Mortgage broker has got me loan approval from ICS - the most expensive lender

I got my approval in principle a few days ago. Had a quick look at the sheet of paper and i seen it was from ICS. I told the mortgage broker that i'm concerned on getting the mortage from them,as they seem to have the highest rates at the moment. She said not to be worried, and that at the moment my priority is to get the mortgage,no matter what the rates are, and that no matter what bank i go with i 'll endup paying the same amount over years, as the rates change.
I am obiously unexperienced when it comes to this and i am trying to make a bit of research here and there. I was wondering if this sounds right to yous? Also... if i do decide to get a mortgage from them, would i be able to change the mortgage provider later?

I would be concerned at this statement...

She said not to be worried, and that at the moment my priority is to get the mortgage,no matter what the rates are, and that no matter what bank i go with i 'll endup paying the same amount over years, as the rates change.

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It is true that interest rates and competitive positions can change over the duration of a mortgage. But that shouldn't stop you/her from trying to get the best deal available now.

Ask her to put in writing the following: -

• Which lenders she actually does business with.
• Which lenders aside from ICS she has considered for your mortgage.
• Why she has discounted the lenders other than ICS.

Post the reply back here.

mihaela said:

. She said not to be worried, and that at the moment my priority is to get the mortgage,no matter what the rates are,

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That's not what one would expect from a broker. I would expect a few different quotes for you to choose from.

Yes you can move mortgage provider later provided you meet another lender's critera at that time. It will cost you though.

Why don't you post up the mortgage amount, your salary and the rate you've been offered by ICS plus your age and mortgage term and other's might know what other banks would lend to you.

Well i'm 27 single,no children, 30k a year,savings of 16.5k so far. Been saving cca 1k a month for the past 8months ( €280 montly rent, €500 in savings each month plus around €200to400adding up in my current account each month). I've worked with the same company since 2007. The only problem i'd have is that i have been employed in 2007-2008-2009, self employed (contracting the same company) in 2010 and 2011 and back on payroll from January 2012 (full time,permanent position).

I payed a visit to AIB a few weeks back and i was told they can only forward an application for €110k, so that's why i' ve decided to go to a broker (i was looking to borrow aprox. €120)
The broker seems to work with the following: AIB, BNP Paribas Personal Finance, Haven Mortgage LTD, Dublin City Council, ICS Building Society, KBC, PTSB, GAlway City Council, SENIORS FinanceIreland, Seniors Money Ireland,Cork City Council, Kilkenny City Council.

I was told she has applied to ICS and Aib, both approved, and that Aib application will take a bit longer. I know that ICS has approved me for €130, and i have no amount confirmed for AIB. This is only an approval in principle, so i don not know what rates i am getting.

ICS is charging new customers 4.8% while AIB is charging them 3.74%. That is a significant difference. The rates are standard for all customers and not tailored to you.

If you can buy a property with an AIB mortgage, that looks like the best deal and is worth waiting for.

Brendan

So AIB would process your application but you're looking for too much based on their own criteria?

I'm guessing AIB are willing to offer you 3.5 times salary. With 10K being the deposit and presumable the 6K being legal fees etc

How much are the monthly repayment with ICS, how much would they be with AIB. You mentioned you haven't been told this. You cannot decide unless you have an exact figure.

Has the broker stress tested you for increased interest rates. The introductory rates look good but be warned in my opinion interest rates are only going to go one way in Ireland. What is the mortgage term.

Did you try Bank of Ireland and I think PTSB have a new good rate for first time buyers.

Do you think that maybe rather than looking for the max at 130K you'd be better off on a lower amount of 110K. A lot of first time buyers try and go to the max but it's not always a good idea.

Would you be better off saving for another year and then having a larger deposit.

What kind of property are you buying, have you factored in the costs of home ownership.

Interesting how rent is considered as savings. Just an observation.

No,i have no confirmation about the rates. That what has me concerned. And i am not even sure if you get your rates with the approval in principle, or with the loan offer.

