Ethics and Pragmatisim - Credit Union Mortgage any safer?

B

Bebop

Guest
Hi there,

I am a first time buyer with a deposit of about €75,000 (inheritance, lucky me I know...), self-employed with a monthly income of €2,239 before tax.

I had a PRSI which I paid into at the top rate for the last 3 years of it and the minimum for the first 2. I put it all into the credit union on November 2006 and since then have added €500 a month to it (though this is really supposed to be savings to cover tax, and I withdrew €3,200 last month for tax and then upped the monthly deposit to €700). So hopefully I may have a decent enough credit rating?

My question is this - I am pretty serious 'leftie' and am uncomfortable with going for a mortgage which is part of an international banking system that I feel is grossly unfair to the majority of people in the world. But I really feel ready to settle down, I'd love a place of my own and I don't have the money to buy one outright!

So I was thinking that taking out a mortgage from my credit union might be more ethically fair. I notice it is more expensive than any of the rates quoted online (6.7%) though and I'm wondering what you guys at askaboutmoney think? There must be some other benefits to the credit union mortgage or surely no one would use the service? Because my wage is not going to rise in the future (I'd be pretty certain) I need to be careful not to get out of my depth - I am planning to rent out a room in the house, but don't think I could charge much more than €450 in the current climate...

Thanks in advance for any advice,

Nicki
 
I think it's really honourable to consider the ethics of what you're doing, but do look after yourself. If you think your salary is unlikely to rise in the future it's important to get the best deal you can.

With a good deposit you should be able to get a much better interest rate than what the credit union is offering. Go for the best rate you can get for yourself. You can always use some of the money you save to support a charity directly if you wish - or it may leave you in a better position to support a relative get a foot on the property ladder in the future.

I think the ethos of the credit union has changed over the years anyway. They have got as bad as the banks for advertising loans instead of encouraging people to save.
 
That's interesting thanks Cheeos - I guess it's less irresponsible marketing that I'm worried about though than what the thousands of euro (I am staggered by how much the interest adds up to!) they're going to make out of me will be spent on!

Sunny - yes my local Credit Union offers mortgages, I don't think they all do though.
 
My local credit union are brokers for EBS. But i think it's just that (a brokerage) and i don't know what that's worth to the C.U. in monetary terms. maybe someone on here might know what commission brokers earn?


i totally agree with the comment about credit unions advertising loans. it makes me really mad to hear their radio ads offering credit for (and i quote) "your winter holiday" !!!!
 
woodbine said:
My local credit union are brokers for EBS. But i think it's just that (a brokerage) and i don't know what that's worth to the C.U. in monetary terms. maybe someone on here might know what commission brokers earn?


i totally agree with the comment about credit unions advertising loans. it makes me really mad to hear their radio ads offering credit for (and i quote) "your winter holiday" !!!!
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You hit the nail on the head. Credit Unions dont offer mortgages from their own funds but merely act as a broker where they offer the funds of EBS or KBC on a tied agency basis. They earn about 1% of the loan amount as commission, but ultimately the OP will have borrowed money from EBS or KBC and not the credit union
 
Wow I'm really glad I asked thanks everyone - much as I want to support my local CU I see no point in forking out extra for no reason...
 
"Wow I'm really glad I asked thanks everyone - much as I want to support my local CU I see no point in forking out extra for no reason..."

If you use the CU as your broker, it shouldn't cost you extra, unless (1) you can get cheaper than EBS or KBC elsewhere (not difficult, I suspect), or (2) I'm missing something.
 
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