# Key Post: Raising the dreaded deposit



## donieh1975 (5 Feb 2003)

Hi there,
           I'm currently in a very stable semi state job earning a fairly good salary plus expenses. I'm thinking of buying a house in the next year or two but the deposit is my big stumbling block. I have just finished paying off a fairly big loan and I'm starting to save €400 to 500 per month. I'm thinking of putting the money in to the credit union so that when I have €5000 to €8000 I can borrow the extra money required. Is this the best solution or does anybody have any better ideas. I'm thinking about buying a secondhand house for 180,000 to 230,000.


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## Dan (5 Feb 2003)

*Raising the dreaded deposit*

Most mortgage lenders will be reluctant to lend if they know that you had to borrow to raise the deposit. Many will look for accounts over a period of time to verify your accumulation of the deposit. Of course you can get around this.

For a deposit of 180,000, you are looking at a deposit of 18K, so if you have a mortgage of 162K you are also going to have payments of 12K to the CU. 

Evidently if you are getting a 180K mortgage, you will be earning in excess of 50K per year, biut beware of getting in too deep.

Regards,
Dan


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## frfluffybottom (5 Feb 2003)

I wouldn't worry to much about, from my experience, many people do exactly this.  For my deposit, i told the lender parents would be gifting me the money.  They simply asked for a letter to that effect.  I was told that i shouldn't worry, the letter wasn't going to be scrutinised - i reckon they knew exactly what we were doing.  After approval was granted, i immediately got a loan for the required amount.


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## Moneybags (5 Feb 2003)

What about the EBS's family first loan? I know it has received a lot of bad press but it doesn't have to cost your parents anything. They can raise the deposit based on the security of their own home and suspend all repayments for three years, after which you take over the loan. 

With the government commited to bench marking in the public service, your earnings are likely to be a lot better in three years than they are now.


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## weathergirl (5 Feb 2003)

*Loan*

But don't the Credit Union scrutinise u re; what u want the loan for in the first place? 

By the way. if u find a house in dublin for €180 k then fair play to u!


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## donieh1975 (5 Feb 2003)

*Re: Loan*

Thankfully I don't live in Dublin so I can expect to buy a 3 or 4 bed semi for €180,000 to €200,000.
I went to my bank (BOI) today to set up a smartsave account to save for the deposit. I spoke to the mortgage advisor and he told me, "off the record", that if I need to raise extra money for the deposit, I can borrow from the credit union and when my bank scans all the financial institutions to see if I have any other loans, the credit union loan won't show up because it's not part of some irish banking bureau.
At least it's an option.


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## ClubMan (6 Feb 2003)

*Re: Loan*

*I went to my bank (BOI) today to set up a smartsave account to save for the deposit.*

There's no need to tie yourself to your own bank when saving for the deposit or borrowing for the mortgage - go wherever you get the best interest rate/deal. See .


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## weathergirl (6 Feb 2003)

*Re*

Yep, credit union amount won't show up, as ur capital detials will not show up on th eusual computerised system as under the data protection act... however, I thought that credit unions were pretty insistent on finding out what you want your loan for … how do you explain what u need €10k for without telling them it’s for a mortgage?


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## Joe (10 Feb 2003)

*House Deposit*

I'm about to put an offer on a house for 550K. Without selling my current home first (and closing the deal), where am I supposed to come up with a 10% deposit? 55K!!! Surely most vendors must appreciate this 'catch 21' situation? I am able & willing to put down about 15K - not an amount I can afford to lose....surely this will suffice?


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## Sarah Wellband (10 Feb 2003)

*Re: House Deposit*

Hi Joe,

You have three options;

1. Negotiate a lower deposit with the vendor/estate agent - however the vendors solicitor may not be happy with this.
2. Get a top up on your existing mortgage which will be repaid from the sale
3. Ask your bank for a short term overdraft - they may only do this if you take your new mortgage from them

Kind regards,

Sarah

www.rea.ie


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## Joe Nonety (10 Feb 2003)

*Re: House Deposit*

1. I know that the Credit Union loans don't show up when the bank does its credit history check, but I also thought that no current loan you have anywhere will show up either, i.e. that the credit check will only show up loans that you've defaulted on. Is this not the case?