The mortgage term is on 35 years ( but planning to over pay if things go as planned)

I was considering a 2 or 3 bed townhouse in the country side. The reason i was considering the rest as savings is because one bedroom will be rented. The roomates which i've been living with for the past 5 years will be moving with me. They are saving for a house also, but they want to buy it with cash so is cheaper for them to move with me rather than renting an apartament.

mihaela said:

The mortgage term is on 35 years ( but planning to over pay if things go as planned)
.

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Others disagree but I think 35 years is way too long.

You mention countryside, how far is the commute, how much would the property rent for, would it rent easily. These questions are pertinent to see if the renting to friends is a long term viable option.

Can you afford a mortgage if you didn't rent one room?

For the countryside 3 bed is better than 2 bed. For cities, depending on location that is not so important.

Well i know that the longer the term is, the more i interest i'll end up paying. I plan to repay that in about 25 years, but just in case if things don't work out as planned, then at least my repayments are a bit smaller.

There is no commuting. The house is in the village where i work. I'm renting a 4 bed for €900 at the moment, so i figure i'll get around €700 to €800 for a 3 bed. I passed thru the village the other day and one of the local actioneers had a big sign in the window saying that there is a huge demand on 3 beds for renting at the moment. Checked the internet last week and there was only6 house for renting on the website. Also i'm 8miles from Maynooth.....


I figure that i'll should keep up even with a 9% interest.....hopying that i'll never get there tho!!!!

That's a good rental area. I know someone renting there. Rents holding up well. Sounds good, others from the area will maybe clarify more comprehensively.

If you could afford 9% then really why not try for a much shorter term, you say you mean to overpay, it's amazing how this gets forgetten in the rush to buy furniture, fix the garden etc. Personally I think 35 year mortgages should be banned as they are a key problem of the celtic tiger borrowing, but what would I know.

Mihaela, anything an auctioneer says or writes in a window should be taken with a pinch of salt.

mihaela said:

Well i know that the longer the term is, the more i interest i'll end up paying. I plan to repay that in about 25 years, but just in case if things don't work out as planned, then at least my repayments are a bit smaller.

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I fully agree with you.

The scheduled payments are much lower on a 35 year mortgage, which leaves you in control.

You can overpay when it suits you.

For the first few years of house ownership, you will have plenty of expenses and it is the wrong time to be saving by paying capital off your mortgage.

Just as a by the way, the County Councils don't give out mortgages or housing loans anymore, and all that Shared ownership stuff is gone. At least Dublin and Galway don't do it and I doubt if any other councils still do.

When I went looking for a mortgage several years ago, I went to the Irish Times list of mortgages picked the cheapest from that list and got approval. I also went to most of the other main lenders to see if there was any reason to pick them. Since I was puzzled by why people used brokers for something so straightforward I also as an experiment went to a broker to see if they maybe could get a cheaper rate than was being advertised.

The broker found a rate with ICS which was around 2% higher than the best quote I’d got myself from a different lender. By that stage I’d several quotes directly from mortgage providers. The broker had found me the worst rate of all the quotes I’d received. Even BOI who own ICS had a better rate. Clearly there was some advantage for that broker in selling ICS mortgages.

My conclusion was that brokers are either for people who’re too worried/shy/lazy/busy to deal with lenders directly, or possibly for people who’re looking for a mortgage that in reality they can’t afford. It doesn’t seem to be about a method of getting the best value mortgage possible.

ashambles said:

My conclusion was that brokers are either for people who’re too worried/shy/lazy/busy to deal with lenders directly, or possibly for people who’re looking for a mortgage that in reality they can’t afford. It doesn’t seem to be about a method of getting the best value mortgage possible.

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As a broker, I'd have to disagree with this. From what you're saying, you went to a bad broker. I sympathise with you. There are procedures in place where you can complain if you receive bad advice from a broker and the broker can be sanctioned or put out of business in extreme cases. But you seem to have concluded from this experience that all brokers operate like this. This is certainly not the case.

I have had direct experience of doctors who were incompetent, but I don't conclude that doctors are incompetent. I have had experience of solicitors who were dishonest and greedy, but I don't conclude that solicitors are dishonest and greedy.

I know many brokers who put huge time and effort into getting the best deal they can for their clients.

