Is it impossible to get a mortgage?

I have been renting for a couple of years after selling our last house. We have kept in contact with our bank over the last 18 months with regards to mortgage amounts etc and the mortgage offered remained the same up until now yet our personal or financial situations have not changed. Although we have an investment property, with a modest mortgage, which monthly repayments are covered by the rent and have a good history over the last 7 years on the mortgage and have a sizeable deposit in place they have reduced our mortgage sum from the previously agreed amount and require a “contract of the sale” on the rental property in order to give us the mortgage. While I explained this property was being paid for by rent and has been for some time they just won’t take it into consideration. I find this very annoying, we are carrying no personal debt and have had 2 previous mortgages cleared on previous houses yet they are not willing to do anything. Is this the case with all banks at present or I am dealing with the one that doesnt want to give out mortgages at present?

Probably the latter.

Would EBS be the culprit by any chance?

no its AIB

I’d say it’s to do with affordability. AIB only lend up till age 65 I discovered, whereas BOI and others lend up to age 70. So if you are an older borrower, the repayment terms are shorter, so the monthly repayments will be larger and affordability gets harder then. If you have kids then that reduces affordability even less. I am seeking approval with AIB currently and they are doubtful if we can be approved for the same as BOI because of the age thing.
From their point of view, if you lost the tenants from the investment property, could you still meet your monthly repayments and pass the stress test of interest rates rising?

I recently got approval from boi. They calculated my total mortgage exposure and were willing to give me a mortgage despite having an investment in negative equity.

The did not include my rental income as income.

neither of us have reached 40, few years away though!, so don’t think that would affect it, but yes have 3 kids. Will try boi, tried them about year ago and the amount offered was low, but hopefully that has changed. want to get a mortgage offer soon so we can buy!

If they take the investment mortgage into account and none of the rental income into account I seriously doubt I will get far with them!

I think the banks will lend 2.5 to 3 times income just like they historically have, and probably above that in the right circumstances (good savings record, good ltv, no other property to worry about etc.0

Basically, it appears to me that it is back to traditional lending criteria.

Anyone know how children/dependants impact the calculation of a mortgage value? Is there a set monthly cost value per child a bank assign when looking at a mortgage application?

So you already have a mortgage and now you want a second one? That’s just being greedy!

I’m always fascinated by these threads about the difficulty of getting a mortgage. We’re in the middle of a credit crunch, our banks are completely broke, mortgage lending is extremely loss-making for banks, and property prices are dropping fast. If banks were doing their job properly, nobody would get a mortgage at current mortgage rates. All the evidence I have seen is that getting a mortgage is nothing like difficult enough, and that the banks are going to lose a whole lot of money on the mortgages they are giving out at the moment.

The people who complain about not getting a mortgage are always unsuitable for some reason. In this case we have someone who already has significant debt and exposure to a falling property market. Despite this the bank is willing to give you a mortgage. They are just not willing to lend you as much as you want for the very good reason that you are already more risky than someone who is not exposed to the property market.

This looks a rare case of the banks doing their job.

The days of a smiling bank official adding two gross salaries and multiplying by a number are thankfully gone.

From my understanding the “pillar” banks are both using a calculation like the following. (This may change – and maybe even different branches of the same banks have different explanations of how they calculate affordability.)

(Combined monthly net/after tax income) – bills - (1000 * number of adults) – (250 * number of children) = Maximum monthly mortgage repayment.

Then you take that maximum monthly repayment and translate that into a maximum mortgage over 20 years or whatever, maybe use drcalculator.com/mortgage/ie/ to get an idea.

PTSB offered us up to 450k on a 80% LTV, last week, this was around 4 times joint income, They will happily lend so that the repayments are up to about 47% of net income, the stress test is just +2% on the curent interest rate of 3.6%. It is impossible to get fixed rates unless the LTV is less than 50%.
We are going to check out BOI and AIB in the next few weeks too.

:astonished:

That’s mad stuff! Have they not learnt anything!

I was told by BOI they would offer 5 times joint income. First time buyers, some debt, one dependent. Still awaiting final loan approval (for a bit less then 5 times- I insisted - but still more than I really want and wish OH hadn’t been shown the option as now he’s tempted!)

Oh and that was 90% LTV - so loan approval for 4 times joint income at 90% LTV.

I sincerely hope that you are in line for a huge salary promotion, or else that you might hold out for another year before buying… That’s a LOT of debt.

Definitely not in line for a salary promotion, and sprogs may be in the pipeline. It is a lot of debt - as I said I didn’t allow the guy to show us figures for any more than 4 times joint income, but succumbed to allowing myself to look at the rate over 30 years. Don’t intend to borrow 4 times, but even if I did the (current - yes I know I must stress test!) amount would still be €1,000 less than current rent + savings (of course that excess would be required for creche fees etc)

BoI offered us around 4 times income and 92% LTV - way more than we wanted. However, this was based on their mortgage advisor plugging figures into an equation but she stressed that each actual application is judged on a case-by-case basis. It depends on the property and an assessment of how reliable earnings info is.

We’re self-employed and while they didn’t turn their noses up, I did sense that they’d be fairly conservative in what they count as guaranteed future earnings. I’ll need contracts and commitments from existing clients, and while last year was the best of the last three, it seemed likely that they’d err on the side of caution and presume the lower of those three years is most reliable.

To get a straight answer we’d have to make a full formal application on a particular house. Approval in principle is entirely theoretical and meaningless.

Very mad, BTW, the term was up to 31 years, I had to pay it back before I turn 70.

We are looking to borrow less than half that over 15 years, repayments less than 30% net income.
If you are debt free, with a large deposit and a history of regular savings, then there appears to be no problem getting a absolutely insane loan.