Mortgage refusal for 3rd time - is it time to give up?

J

joe-1

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Hi Everyone. This is my first post on here so please excuse me if much of this has been covered before.
Myself & the Mrs are hoping to get a mortgage for a self build. We have been refused from AIB, PTSB & EBS. I suppose I am posting here hoping that someone with a little experience might see something we are missing or maybe even inform us that a mortgage is just not possible for us right now.

We bank with AIB, who simply said we don't fit their criteria right now but try again in 6 - 8 months time. PTSB said that in their opinion we weren't asking for enough money to complete the build & wouldn't qualify for a larger amount. EBS refused due to my wife being employed in the construction sector.
With all this in mind, our current situation is laid out below:


Type of Property. 4 bedroom dormer self build.
Value of Property Current value €40,000; When complete €210,000
Amount of Mortgage €145,000
Term of Mortgage. 30 years
Amount of savings and over how many years €13,000
Is there a lump sum from any other source? If so give full details. Gifted Site
Age of Applicants. 33 / 34
Employment situation. Public sector/Private sector/Self employed/Contract. Both Private Sector & permanent; Chemical Engineer / Civil Engineer
How long are you in current position and are you permanent. 1.5 yrs / 7 yrs
Have you any children. No children
Have you any court orders or Judgements. None
Have you any other loans and if so full details of amount/period/% rate and repayment amounts. Wife has mortgage with mother; €154,000 remaining. No other loans
Cr. Card situation. Full disclosure. Wife has credit card (limit €5200) with a balance of €0
Have any of your existing loan or credit card monthly repayments been paid late over the past twelve months, even if you made the repayment in full a few days later? If so, how many times in the past twelve months? No
Any previous negative Cr. history by either applicant. I had credit card revoked ten yrs ago, balance of €500, since been settled.
Are your savings and rent clearly visible and identified as such in your bank accounts each month Yes
Have you gone over your overdraft limit in the past six months, even if only for a day or two? If so, how many times in the past six months? No
Did you use a Mortgage broker or are you applying directly?. Applied directly
 
Without knowing your salaries it'll be impossible to advise. The second mortgage by your wife will also put a huge strain on what they'll lend.
 
145k is the amount of mortgage being looked for? Or am I reading it differently to everyone else? I didn't read it as though they already had an existing mortgage of that amount.

Other than that if you just don't fit bank criteria based on income at the moment there is not much you can do, have you tried UB? I do see where PTSB are coming from too, you have to be able to borrow sufficient to finish the house, nothing worse than unfinished property and inability to borrow more to complete, both bank and you are stuck if that sort of situation arises, surprised the others didn't flag that one too or did you have to provide architects/engineers estimate of cost yet?

Self builds always cost more than you think and getting it completely finished on that budget is tight and you won't have sufficient income left over on a monthly basis to be able to finish it off bit by bit, which banks don't like anyway, they want a mortgage on a completed property.
 
wbbs said:
145k is the amount of mortgage being looked for? Or am I reading it differently to everyone else? I didn't read it as though they already had an existing mortgage of that amount.

Other than that if you just don't fit bank criteria based on income at the moment there is not much you can do, have you tried UB? I do see where PTSB are coming from too, you have to be able to borrow sufficient to finish the house, nothing worse than unfinished property and inability to borrow more to complete, both bank and you are stuck if that sort of situation arises, surprised the others didn't flag that one too or did you have to provide architects/engineers estimate of cost yet?

Self builds always cost more than you think and getting it completely finished on that budget is tight and you won't have sufficient income left over on a monthly basis to be able to finish it off bit by bit, which banks don't like anyway, they want a mortgage on a completed property.
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€145,000 is the amount the supervising architect advises it will take to build the house. This includes 10% contingency. There are also works completed to a value of €10,000.
 
