Mortgage, Savings and Poor Credit History

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ircs

Guest
Hi guys the following is an outline of my situation:

I have a partner and two kids and our income is as follows:

From My Business (open 9 months) approx €3500 per month
From My Partners business (open 3 months) approx €1500 per month

Total monthly income is approximately €5000

We have credit union savings of €15,000 which we have accumulated over the past 9 months.

I have a very bad credit history but all loans have been cleared.

We are saving approximately €1600 per month

Our current rent is €1000 per month.


I want to buy an 2 bedroom apartment in North Dublin. The owner is willing to accept €60,000.

I know someone who is willing to rent it from us for €600 per month

If I get a mortgage for 45,000 the repayments would be about 200 per months

But if i could get a credit union loan then I could pay 850 a month and the loan would be paid off in one year.

My question is: Is there any chance that the credit union would give me a loan for 40-45k? My particular credit union do not carry out credit history checks.

Would any bank give me a mortgage considering my poor credit history?
 
I doubt that any bank would lend to you based on what you say. Not sure about CUs. But some questions/observations...

Do you already own your own home? Mortgage free? And the proposal here is to buy a rental/investment property?

As far as I know CUs normally expect loans to be repaid over 5 years max so the repayments on €45K over 5 years @, say, 9% would be around €900. By having €15K on deposit/in shares the effective cost of borrowing an effective €30K would be higher - probably c. 11-12%.
 
Hi Clubman,

Thanks for your reply.

I am renting but, as I presumed that I couldnt get a mortgage because of my poor credit history, I was thinking that this would be the best way to get on to the property ladder - by getting a loan from the CU and buying a cheap apartment.

I have no problem paying 900 a month to the credit union for 5 years because at the moment we are saving 1500 a month even though our own rent is 1000.

I suppose the best thing for me to do is approach the CU and see what they say.
 
Very impressed with the 'profit' you both have from new business. Presumable you have to pay tax, is this factored into the figures you've posted?

Can you give more details on why you have a bad credit rating, does your partner have a good credit rating?
 
ircs said:
I have a very bad credit history but all loans have been cleared.
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Hi ircs

Your loans, whether they were paid off or written off, will only be recorded by the Irish Credit Bureau for five years after termination. So if your loans ended more than five years ago you don't have any credit history at all.

I think too much emphasis is placed on this idea of a credit rating. Check out my article on it on my blog for more explanation, google Getthepennyrolling blogspot, that's me
 

Hi Bronte thank you for your reply.

Basically we both worked in very low paid jobs for the first 6 years that we were together. We struggled to pay rent etc.. But to be honest we didnt manage our money very well so it was mostly our own fault. We both have a terrible credit history. However I have now paid back every penny that I owed and my partner is paying off her debts now as well.

After 6 years and two kids, we decided that we had enough working as employees and we set up our own businesses.

Beleive it or not I set up my business with an investment of €1200! The business is related to the experience I have gained in the past 5 years but actually has nothing to do with the work experience that I have! The business is continuing to grow.

My partner set up her business with an investment of €1000. Her business is directly related to her work experience.

Its ironic that we struggled during the boom years but that now, during a very difficult recession, we are finally seeing some success!

We consider ourselves extremely lucky to be in a situation were we dont have to worry about not having money to pay bills etc..

PS: Figures include relevant deductions for tax.
 

Hi Mccabes2,

Very interesting article on your blog.

Unfortunately it will be another 4 years before my history is wiped from the ICB!
 
Thanks ircs. Interestingly, I had my own file checked by the ICB recently for work and it came up completely clear even though my student loan is not totally paid off. So they are not totally efficient over there in the Credit Bureau. Maybe that will change if the powers that be ever come across these posts though..
 
mccabes2 said:
So they are not totally efficient over there in the Credit Bureau.
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The ICB just collate/record the information sent to them by lenders. If the lender doesn't send the info in at all or in a timely fashion then the ICB records may not be accurate.
 
You're right Clubman it could be my lender who has omitted it, thought they are singed up with the ICB and my loan included a declaration of consent that they could pass information on to be ICB. Who knows.
 
IRCS you should get your credit report as a starting point. Do you know what debts are on there, is there any possibility that those you have paid back would 'remove' your record from the ICB, you could try asking them, particular if you have a good relationship with them now.

In any case you would want to think about getting a 20% deposit together and show for about 2 years that the business is doing well and that you are a good saver (regular). New self employment status is not good from a banks point of view. I imagine they will be looking for some kind of accounts signed off by an accountant. A broker or bank will give you more info on this.
 
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