Borrowing after credit check??

Re: Separate point

For fear you won't sleep, here are the answers (I'm beginning to suspect you fear this might actually work out for me!!):

Q: What level of interest rate increases have you built into your analyses?

A: Like everyone who attempts to budget for buying a home these days (.........and not 10 years ago ;-).....) I have estimated what my repayments might be should interest rates rise sharply (very sharply, which, inevitably, they will). I am still happy with the figures. I currently earn three and a half times my monthly mortgage repayment and that salary is guaranteed to rise each year. I am, therefore, as confident as anyone can be in this situation.

Q: I presume you are referring to a mortgage broker? He has no long-term interest in your welfare. His sole interest is in closing the mortgage deal so he gets his commission and/or fees. If he can talk you into taking out a bigger mortgage in order to maximise his commission, he will probably do so?

A: Incorrect, I was referring to advice received directly from the bank with which I am taking out a mortgage. I am fully aware brokers are only interested in their commissions – that's why I didn’t use one!

Q: When I got my mortgage 10 years ago, the maximum available was 95%. Why do you think the banks will only lend 92%, given that they are in the business of lending money?

A: I repeat: that was 10 years ago. If you were familiar with today's practices you would know that the general 'policy' is a 92% loan, unless you belong to certain professions (mainly medical). Yes, of course, they're in the business of lending money but not lending 100% the cost of a new home.

Q: So is there no property (maybe smaller, or in a less-attractive location) which you could fund without having to borrow a deposit elsewhere?

A: You didn't read my earlier posts, I don't need to borrow my deposit, only the stamp duty. Why not buy in a less attractive location? Why on earth would any one do that when they can arrange to borrow their stamp duty from a credit union (as the bulk of first time buyers do these days), can afford to repay the loan and, thus, end up living in a decent area, in a decent home, which they can afford?


I'm detecting an extraordinary begrudging, almost resentful tone from existing home owners on this site towards those attempting to buy their first homes. Rather than being encouraging you are opting to be niggardly, mean-spirited and alarmist, as if we are entering this process in the belief that our purchase is no more significant nor costly that a bag of spuds. Chill out everyone, and don't be so begrudging…..mind you, this IS Ireland!
 
Re: Separate point

On second thoughts....I'm really sorry that I bothered posting the last response.

Abuse deleted
 
RE:Seperate Point

I have to say I agree with 2004XYZ here. There was too much negativity towards what she is trying to do....get on the property ladder in the only way a person can.

I think it was a bit unfair by Chord of Souls to come back with "seperate point".
Especially....... "Maybe you can repay it in today's low-rate environment, on the salary you currently enjoy, but will this always be the case? Lenders' credit policies are based on many years of experience of many sorts of economic environments"

It has been said on this website on many occasions that nobody has a crystal ball regarding interest rates and job security and if that is always to be the case we can only plan for tomorrow on what we have today and make the best of it.

The way I read the thread, 2004XYZ was basically saying that she appreciated that lying/giving false information/white lies/hiding the facts....call it what you will, is not the best way of doing business but if needs be, so be it, and if the bank found out they could hardly come back to her and complain about her methods of achieving the full loan with any moral highground to stand on.

If the average house buyers were to play it by the book
and be totally honest with the financial institutions then the majority of houses that would be sold nowdays would be to homeowners with massive equity in the property they bought in the last 10-20 years.

House buyers took a chance back then when interest rates where high and I am sure they worried then about what would happen if rates went up even further.

Its no different now to when it was then.

Rgds
Lapxp
 
Re: RE:Seperate Point

Hi 2004xyz - Don't shoot the messenger. You may not like what I have to say, but don't attack me or label me for saying it. You can of course choose to ignore me

Let me clarify a number of issues;

I never made any comment that you should or shouldn't proceed with your purchase. I don't really have an opinion on this, as there is insufficient information available. I would never discourage any FTB from proceeding with a purchase which they can afford. Indeed, I have a track record on this board of encouraging FTBs not to try to time the market, and to buy when they see the house they can afford. I clearly understand that most people have to stretch themselves with their first house purchase. Indeed, I recall having to borrow £3k at short-notice from a family member to be repaid from the FTB grant, when a promised gift from elsewhere failed to materialise. I recall living for over a year on concrete floors & floorboards as we could not afford carpets. I recall walking to school in bare feet after working an 18 hour shift down the mine yada yada yada....

I asked some questions which raise some important issues with you and all FTBs should be thinking about. The absence of specific answers (i.e. what actual level of interest rate rises did you build into your calculations, why do banks generally not lend 100%) is somewhat worrying to me.

However, the most worrying comment is 'If you have nothing encouraging to say PLEASE say nothing!' - that is contrary to the culture here on AAM. The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions. If you only want encouragement, I'd suggest you are posting in the wrong place. If you want information, stay around here.
 
Re: RE:Seperate Point

However, the most worrying comment is 'If you have nothing encouraging to say PLEASE say nothing!' - that is contrary to the culture here on AAM. The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions. If you only want encouragement, I'd suggest you are posting in the wrong place. If you want information, stay around here.

Have to agree with Rainyday there.
 
The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions.
Im just wondering so, what do rainyday and clubman recommend that 2004xyz do to raise the stamp duty for her house. Also have they any other opinions on what FTBs should do when attempting to raise a deposit for a house? What other options are open to us ?? (apart from the borrowing from parents route which i have already expresed an opinion on!)
 
.