2. If you wanted a €20,000 deposit from the Credit Union, how much would you need to have saved in there already, or is more to do with combined salary as is the case for getting a mortgage off a bank?

3. Once you've enough saved/earning enough, is it a formality to get the deposit off the Credit Union, i.e. will their attitude be, "If the bank is willing to give them a mortgage for €200,000, then I guess its Ok for us to give them €20,000"?

4. Is there any engineer's report/life insurance/fire insurance needed when borrowing the deposit from a credit union?

5. Won't it show up on your bank account that the €20,000 deposit came from a Credit Union account, rather than your parents account, and so making your lie "I'm getting the deposit from my parents" looking fairly threadbare?
Or even more so, when money gets directed debited from your bank account into the credit union account, which could occur before the buying of the house has gone through.


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## ClubMan (10 Feb 2003)

*Re: House Deposit*

*1. I know that the Credit Union loans don't show up when the bank does its credit history check, but I also thought that no current loan you have anywhere will show up either, i.e. that the credit check will only show up loans that you've defaulted on. Is this not the case?*

I suspect that the ICB credit rating record may indeed contain details of outstanding loans that are not in arrears/default although I'm not 100% sure on this. Maybe the [broken link removed] clarifies the situation in this regard?

I think the answers to your other questions depend on the specific CU branch in question as each CU may have its own criteria/rules for evaluating loan applications. I don't think the CU offer loans secured on property so I assume surveys/insurance/etc. are not relevant.


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## Liam D Ferguson (10 Feb 2003)

*Re: House Deposit*

ClubMan's right - the ICB records all loans of an individual from participating lenders, whether or not there have been payment problems.  Arrears and other payment problems will be noted as well as prompt payments.


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## weathergirl (10 Feb 2003)

*In Reply*

Joe Nonety, 
Ø&nbsp &nbsp &nbsp &nbsp As stated previously, any loan you have out except credit union loans will show up because your credit record will be stored on computer under the aforementioned data act – regardless of whether you have defaulted or not! However, you can check your credit record and you can make any amendment if you feel that there may be a mistake in your record. 

Ø&nbsp &nbsp &nbsp &nbsp The size of the loan you get from a credit union is not based on salary as the banks do – it is to do with your savings and your credit history with the credit union. For instance in my union you can only take out a first loan of 3 times what u have saved to a max of €6,000 … it goes up slightly after that but depends on your record with them. Plus, when you have a loan with them, your savings are frozen (so as to ensure that you pay back). 

Ø&nbsp &nbsp &nbsp &nbsp Given the above, you are not going to get your deposit but may a few grand towards it! 

Ø&nbsp &nbsp &nbsp &nbsp In my credit union there is already insurance at no extra cost– I think it’s a basic package of twice whatever you have saved with them….but contact your own credit union for details or the Irish league of credit unions at 614 6700 / www.creditunions.ie 

Ø&nbsp &nbsp &nbsp &nbsp The money won’t show up as coming form your credit union account because you are given it as a lump sum (as amounts are far less than what a bank would loan) so you can take out as cash, put into your account & pretend it was from you parents! – the bank will ask you for a letter from your parents sometimes to verify!


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## Joe Nonety (11 Feb 2003)

*Re: In Reply*

Thanks Weathergirl. That's all I need to know. I guess I'd better start saving. My first costcutting measure is to switch to Beamish - God help me!


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## Sarah (22 Jul 2003)

*Credit Union Loan*

I thought everyone borrowed from the credit union for their deposit!

If you want to borrow more than 3 times your savings, you should save for a few months, and borrow a small amount and pay it off asap (no penalties for early repayment).  That way, you can borrow up to 5 times your savings (in most credit unions) on your second loan.


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## ClubMan (22 Jul 2003)

*Re: Credit Union Loan*

Obviously the prudent thing would be to avoid taking on the burden of more debt than one can comfortably service particulary in the worst case scenario of a few percentage points interest rate increase.


