# Declined for Mortgage for 185k. my annual earings are 33k gross.



## Delmonte (29 Jan 2010)

Hi,
I have recently deen declined for a mortgage with one of the main Irish banks. These are my current stats
I earn 33,000 gross p.a.
I have been in employment for 2 years ( approx).
I recently received a gift of 80,000.
My bank statements show savings 200/mth but also that i have been in my overdraft on a regular basis.
I am purchasing a site subject to planning with the gift money and total costs legal and others will come at a total cost of 30k planning due in the coming weeks.

I am seeking a mortgage of 185,000 and intend to invest the remainder of the gift.
Please advise as to what i should do to put myself in astrong position to get a mortgage and time frame i should work within.

Thanks for you help in advance.

Delmonte


----------



## Brendan Burgess (29 Jan 2010)

*Re: Declined for Mortgage*

How much is the site costing?

You are asking for a mortgage 6 times your gross income? That seems excessive to me, although I was raised on the expectation of 2.5 times gross salary.

Brendan


----------



## Vanilla (29 Jan 2010)

*Re: Declined for Mortgage*

Did you only try one bank:? Have you considered trying a broker?


----------



## Renter27 (29 Jan 2010)

*Re: Declined for Mortgage*

It should be do - able , I earn 30k a year and have just borrowed 186k. 
Stop using the overdraft , they dont like that  if your not paying any rent at the moment you really should be saving way more a month, 800-1000, this will show your able to pay a mortgage too.
Clear any loans / credit cards.
Try more lenders, brokers, if you get turned down again , ask for the exact reasons why and go from there ...


----------



## Delmonte (1 Feb 2010)

*Re: Declined for Mortgage*

Thanks for your advice. I'll be taking you up on  it. Overdraft dcancelled and savings upped. 6 months healthys statements might push me over the  line.


----------



## Vega (2 Feb 2010)

*Re: Declined for Mortgage*

Yes anything like an overdraft will show up on your ICB check.  Also, make sure you don't have anything else, like unpaid credit card bills etc.


----------



## csirl (2 Feb 2010)

*Re: Declined for Mortgage*



> i have been in my overdraft on a regular basis.


 
In the current climate, this will scare off a lot of banks. No matter what you say, they'll just point to your statements and say how do you plan to pay a mortgage if you cant even keep yourself in the black from month to month. You stop using the overdraft or any other sort of short term credit.



> My bank statements show savings 200/mth


 
How much are the payments on 185k likely to be? They will be a lot higher than 200/mth. You should consider saving an amount equivalent to the mortgage payments to prove that you have enough surplus income to pay the mortgage.


----------



## pjmn (2 Feb 2010)

*Re: Declined for Mortgage*

I'm of Brendan's generation (and probably same thought process as well) - you are seeking almost 6 times your gross salary.

Repayments on E185k - over 20 years at say 5% would amount to c. E1,218 per month or 44% of your gross salary...

I think you are proposing to take on too big a committment at this time...

pjmn


----------



## Mpsox (2 Feb 2010)

*Re: Declined for Mortgage*

You've been declined for a mortgage because you can't afford it. Based on repayments for the amount you are looking to borrow, + utility bills, insurance, refuse charges etc + upkeep, you'll be paying out half your salary on property related costs. You might need to consider using some of the gift to reduce the mortgage amount you are looking for.


----------



## Renter27 (2 Feb 2010)

*Re: Declined for Mortgage*



pjmn said:


> I'm of Brendan's generation (and probably same thought process as well) - you are seeking almost 6 times your gross salary.
> 
> Repayments on E185k - over 20 years at say 5% would amount to c. E1,218 per month or 44% of your gross salary...
> 
> ...




Mortgages now are generally 35 years, my repayments are around 700pm


----------



## pjmn (2 Feb 2010)

*Re: Declined for Mortgage*

True - but perhaps the advent of 35 year mortgages are in part to blame for the situation the country now finds itself in - I'd suggest merit in reverting to the old style 20 year mortgage - and if one couldn't afford to pay off a mortgage over 20 years then don't take it on..... just my opinion.


----------



## Renter27 (2 Feb 2010)

*Re: Declined for Mortgage*

I agree in part , obviously giving a 35 year mortage to someone in their 40's is crazy , I know of people who will be paying their mortgage well into their 70s, thats not something to be looking forward to ....


----------



## glic83 (4 Feb 2010)

*Re: Declined for Mortgage*

what is the general rule of thumb in relation to borrowing would it be 3-4 x times your gross salary ?


----------



## Soarer (5 Feb 2010)

*Re: Declined for Mortgage*



pjmn said:


> True - but perhaps the advent of 35 year mortgages are in part to blame for the situation the country now finds itself in - I'd suggest merit in reverting to the old style 20 year mortgage - and if one couldn't afford to pay off a mortgage over 20 years then don't take it on..... just my opinion.


 
If you don't mind me asking, who gave you a mortgage of 6.2 times your salary?

We went for a quick chat with our bank manager the other day, just to get the lay of the land. We've a combined income of €80k, savings of €45k, no loans, clean record, and 5 previous years of mortgage payments, and we were advised of a mortgage of €372k.


