# Will the credit union lend for house deposit



## roball (25 Jul 2009)

Hi guys do you know if the credit union will lend if they know it's for a house deposit.


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## NorfBank (26 Jul 2009)

From a lenders pespective, the house deposit must be from an unborrowed source e.g savings or gift.

www.moneybackmortgages.ie


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## roball (26 Jul 2009)

I know but I won't be telling the lender I've a credit union loan.  I checked the icb list and my credit union isn't on it.  

The reason why I'm so eager to get a loan is because I've seen a house for 140k asking price so I reckon if I offer 130k I'd get it and the mortgage repayment would be as much as the rent I'm currently paying.


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## rmelly (26 Jul 2009)

What about servicing the credit union loan on top of that?


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## z109 (26 Jul 2009)

roball said:


> I know but I won't be telling the lender I've a credit union loan.


That would be fraud.


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## roball (26 Jul 2009)

I know but I've a kid and hate the thought of renting when I could be paying for my own home especially now when the prices are so low.  I know a lot of people who have borrowed for the deposit.  

I have been managing to save 1k per month so I am thinking of just keep saving away, it just I'm paranoid I'll never own a house.


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## Darwi (26 Jul 2009)

You have dependent, you are renting @ ~€600 per month ( €117k for 30yrs @ 4%  - mortgage calculator - drcalculator.com) and you are considering fraud to enable you to take on half a life of debt with reduced accommodation flexibility.
You are considering this at a time when interest rates are at the lowest level they have ever been since the formation of the Euro and property prices are falling.

This is my (biased) opinion:
You are in a better position now than a huge number of those "paying for [their] own home". 
Interest rates will rise in the not terribly distant future, increasing your payments. 
The glut of rental accommodation is unlikely to disappear for quite a while, putting pressure on landlords to keep rents low.

I understand your concern. There is a very strong social pressure in Ireland to own a house and tenant rights are not as strong here as they are in some other EU countries.

Given that you are able to save €1,000 per month, it may be better to keep this up and have a nest egg to use if things get really bad for the economy.
Also, If you are saving €1,000 per month, you will have deposit saved by August next year with no reason to borrow, or commit fraud. Who knows? maybe the price of the house will have fallen further by then. If so, you'll have saved a packet.

Best of luck with your decision.

- darwi


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## roball (26 Jul 2009)

Thanks Darwi, I think you are right, the social pressure is probably one of the reasons for me wanting to buy a house.  Sick of being asked by everyone "are you still renting, oh that's dead money etc..."  

I think I'll continue saving at least I'll have a strong savings record so this should also be a help when getting a mortgage and whatever the outcome I  think I can safely say the price won't increase in a year.


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## raven (26 Jul 2009)

+1 to waiting it out for the moment. 
Saving taht deposit will definitely stand to you. Time is on your side and you are probably in a stronger  position that you realise. The "rent is dead money" is a facile, simplistic argument at best. Yes, in the long run, you should put a roof over your head, as you don't want to be paying rent during your retirement days. However, time is on your side at the moment, and its highly unlikely prices will see the mad increases of the boom years for quite a while to come (if ever in lifetimes, as long as people remember this bust), we're in the middle of a correction back to more "normal" levels.

There's sensible reasons why the bank wants to see a deposit, and its very much in your interest to put in the hard graft, and just save it up like the old days.  You'll be much more comfortable and happier making the purchase when  you do.


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## senni (26 Jul 2009)

please factor in rising mortgage rates....this seems cheap, does it need repairs or work, factor house insurance and life .is work secure and solid, any possibilities of redundancies, are you losing any rent allowance benefits..

Good luck with your decision..go with your gut.its never wrong ( i think )

BUt...i wish i was renting as i have a mortgage and i worry about the rates rising !!!!


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## corkgal (27 Jul 2009)

Dead money comments might be coming from jealousy, at the very least they are uninformed. No greater dead money than paying morgage when in negative equity.


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## NorfBank (27 Jul 2009)

corkgal said:


> No greater dead money than paying morgage when in negative equity.



I cannot understand this. You pay your mortgage, at the end of the term you own a house. You rent a house, you never own it and are paying rent into your retirement.

Negative equity will not affect either.


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## DerKaiser (27 Jul 2009)

NorfBank said:


> I cannot understand this. You pay your mortgage, at the end of the term you own a house. You rent a house, you never own it and are paying rent into your retirement.
> 
> Negative equity will not affect either.


 
There's no such thing as 'dead money', either way you're paying for a good i.e. shelter.

The funniest thing is that the majority of mortgage repayments go towards interest repayments initially.  The same people who call rent dead money seem to blissfully ignore the fact that payment of interest does not go towards owning the place either


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## Lilly2099 (27 Jul 2009)

My house deposit was funded by a credit union loan. I am in the house 2 years now!


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## Howitzer (27 Jul 2009)

Lilly2099 said:


> My house deposit was funded by a credit union loan. I am in the house 2 years now!


My deepest sympathies.


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## Lilly2099 (27 Jul 2009)

Howitzer said:


> My deepest sympathies.


 
The loan is fully repaid already. Im happy in my house! So no sympathy needed!