I know many brokers who put huge time and effort into getting the best deal they can for their clients.

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I’ve no doubt that’s true. However unfortunately it’s an industry that individuals will only interact with a couple times in their lives so there’s little chance to correct first impressions, so far I’ve got a failure count of one out of one.

The existence of ICS doesn’t reflect well on brokers. ICS seems to be a way for BOI to sell its mortgage product for a higher price to people who don’t want to do their own research.

As far as I know ICS mortgages are only sold via brokers. Brokers know that there is a cheaper equivalent product from BOI. If all or the vast majority brokers wanted the best for their customers then ICS would cease to be able to sell new mortgages.

Currently ICS have every mortgage rate at 0.3% higher the equivalent BOI one. That’s around 5k extra over the lifetime of a mortgage per 100,000 for the exact same mortgage. Why go with them? In what possible situation would it be better for a customer to take the ICS version of the BOI mortgage?

I've put thru a single appliant form. There will be no shared ownership or anything. Is just that my friends are helping me and i'm helping them. I suppose that is suitable when u are still young and single and u don't have a family yet.

I went thru a broker, not because i am lazy/ shy, but because AIB's answer and because i do not have a P60 which is needed for my application. I could get a few months untill i get my 2012 one, but then that's another 4 months of paying rent by €280 is 1120. If i get the mortgage from ICS and the interest is too high..then i can change mortgage providers right?? which is gonna cost me around €1000. So looks like is the same thing really....Plus i qualify for TRS if i buy before the end of ther year...
I could be wrong, but that's the way i think this at the moment.

Thank you for all your advice guys. It is greatly appreciated

ashambles said:

The existence of ICS doesn’t reflect well on brokers. ICS seems to be a way for BOI to sell its mortgage product for a higher price to people who don’t want to do their own research.

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I would say that the existence of ICS doesn't reflect well on Bank of Ireland. Bank of Ireland don't distribute mortgages through brokers, so a broker cannot by law recommend a Bank of Ireland mortgage to a client. A mortgage broker is only permitted to recommend the products of institutions with whom it holds agencies.

Why Bank of Ireland chose to distribute through brokers via ICS at often higher interest rates when AIB can distribute through brokers at the same interest rates as their branch network is beyond me.

It is for this reason that I get annoyed when I see mortgage brokers advertising that they "deal with all the banks" when this is clearly not true. Bank of Ireland don't deal with brokers. Neither do National Irish Bank or Ulster Bank. When dealing with a mortgage broker, the broker should, at the outset disclose which lenders s/he deals with, often through the Terms of Business letter.

mihaela said:

I could get a few months untill i get my 2012 one, but then that's another 4 months of paying rent by €280 is 1120. If i get the mortgage from ICS and the interest is too high..then i can change mortgage providers right?? which is gonna cost me around €1000. So looks like is the same thing really....Plus i qualify for TRS if i buy before the end of ther year...
I could be wrong, but that's the way i think this at the moment.

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There's flawed logic in this Mihaela. You cannot change mortgage provider easily. Do not be fooled into thinking this is easy. And their are large costs involved. ICS is like the subprime version of BofI and to be avoided at all costs in my opinion. What is 4 months in a life time. If I were you I'd wait until the next budget as you never know the government might try to stimulate house purchases with more TRS, and they might also put such a hugh property tax burden that it will bring house prices down further which would be of benefit to you.

Bronte said:

They're flawed logic in this Mihaela. You cannot change mortgage provider easily. Do not be fooled into thinking this is easy.

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+1

At present it's difficult to switch lenders because many lenders just don't want to take on loans from other banks. AIB won't take on a loan from another bank, Bank of Ireland will only take one on if the loan is less than 50% of the property value etc.

ashambles said:

Currently ICS have every mortgage rate at 0.3% higher the equivalent BOI one. That’s around 5k extra over the lifetime of a mortgage per 100,000 for the exact same mortgage. Why go with them? In what possible situation would it be better for a customer to take the ICS version of the BOI mortgage?

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3 months ago PTSB and UB had the highest %,its really just about snapshots in rates,3 months from now it will be AIB 3 months after that it may well be PTSB again etc.