Refused Mortgage by BOI

Hello All.

So here's the deal. We currently have two seperate mortgages of 66,000 and 70,000. The mortgage of 66k is variable and is on a house worth at least 250,000. We aplied for a top-up of this mortgage to 140,000 in December with a view of consolidating our other loans into this mortgage. We were flatly refused by our current lender BOI. We then went to broker who messed us around completely and offered us fixed sub-prime loans. At a meeting with someone from our credit union, we were told to go back to BOI and re-apply for the mortgage. We were told by the adviser in the bank that we would have no problem in securing the mortgage, only for them to ring this morning refusing our application.

I think the main problem was that the first time around we told them we were consolidating our debts. The second time around we told them we were extending our house as we had been told to do so by the adviser in the Bank.

All in all, we are in a complete daze as to what to do now. Should we apply to AIB for the mortage or should we try another broker?

Any advice would be greatly appreciated!

Consolidating Debts seem to be a no no at the moment.

I don't know if this concerns you but I heard from a broker this morning that the banks were not giving out mortgages/loans to anyone in the construction or motor sector.

I'd say you should go to a new broker and tell them you want to extend your house. Don't mention anything about debt consolidation.

Best of luck with it.

sorry for butting in here ireland but if ceimanfhiadh changes the mortage/loan application and states its for a home extension will the bank not do a credit history check and spot any existing loan commitments

And shop around.

Ireland.1 said:

I'd say you should go to a new broker and tell them you want to extend your house.

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Would this not make the mortgage similar to one for a self build. And therefore the lender will condition valuation, estimates, architects letters & qualifications, planning permission as part of the application?

Did you wish to add the two mortgages together or did you wish to get 74K (140-66) to pay off existing debt? You can always try another bank. What is your ability to repay/service a debt of 140K? Try to think of it from the banks point of view. Currently it seems no bank is willing to do consolidation and they want people is good secure jobs with not too much debt before they will advance any money. As we didn't know your salary, job security and assets it's not easy to give you advice. Why don't you try to do the money makeover section and you may get some more options from people on AAM.

Yes I agree we should never have told the banks about the debts, in hindsight. We had no idea though. I have daggers for the adviser after she telling us we'd get it no problem the 1st time.

The second time we re-applied we said it was for an extension, as the adviser told us to do so and the bank refused as they saw we had applied for a debt consolidation the 1st time. It's very frustrating!

We do have 34k on 3 cards from from 3 different banks, so I assume that everytime a bank checks our credit report, they will show up and throw a spanner in the works for us.

Even if we said we were extending the house, their is no way in hell we could pay both the mortgage and the cards off, from the banks point of view.

All I want to do is pay off our existing debts. These consist of the cards and around 20k in the CU. Thank god they don't show up on ICB systems!

We can definately afford to pay off a 140k loan + plus our 70k existing mortgage. The repayments would be so much lower than what we are paying off now, and it would mean we could keep both properties.

All i want to know is their any bank that will even give us a second look when they see our CC debts when we say we are looking for a home improvement loan?

Age: 58
Spouse’s/Partner's age: 51

Annual gross income from employment or profession: €52,000
Annual gross income of spouse:

Type of employment: e.g. Civil Servant, self-employed : Bus Eireann Driver = Secure

In general are you:
(a) spending more than you earn, or
(b) saving?

Rough estimate of value of home 300,000 + 200,000
Amount outstanding on your mortgage: 66,000 + 70,000
What interest rate are you paying? 4.2%, 5.4%

Other borrowings – car loans/personal loans etc 7,900 Personal Loan 2 years left

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit cards? 12,300+8,750+11,900 = 34,000

Savings and investments: Zilch

Do you have a pension scheme? Yes

Do you own any investment or other property? Yes, as listed

Ages of children: 17, 15, 8

Life insurance: Yes


Also my wife has 33,000 of a pension from when she worked in England, which is locked into an Irish Life fund until she retires. Is there any way we can access this?

Your figures are not adding up. Your credit card debt of 33 plus 8 personal debt = 41 but you want a top up of 74 (140 -66)

Where is the 20K you mention in the Credit Union, is it a loan that you have ommited?

There is a serious overspending of salary but this is probably taken up by the interest and debt payments on the credit cards and loans.

Your mortgage to house value is good. Can you do the figures again and maybe tell us your take home pay plus the payments you make on the debt. I'm assuming with the amount of debt on the credit card you are now just paying minimum payments.

How is the rental property performing, is there an extra income from this? If not would you consider selling it to repay all your debts and to get you back on track.

While I believe it's best to tell the bank what they want to hear in relation to their form filling I would not be hiding debt of this magnitude. Your agent would really not be helping you long term to face up to the debt if she had done what you said.

Solutions so far are to get MABS to help you negotiate your debts, particularly your credit card debt which is really costing you, they may be able to get the interest frozen and the bank may agree to a repayment plan, can your spouse get a part time job (youngest is 8). Is the 17 year old in Education and if not are they able to contribute, are you able to do overtime. You also need to do a budgeting exercise to see where all your money is going. None of this is going to help you to consolidate but I understand most banks are now not willing to do this.

Our net monthly income comes to about €4120

The mortgage payments are currently €1,150
We have applied to change them both to interest only which would reduce them to €550

Credit Card Minimum Payments total €850
Personal Loan €420

Our Credit Union has frozen the payments for the time being, and the second property is not rented as we live between the two properties.

The Credit Union has said they could sort us out with a loan but I understand there interest rates to be extortionate.

ceimanfhiadh said:

The Credit Union has said they could sort us out with a loan but I understand there interest rates to be extortionate.

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What rate have they quoted you? I've never heard them to be extortionate - certainly compared to credit card debt.

There's no possibility of living out of one house and renting the other out?

Have you addressed the problem that led to so much credit card debt? If not consolidating is no solution. Address the underlying problem rather than the symptom.

Going Interest Only on your property does make sense if you ring fence the money saved and set it against the credit card debt.