 90% in general but they protected themselves for anything they lent above 80% by getting the customer to take out and pay for an insurance policy, an indemnity bond, that protected them against loss if the house ended up being worth less than 80% of original price.   When competition started hotting up indemnity bonds were dropped to reduce costs, then they started to pay for valuations etc, total price war!  Ended in a right mess didn't it


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## Gordon Gekko (23 Nov 2017)

Pepper look at borrowers with a suboptimal credit history; however, I am unsure whether that includes the nuclear option of bankruptcy. As other posters have pointed out, your age is as big an issue. I fear that the combination of these two issues will make it impossible for you to obtain a mortgage. Best of luck in any event.


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## TLO (24 Nov 2017)

The bankruptcy is a red herring.  Two things are needed:

1) A 20% deposit.
2) The capability to redeem a mortgage by the age of 68.


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## Alan1962 (24 Nov 2017)

TLO said:


> The bankruptcy is a red herring.  Two things are needed:
> 
> 1) A 20% deposit.
> 2) The capability to redeem a mortgage by the age of 68.




Sadly it seems this is going to be the case, I just don't see that people and politicians in particular see the massive problem of a generation of pensioners needing housing.

The number of ex bankrupt, separated people in new relationships etc, that could service mortgages but will / are been frozen out is going to result in these people, and we are talking 10s of thousands, hitting pension age and been an even bigger drain on state finances.

As a previous poster said building societies used to take out an indemnity  on loans over 80% (i think that was the %), and it worked.

Personally we will be alright, we can have family purchase a property, become tenants and get state help by the way of HAPP.


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## renter45 (24 Nov 2017)

If banks do allow the 90% exception for deposit, am I right in saying, with the 3.5 ratio, you need an income of circa €105,000 to meet mortgage criteria?


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## Alan1962 (24 Nov 2017)

renter45 said:


> If banks do allow the 90% exception for deposit, am I right in saying, with the 3.5 ratio, you need an income of circa €105,000 to meet mortgage criteria?



No, they take other things into consideration, and given that we have no dependents and wont have any, that means we can afford a much higher repayments.

When we got our first mortgage we then had kids, and all the costs associated with that, 

Had we got better advice we should have closed our business earlier leaving our staff out of work, foolishly we tried to salvage the business and in return for extra funding gave the banks personal guarantees. We could have lived off rental income from our US holiday home instead we used that to pay our creditors.

Yes once out of bankruptcy we will have a high earning capacity, but our age is a concern and why we want to do something now so we dont have to rely on state handouts in the future.

Maybe you feek we should just live off the state?

If we live to be 90, that means 25 years of the state paying housing for us, surely it makes more  sense for the state to help people like us get back on the property ladder, and its not financial help required, its looking at the lending rules sensibly.


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## Sarenco (24 Nov 2017)

I'm confused why you think there is simple binary choice here - secure a mortgage or rely on the State to provide your housing in retirement.

Why wouldn't you simply rent privately in retirement? That's what lots of people do.

If you have a high earning capacity why not simply save a sufficient sum to discharge your living expenses in retirement?  The State even provides a tax efficient vehicle for retirement savings.


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## Alan1962 (24 Nov 2017)

Sarenco said:


> I'm confused why you think there is simple binary choice here - secure a mortgage or rely on the State to provide your housing in retirement.
> 
> Why wouldn't you simply rent privately in retirement? That's what lots of people do.
> 
> If you have a high earning capacity why not simply save a sufficient sum to discharge your living expenses in retirement?  The State even provides a tax efficient vehicle for retirement savings.




Where do you get that from that lots of people rent in retirement?

I would be very sure that the numbers of people renting privately in retirement has been very low, unless they have sold off their home

Home ownership has been the Irish way for decades.

Would you like to be renting in your 70s and 80s when you could be evicted at any stage even if your rent is always paid on time?

I would also wager that the vast majority of pensioners in rented accommodation in Ireland are in state housing.


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## Sarenco (24 Nov 2017)

Alan1962 said:


> Where do you get that from that lots of people rent in retirement?


Because I know people that are doing just that - some by choice, some because of their circumstances.  It's really not an uncommon scenario.


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## renter45 (24 Nov 2017)

Alan1962 said:


> No, they take other things into consideration, and given that we have no dependents and wont have any, that means we can afford a much higher repayments.
> 
> When we got our first mortgage we then had kids, and all the costs associated with that,
> 
> ...


Keep us updated on this thread with how you get on with the banks, its all figures & credit history with them.


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## Bronte (27 Nov 2017)

Alan1962 said:


> Where do you get that from that lots of people rent in retirement?
> 
> I would be very sure that the numbers of people renting privately in retirement has been very low, unless they have sold off their home
> 
> ...



Alan do you want to give us some figures.  How much of a deposit you have etc. I can well see how in your mid fifties you both want to own your final home. Have you tried any banks so far?  Would your children be willing to help out, as in be some kind of guarantor if the bank required that.  Or get your children to purchase a property for you both, with a lease to end of life,  or a side legal agreement that  you pay rent to them but it's to pay the mortgage.  Something along those lines.


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## Alan1962 (2 Dec 2017)

deleted as did not know newspaper articles could not be quoted, even though the article has a share facility on it to allow it be shared


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