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## JoeB (27 Jul 2009)

Yep, I think you should hold off.. count your lucky stars that you are renting and that you haven't overpaid for a house or apartment.. I totally understand the frustration you felt in the past at not owning, however now it's different.. paying rent now is great as house prices are falling and your savings are increasing..

I too have seen great offers on Daft, and compared to prices before they're great.. but in the future they may be lower and you'd have more money, and maybe more choice. I saw a nice 2 bed terraced house in Dublin for 149K.. I cannot remember seeing prices like that before!

People saying 'rent is dead money' is overly simplistic.. don't forget that mortgage interest is dead money too isn't it?.. money which you won't have to spend if you save it first.. there's a good thread on here somewhere which puts forward strong arguments that rent is not always dead money, and that property is not always a brilliant investment.. and rent is definitely not dead money today in my opinion, not if you pay 6K rent in a year and house prices drop by 20K or 30K while your savings increase..

Just keep your head up, don't dive in, just feel very happy that for the first time in as long as I can remember that houses are actually becoming more affordable and that you will be able to get one eventually..


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## dtwhaler (27 Jul 2009)

NorfBank said:


> I cannot understand this. You pay your mortgage, at the end of the term you own a house. You rent a house, you never own it and are paying rent into your retirement.
> 
> Negative equity will not affect either.


 
So if you're paying 750-1000 per month to your mortgage right now, your balance comes down by how much after 1 year ?

If you're renting right now for 750 per month but in the market to buy, how much has the house price fallen after 1 year ? Loads in the current market. In a roundabout way its reducing the potential balance of your mortgage by a lot more.

I think you're in a strong position right now renting and in the market to buy.


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## DerKaiser (27 Jul 2009)

The herd mentality is interesting to observe here.  One person calls rent dead money and ten say that house prices have nowhere to go but down.  

The herd will be right for a while but there will be a turning point.


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## Chris (28 Jul 2009)

roball said:


> I have been managing to save 1k per month so I am thinking of just keep saving away, it just I'm paranoid I'll never own a house.


In fairness, there are plenty of houses out there, and I don't think anyone will seriously be convincing when saying that there could be a v-shaped recovery in house prices, and that you'll lose out if you don't catch the bottom. Stay put, save your money, and be under less pressure if/when you buy your house.




roball said:


> Thanks Darwi, I think you are right, the social pressure is probably one of the reasons for me wanting to buy a house.  Sick of being asked by everyone "are you still renting, oh that's dead money etc..."



Best response to this is that a mortgage is just as much "dead money"


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## canicemcavoy (28 Jul 2009)

roball said:


> I know but I've a kid and hate the thought of renting when I could be paying for my own home especially now when the prices are so low.


 
You do know that low interest rates, unlike death and taxes, are not permanent, and that rents are plummeting?

As previously mentioned, you would be also committing fraud.


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## canicemcavoy (28 Jul 2009)

roball said:


> Sick of being asked by everyone "are you still renting, oh that's dead money etc..."


 
Are there really people saying that even now? The stupidity of the Irish sheeple never ceases to amaze me.

Keep saving your 1K a month, sounds like you are doing well, and sit and wait 'til we hit the bottom (don't worry, house prices will not miraculously soar after we hit the bottom, you're not going to miss it). The amount of places for sale and rent is still rising:

http://daftwatch.atspace.com/


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## markpb (28 Jul 2009)

Chris said:


> Best response to this is that a mortgage is just as much "dead money"



Or ask them how much interest they pay on their mortgage? My 248k apartment would cost €428,036 if I took the full 35 year term. I'd call 179k of interest extremely dead money!


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## Chris (28 Jul 2009)

markpb said:


> Or ask them how much interest they pay on their mortgage? My 248k apartment would cost €428,036 if I took the full 35 year term. I'd call 179k of interest extremely dead money!



That actually makes the point even better.


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## DerKaiser (28 Jul 2009)

markpb said:


> Or ask them how much interest they pay on their mortgage? My 248k apartment would cost €428,036 if I took the full 35 year term. I'd call 179k of interest extremely dead money!


 
Your interest is payment for the use of money you don't own in the same way rent is payment for the use of property you don't own.  So interest is simply rent of money.  

Saying rent is dead money would be like saying that you should never pay to stay in a hotel because you don't get to keep the room at the end of it.

If you think interest is dead money you should be indifferent to giving someone €100 now and getting it back in 35 years.


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## dereko1969 (28 Jul 2009)

Also with regard to rent it's possible to negotiate a significant reduction at present due to the enormous supply out there, i've just negotiated (though that's stretching it, i asked for a reduction and was given it) a reduction of €200 a month in my rent to renew.


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## z109 (28 Jul 2009)

Er, Der Kaiser, I believe markpb was backing up your point with a further example...


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## DerKaiser (28 Jul 2009)

yoganmahew said:


> Er, Der Kaiser, I believe markpb was backing up your point with a further example...



My point is that neither rent nor interest is dead money.  I thought markpb was implying that interest is a worse waste of money than rent.

I've seen people make the point elsewhere that its much better to pay off a mortgage as quickly as possible as your total mortgage outgo will be lower, the implication being that there is zero benefit from being able to spend money you do not yet have


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