I don't believe what I do for a living is anyone's business on Askaboutmoney.com. I choose to remain anonymous, as do all the other posters on this thread (with the exception of Sarah Wellband). If I was trying to use the board to plug a particular commercial service, I could understand why the Moderators would seek for me to clarify if I had a link with that service, but I'm not. I'm expressing some personally-held opinions. So please don't try to personalise this debate by surmising about what I do for a living. Whether I'm a student on grant money renting a bedsit or a multi-billionaire is irrelevant to my opinions.

It seems some posters don't like my opinions. That, surely, is the nature of debate.

Of course I'm very aware of the pressures on home-buyers. I am aware that many people are faced with a choice of lying to a lender to secure the loan they require, or losing the house they like (and possibly seeing it soar further beyond their means).

But why not admit "What I'm doing is unethical but I'm going to do it anyway because I feel I have to?"

In relation to my second point, I am simply stating that borrowing left, right and centre to fund a house purchase, when professional lenders are suggesting you can't afford the overall package is a very risky business.

Now I feel I have made my points clearly enough. Do feel free to disagree with them, but please refrain from any attempts to personalise what is otherwise a straightforward debate.
 
Options would include;

- Save for a period until the funds for stamp duty are available without borrowing
- Purchase a smaller/cheaper property to avoid the need for short-term borrowing.

Note that I did not say and am not saying that 2004XYZ should absolutely not borrow for the deposit. I am saying that she should think & plan very carefully before going down this road.

The other important issue in this debate is that by going out & borrowing, the buyers are indeed fuelling the property price increases that we have seen over recent years, at the expense of the interest payments which they will be facing during their first few years as home-owners. It is a vicious circle.
 
Im just wondering so, what do rainyday and clubman recommend that 2004xyz do to raise the stamp duty for her house. Also have they any other opinions on what FTBs should do when attempting to raise a deposit for a house? What other options are open to us ?? (apart from the borrowing from parents route which i have already expresed an opinion on!)

It is quite possible that in some cases people have to face up to the fact that they cannot reasonably afford to buy without lumbering themselves with an unmanageable level of debt. Until they can it might be prudent to hold off.
 
Points taken and thanks for the advice, however i have stalled on buying a house for the past few years for some of these reasons, and regret it now as while ive waited, ive seen house prices soar. Ive now decided to go for it because if i wait any longer ill never be able to afford a home.
Therefore im wondering if it was a toss up between stopping contributions to an SSIA account (which is due to mature in April 2007) and paying all the relevant penalities DIRT etc .....or borrowing for a deposit and paying off this debt at the time that this SSIA matures what advise would ye give?
 
Terms and conditions of SSIA

I think it clearly states in the Terms and Conditions that you may not borrow to fund an SSIA.

Seems to be a grey area in this case though, as you are borrowing for a deposit, while continuing to pay into SSIA.

You can stop contributing after year one with no penalties that I am aware of.

You will have to pay DIRT whether or not SSIA reaches maturity
 
Re: Terms and conditions of SSIA

Seems to be a grey area in this case though, as you are borrowing for a deposit, while continuing to pay into SSIA.

While I'm no tax expert, I don't think that it's a grey area at all. If the SSIA contributions are made from disposable income and one borrows for other purposes then one is not borrowing to fund the SSIA and there is no breach of the relevant rules.

You can stop contributing after year one with no penalties that I am aware of.

Yes.

You will have to pay DIRT whether or not SSIA reaches maturity

Yes - but the difference is that SSIA savings maintained to maturity are subject to 23% tax on growth/interest only, while early encashments are subject to 23% tax on the lot. Note that the SSIA early encashment/maturity taxes are not strictly DIRT.
 
Re: Terms and conditions of SSIA

Kerry, many thanks for your comments, much appreciated.

Abuse deleted - I am not wasting my time trying to sort out if there is any substantial point being made
 
Re: Terms and conditions of SSIA

OK - So you are determined to shoot the messenger because you don't like what you hear. So be it.

Funnily enough, the person who is prepared to give you the hard message (regardless of how unpalatable it is) may well be a better friend to you than the person who gives you loads of huggy/kissy/feely encouragement and then watches you falling over the cliff.
 
Re: Terms and conditions of SSIA

Goodness me, someone seems to be taking this all very personally. I’ve been accused of being disingenuous and dishonest, among other things. I wish you’d just realise that in life some people are going to disagree with your views and some people are going to agree with them. If every time someone disagrees with your points, you end up having a little rant and accusing them of dishonesty (etc.) like the one you’ve had above, I actually pity you.

How much clearer do I have to be? Lying to financial institutions is unethical. Lying to individuals is unethical. LYING IS UNETHICAL. I’ve said it before but I’ll say it again. It may be understandable, but it’s unethical. If you feel like lying on your mortgage application, go right ahead. I’m not even criticising you for it. If I was personally under the same sort of pressures, I might even consider doing the same. But if I did, I’d admit it was unethical. I wouldn’t try to claim it wasn’t just because of who I had lied to, or how I felt about their ethics, or what the pressures were that forced me to do it.

I think we're perfectly entitled to ask what line of work you're in…

Why? It’s obviously news to you that some of us can hold and express opinions that aren’t necessarily influenced by how we choose to earn a living or our personal circumstances generally. This is known as objectivity.

But seeing as you seem so hung up on what I do to earn a crust, I can tell you that I do NOT work for any financial institution. I run and own a small business. My business is of a financial nature. In theory, I should have a vested interest in ensuring that more and more people take out bigger and bigger mortgages. This does not colour my opinion about ethics.

Now are you to apologise for calling me disingenuous and dishonest?
 
Re: Terms and conditions of SSIA

I think we're perfectly entitled to ask what line of work you're in…

Actually you're not.

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Re: Terms and conditions of SSIA

This topic seems to have run its course so I'm closing it now.
 
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