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## deadlybuzz (24 Feb 2004)

*credit union?*

my credit union has been known to be very flexible regarding loans to members,but i'm anxious to know the following:

1)does the credo have a set max it can lend you and
2)are the loan terms the same as personal loans i.e. five years.
obviously the length of term will determine the affordability of my monthly repayments,so ten years would be ideal


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (24 Feb 2004)

*Re: credit union?*

I'm not sure if there is a set maximum that CUs will loan to members but as far as I know the maximum loan will be dictated by your shareholding/savings with the CU (e.g. some multiple dependent on ability to service the loan). The criteria may even vary from one CU to another. Apart from that you agree a particular term and repayment schedule with the CU when taking out the loan. Ideally you stick to this but CUs are generally flexible in accommodating members who, for whatever reason, need to vary this schedule at some point. Note that it is often difficult to compare CU loans with loans from other financial institutions (particularly on real cost/APR). This topic contains a lot of useful reading on this and related issues:


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## deadlybuzz (25 Feb 2004)

*re:credo*

thanks O, found the cu debate very interesting,not to mention an eyeopener!


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## yp (21 Aug 2004)

*Credit Union*

would it not be possible to pay back the credit union loan within a year of buying the house by remorgaging the house for that amount,telling the bank you want to make home improvements?that way u will not be in debt to the CC and u will own a house?


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## rainyday (21 Aug 2004)

*Re: Credit Union*

Hi YP - That might be possible, but it would depend on continued growth in property prices, which is by no means guaranteed. You'd certainly want to have a contingency plan in place to cover the scenario where property prices remain flat or even drop.


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## yp (21 Aug 2004)

*Remorgage to pay of CC loan deposit*

yes i was thinking of doing that.i mean even if house prices go down,the fact that i got a mortgage for 90% of the value of the house means i could remortgage for 100%,this would mean i could pay of the CC loan,keep the repayments at the same level by increasing the duration of the loan,and own a house at the end of the day! how long after getting a morgage does a bank allow you to remortgage(would they suspect on what u were doing)?
thanks
yp


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## rainyday (22 Aug 2004)

*Re: Remorgage to pay of CC loan deposit*



> the fact that i got a mortgage for 90% of the value of the house means i could remortgage for 100%


I don't think the bank will allow 100% remortgages. They will want to keep the same maximum LTV (loan to value) ratio (i.e. 90%) - so you'll be relying on the house increasing in value by approx 10% to implement this plan.


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## Guest (22 Aug 2004)

*Re: Remorgage to pay of CC loan deposit*

I suppose you could remortgage for 100% of the original purchase price if the market value has increased sufficiently by the time that you go back to the lender? Perhaps that's what was meant by the above?


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## jock04 (24 Aug 2004)

*Credit unions*

I heard recently that Credit Unions now have to disclose any loans you have to mortgage lenders.
Anyone know if there is any substance to this?


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## lawbones (24 Aug 2004)

*Its possible not probable (yet)*

Yes. The old 'deposit from Credit Union and Mortgage from bank' scnario is becoming an endangered species.

Credit Unions were not members of the Irish Credit Bureau in the past. Therefore they didn't check your maybe dismal records with banks and they did not report your maybe dismal record with them either. 

This splendid isolation is coming to an end as SOME of the 500 Credit Unions in the Country join the ICB . I am not sure which ones . 

The upshot is that the Bank MAY find out where you got that deposit where they could not easily do so before  before !   Only about 10% of Credit Unions will join If I remember but they will tend to be bigger ones


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## Spudie1 (24 Aug 2004)

*Credit Unions*

yeah I heard that the League of Credit Unions are under major pressure to disclose all borrowings, should be interesting to see the level on undisclosed borrowings out there

by the way, lenders normally ask for 3-6 months bank records when applying for a mortgage, so if there are standing orders to your credit union, they will ask for a statement, same way with people who have deductions on their payslips to credit unions, this can catch people out

also lenders are obliged to query lump sum lodgements to bank accounts under the money laundering legistlation, so 'gifts' from parents will more than likely have to be proved fairly soon, ie copy of parents bank records to show they had the money in the first place


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## lawbones (24 Aug 2004)

*Money Laundering Considerations Apply*

Too much of it in a very few Credit Unions, also downright fraud. The Credit Bureau is accessible to the Guards as well as the banks and will provide heads up of strange 'loans' as soon as they are granted . 