Why does your wife have a mortgage with her mother?
Is there any rental income from the mortgage your wife has with her mother? Is this being paid in full each month?
Which institution is it with?
Could your wife sell her share of that house to her mother or in some way remove herself from the mortgage?
I would think the banks would be likely to discount your wife's salary due to her exposure on the other property thereby looking at you for the full €145k on a salary of €26k with low savings, can't say I blame them really, sorry to say.
 
Ah, now I see it, must learn to read more carefully! The mortgage your wife has would have a major impact on the affordability.
 
  • As has been said, the most likely issue is your wife's mortgage with her mother. Most lenders will assess the full repayment against her income, even if her mother pays the mortgage in practice. Can she be released from this mortgage?
  • KBC don't do self-build mortgages.
  • Stress-tested repayment on €145,000 over 30 years is around €900 per month, so you'll need to show evidence that you've been saving at least €900 per month or paying rent of €900 per month or a combination of both adding up to €900 per month. You'll need a history of at least 6 months of this.
  • You say "I had credit card revoked ten yrs ago, balance of €500, since been settled." When was it settled? If it's less than 5 years ago, it might still be on your ICB record.


 
joe-1 said:
PTSB said that in their opinion we weren't asking for enough money to complete the build
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What did the PTSB base this on? Presumably as they are in the business of lending to self build's they have a fair idea of the current price for building. Are you sure your figures are correct?
 
Bronte said:
What did the PTSB base this on? Presumably as they are in the business of lending to self build's they have a fair idea of the current price for building. Are you sure your figures are correct?
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PTSB always require a borrower to qualify for 20% more than what they're looking for on a self-build. So if the borrower produces a detailed estimate of €145,000 to build a house, PTSB will insist that the borrower qualifies for €174,000, to allow a 20% contingency, or has a total of €174,000 available between savings and mortgage.

It's debatable that 20% may be too high a figure for contingency but that's what PTSB want.
 
LDFerguson, if the supervising architect reduced the features a little & removed the contingency from the quote, giving a figure of 120K or so, do you think pTSB would go for it then? (120K + 20% contingency = 144K)
 
stephnyc said:
LDFerguson, if the supervising architect reduced the features a little & removed the contingency from the quote, giving a figure of 120K or so, do you think pTSB would go for it then? (120K + 20% contingency = 144K)
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The supervising architect initially put a build cost of €120,000 on the property. This included 10% contingency. However the mortgage adviser recommended he increase this amount.
 
stephnyc said:
LDFerguson, if the supervising architect reduced the features a little & removed the contingency from the quote, giving a figure of 120K or so, do you think pTSB would go for it then? (120K + 20% contingency = 144K)
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That would probably sort the contingency issue alright, although they might have an issue because they've evidently already had an estimate at 145K for the same house. I don't know if that's PTSB's only issue with this application.
 
joe-1 said:
The supervising architect initially put a build cost of €120,000 on the property. This included 10% contingency. However the mortgage adviser recommended he increase this amount.
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This is a common occurrence with PTSB self-build applications. The estimate includes a contingency sum already and then PTSB look for the estimate + 20%.
 
LDFerguson said:
PTSB always require a borrower to qualify for 20% more than what they're looking for on a self-build.


It's debatable that 20% may be too high a figure for contingency but that's what PTSB want.
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I think that is prudent lending. And based on anything I've ever renovated etc 20% would be a good figure. Never ever have I seen anybody come in below, never mind within budget.
 
Bronte said:
I think that is prudent lending. And based on anything I've ever renovated etc 20% would be a good figure. Never ever have I seen anybody come in below, never mind within budget.
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I agree with the prudence, but what happens in practice is often that an experienced architect and/or QS will add a realistic contingency margin into the estimate...and then a little bit more for prudence at their end...and then PTSB will come along and seek an additional 20% on top of all that again.
 
LDFerguson said:
I agree with the prudence, but what happens in practice is often that an experienced architect and/or QS will add a realistic contingency margin into the estimate...and then a little bit more for prudence at their end...and then PTSB will come along and seek an additional 20% on top of all that again.
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Well if that's the name of the game, you get your QS to reduce the figures. That's what I would do.
 
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