----------



## PatrickDub (5 Feb 2010)

*Re: Declined for Mortgage*

In 2007 I had an apartment with outstanding mortgage of E175k. Also an investment property with an interest only loan with E275k outstanding. When I went to borrow E325k to buy another house, I ALSO asked to re-mortgage the investment property up to E445k. These funds (E170k) were to go towards buying the third place and renovating it.

The point here is that I was on a salary of E55k. Total borrowings of E965k. I had to write a letter via the broker to the bank setting out my plans for the E500k additional finance. 24rs later I got the loan offers via fax. 

How easy it was to get money then!


----------



## pjmn (5 Feb 2010)

*Re: Declined for Mortgage*



Soarer said:


> If you don't mind me asking, who gave you a mortgage of 6.2 times your salary?
> 
> We went for a quick chat with our bank manager the other day, just to get the lay of the land. We've a combined income of €80k, savings of €45k, no loans, clean record, and 5 previous years of mortgage payments, and we were advised of a mortgage of €372k.



No one ever gave me a mortgage of 6.2 times salary - what makes you think that I got one?


----------



## Soarer (6 Feb 2010)

*Re: Declined for Mortgage*



pjmn said:


> No one ever gave me a mortgage of 6.2 times salary - what makes you think that I got one?



Apologies.
That shoulda been directed at Renter27. Pressed the wrong quote button!


----------



## Renter27 (6 Feb 2010)

*Re: Declined for Mortgage*

EBS, I also have additional income of around 10k so that may of helped .


----------



## pjmn (6 Feb 2010)

*Re: Declined for Mortgage*



Soarer said:


> Apologies.
> That shoulda been directed at Renter27. Pressed the wrong quote button!




No problem...


----------



## househunter! (7 Feb 2010)

*Re: Declined for Mortgage*

hi delmonte 

which bank did you go to ? even some of the main banks arent lending .so you should try them all. some times the brokers cant get the rates the bank will offer directly so it is worth going to them all.  how long are you looking to take out your mortgage for ?


----------



## Bronte (8 Feb 2010)

The OP wants 6 times salary and can only manage to save 200 a month while having an overdraft in a well paying job?

A strong position would be to have at least 10% of the purchase price saved, plus legal and tax costs.  Borrow 3 to 4 times salary, borrow over not more than 20 years and be able to afford interest rates rising by say 2 -3%.  Ideally he should have no other borrowings, this means no car loans, credit card debt, overdrafts etc.   He should also be able to demonstrate that he can save the same amount as the mortgage amount will be for about 6 months.


----------



## peelaaa (10 Feb 2010)

*Re: Declined for Mortgage*



Brendan said:


> How much is the site costing?
> 
> You are asking for a mortgage 6 times your gross income? That seems excessive to me, although I was raised on the expectation of 2.5 times gross salary.
> 
> Brendan



5-6 times was the norm during the _celtic tiger_. If it was left  at 2.5 salary we wouldn't be in this mess now.


----------



## Pope John 11 (10 Feb 2010)

Lets put it another way. What do you want the €185k for? Have you recieved quotations from contractors? A 3,000sq. ft. house in the boom times could be built for €160k, via. direct labour.


----------



## amiafool (16 Feb 2010)

Pope John 11 said:


> Lets put it another way. What do you want the €185k for? Have you recieved quotations from contractors? A 3,000sq. ft. house in the boom times could be built for €160k, via. direct labour.


 When you say via direct labour, do you mean with your own 2 hands?

Or would the 160k include the cost of emplying tradesmen, labourers? 

I'm trying to establish what the cost per square foot of a "new build" would be either in Boomtime or evenn NOW if possible. I would then have a benchmark of what teh cost of a property would be, against the ridiculous askingprices.

Thanks.


----------



## loukkcat (18 Feb 2010)

When I was getting my mortgage last summer, they (AIB) based what my repayments would be as a % of my net monthly pay, think this is the way they do it now. I had no loans, overdrafts and savings of €25k. On a salary of €53k, I got €306k over 35 years. They also took into account the fact that I would rent a room (this is why singles can end up getting a higher multiple of their salaries than couples).

Before my rental income from renting the spare rooms, my mortgage is less than a third of my monthly net salary and very easily affordable, so I don't agree with pjmn and Brendan on their 20 year advice...


----------



## Gringo (19 Feb 2010)

amiafool said:


> When you say via direct labour, do you mean with your own 2 hands?



 Direct labour generally means that you don't employ a builder to take the job from beginning to end - you hire all the sub contractors, provide their materials and get your hands dirty to keep the project ticking along. But you earn the 15%+ that you save.




> Or would the 160k include the cost of emplying tradesmen, labourers?
> 
> I'm trying to establish what the cost per square foot of a "new build" would be either in Boomtime or evenn NOW if possible.


I've recently got a quote and the price per sq ft was pretty much the same as in 2004 for the same builder.  The price varies considerably depending on your location. 

160k would be on the low end for a 3000sq ft house - low spec and only a builders finish I'd guess.



> I would then have a benchmark of what teh cost of a property would be


Not all houses are created equally.  if the house looks pretty much like loads of others in the area and is fitted out with 'standard' spec (white pvc windows and loads of pine inside are often an indicator) it would have been a lot cheaper to build than houses that are that bit different or are fitted out with higher spec.  Be prepared to look at the detail


----------