One credit union is being very closely watched as it is at risk of being used in large scale 419 fraud . If it does not cop on it pronto will be shut down soon .  

These risky ones constitute only about about 10 out of 500 and are normally in big cities. By comparison I would point out that the eircom employees who got €100000 each from their windfall this year managed to bankrupt their own credit union at the exact same time. 

What a bunch


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## Guest (24 Aug 2004)

*Money Laundering Considerations Apply*

> The Credit Bureau is accessible to the Guards as well as the banks and will provide heads up of strange 'loans' as soon as they are granted .

But aren't CUs (and the loans that they grant) still outside of the scope of the Irish Credit Bureau or are some or all CUs no participating?



I think the issue of legitimate loan disclosure between the CU or the CU member and other lenders is a different one to the issue of alleged fraud and other shenanigans in some CUs (or tax evasion in most as a result of the erstwhile laws governing taxation of CU accounts and self declaration/assessment of interest/dividends).

For what it's worth the current rules regarding taxation of CU accounts is outlined here:

[broken link removed]


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## lawbones (24 Aug 2004)

*Credit Unions and ICB*

some are participating in the ICB or are just about to but not all of them .

some are being 'made' to and some 'choose' to and some have good enough systems that they don't 'have' to if you see my meaning  .


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## jock04 (24 Aug 2004)

*Credit unions*

Thanks all.
looks like the net is about to tighten,though for reasons of money-laundering rather than young decent people trying to scrape up a deposit. Maybe another step towards 100%  mortgages like they seem able to offer in other countries without bankrupting the population.
Thanks again for the updated info


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## jdwexford (1 Sep 2004)

*Re: Money Laundering Considerations Apply*

"eircom employees who got €100000 each from their windfall this year managed to bankrupt their own credit union at the exact same time. "
Could you clarify this please?


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## ragazza (8 Mar 2005)

*Re: Money Laundering Considerations Apply*

A reply to an earlier question in this thread : my credit union said the max that would lend is E30k. (maybe other CU have different maxima).
In general I find that CU ask very few questions before granting a loan, in particular if you have a good credit history with them. 
I recommend if you are planning to take a big loan from the CU, to take a small one first and pay it off with no problems. (Note you have to have the first loan FULLY paid off before they will grant you the new bigger one).


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## RainyDay (2 May 2005)

*Re: Credit Unions and ICB*



			
				lawbones said:
			
		

> some are participating in the ICB or are just about to but not all of them .
> 
> some are being 'made' to and some 'choose' to and some have good enough systems that they don't 'have' to if you see my meaning  .


The is an interesting update in today's Indo on the progress (or lack of same) regarding use of ICB by credit unions.


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## RainyDay (16 Apr 2006)

*Re: Money Laundering Considerations Apply*



> But aren't CUs (and the loans that they grant) still outside of the scope of the Irish Credit Bureau or are some or all CUs no participating?


According to today's Sunday Business Post, some 32 CU's have applied to join the Irish Credit Bureau.


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## deem (18 Apr 2006)

I would be careful about getting a credit union loan, and thinking it won't show up on a review by a mortgage lender. Many credit unions have become members of 'ICB?' and their loan information is available to lenders. I had loan with Tullamore Credit Union, and thought as above that it wouldnt show. Didnt declare it as had funds to repay loan, but was waiting for cash to come from various sources in Uk to clear. 

Be sure your local credit union is not reg before you go this route, could you not consider a 100% mortgage


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## Newbie! (18 Apr 2006)

how can you check which CU branches are registered with ICB?


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## Newbie! (18 Apr 2006)

just found this on a particular credit union site...

_"A condition of a credit union using such a service (ICB) means that they must share credit agreements and repayment history. This can only be done with permission from the credit union member, both at loan application to look up the person in respect of other loans and also in respect of repayment of this loan"_


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