The human cost is enormous and the scenes from the country are heartbreaking.
Source: https://www.independent.ie/business/personal-finance/theres-no-ignoring-what-putins-war-in-ukraine-will-mean-for-your-finances-41437974.html
A You could borrow at least three-and-a-half times your combined income, which would be a loan amount of €525,000, said head of credit at online broker MyMortgages.ie Joe Sheahan.
Source: https://www.independent.ie/business/personal-finance/your-personal-finance-questions-should-we-buy-a-home-now-or-wait-until-i-get-a-permanent-position-41413732.html
‘An increasing number of homeowners are now coming to the realisation that they can switch their mortgage and save thousands of euros’
Mortgage rates have hit a rock bottom and the European Central Bank (ECB) have threatened that the only way is up – with an interest rate rise of 0.25% expected between October and the end of the year.
The small rise in rates equates to about a €40 monthly increase on a €300,000 mortgage, and will only impact those on a variable rate or tracker mortgage.
The real savings to be made are those coming to the end of their fixed rate term on a rate from three to five years ago. Even if you’re in the middle of a fixed contract, it could be worth paying the penalty to exit early in order to secure the cheapest rate on the market of 1.95%.
Speaking to RSVP Live, Joey Sheahan, Head of Credit, MyMortgages.ie and Author of The Mortgage Coach says: “We are lagging behind our European neighbours in terms of mortgage rates. European interest rates are at an all-time low, but Irish mortgage rates, while competitive in this market, are still significantly ahead.
“In terms of value, Ireland’s mortgage providers are competing more on more on fixed rates – with longer terms and lower pricing.
“Mortgage switching is really driving activity in the Irish mortgage market at the moment, which is encouraging to see, given that every mortgage holder should reassess their mortgage contract at least every three years – regardless of what rate you are on.
“An increasing number of homeowners are now coming to the realisation that they can switch their mortgage and save thousands of euros.
“A borrower could save €56,000 in interest over the life of their mortgage by reducing their rate from 2.95% to 1.95%. Based on €300,000 loan at 60% loan to value over 30 years”.
Source: https://www.rsvplive.ie/life/homeowners-can-now-save-56k-26188951
Avant Money (formerly known as Avantcard) launched today and confirmed its new mortgage products are now available to Irish customers, with fixed rate mortgages starting from 1.95%, by far the lowest rate in the market today.
The company has been providing credit cards and personal loans to Irish consumers for over twenty years. Avant Money is owned by Spanish banking group Bankinter, which also has operations in Portugal and Luxembourg.
We, at MyMortgages.ie, are proud to announce that we are one of Avant Money’s partners and we are here to guide and advise switchers, movers and first-time buyers on the range of these new products.
Joey Sheahan, Head of Credit, MyMortgages.ie and author of The Mortgage Coach says:
“Avant Money’s entry into the Irish market is the best news for Irish mortgage holders. We have long seen European rates well below 2% compared to closer to 3% for Irish mortgage holders, and now, for the first time since before 2008, rates below 2% are available to homeowners in Ireland. It’s a once in a decade or maybe even 2 decade opportunity where a new lender enters the Irish market and reduces interest rates to this extent. We are delighted to be one of Avant Money’s partners and our advice to mortgage holders is now is the time to review their current mortgage, even if they have done so recently. A mortgage holder with €300,000 outstanding with 32 years remaining and Loan to Value of below 60% can save €158 monthly or €60,000 over the term of mortgage based on reducing interest rate from 2.95% to 1.95%”.
Head of Credit, at online brokers MyMortgages.ie and author of The Mortgage Coach
Yes, you are very suitable mortgage candidates. You should be able to borrow 3.5 times your income which is €280,000, and possibly qualify for an exemption, meaning you could potentially borrow up to maybe €320,000 – €360,000. Based on your current monthly savings amount, in 1 year your savings will increase by €15,000, which means you will have €32,000. This would allow you to purchase a home for €320,000. According to the most recent report, the average house price in Cork City is €313,000. As long as your employer confirms in writing that it’s ok for you to work from Cork, then there is no issue buying a house to live in Cork if your employer is based in Dublin.
Head of Credit, at online brokers MyMortgages.ie and author of The Mortgage Coach
Yes, absolutely. If you guys have been paying rent, then the monthly rental payments will serve as proof to the ban of your ability to meet monthly mortgage repayments. If you are not paying rent, then you have ample time, between now and when you receive the inheritance funds, to start saving now to be able to show the necessary savings record of 6 months.
Head of Credit, at online brokers MyMortgages.ie and author of The Mortgage Coach
You could borrow at least 3.5 times your combined income, which would be a loan amount of €525,000. You could potentially secure an exemption, given you are both high earners, meaning we could qualify for a loan amount of maybe 4.5 times your income, which would be €675,000. However, you would need to increase your deposit, as you would need 10% of the purchase price. If you are currently renting, I would give serious consideration to buying now as the rent you will pay in Dublin over the next 2.5 years will really add up. The average monthly rent in Dublin is approximately €2,000 so if you multiply this by 30 months, it means you could pay at least €60,000. The monthly repayment on €525,000 mortgage over 35 years at an interest rate of 2.2% would be much less at €1,793. If work dictates that you have to move county down the line, then you could rent out your Dublin property and the rent should cover the mortgage repayments, subject to any tax obligations.
Know your rights when seeking help from parents to get on property ladder
Forget AIB, Bank of Ireland or any of the remaining stalwarts of Irish finance. It’s the Bank of Mum and Dad that is giving most first-time buyers a step on the property ladder.
According to data from the Banking and Payments Federation (BPFI), 42pc of new home purchasers used a parental gift toward their deposit. And they needed it: €52,500 is now required on average to get a first-home deposit together – a doubling from a decade ago. And despite a record 31,000 new builds commencing this year, it isn’t anywhere near enough, or fast enough, to curb house price inflation.
The total value of gifts alone was €210m in the first six months of the year, and that’s worrying enough for the Government to have at least considered taxing it in the budget. It is inequitable for one – not everyone has a wealthy parent to contribute – and of itself, it inflates house prices.
Ray McMahon, chief commercial officer at ICS Mortgages says: “This would reflect what we are seeing from our customers also. What is particularly of note from the BPFI figures is the significant number of second-time buyers who are also utilising gifts – a trend we are increasingly observing.”
There are conditions attached, but it’s normal for a lender to facilitate gifts as part of the deposit as long as it’s clear who’s giving it and under what circumstances, he says.
And when is a ‘gift’ a ‘loan’ or vice versa? If it is due to be repaid, it should have interest charged, with gift tax implications – this is what is being considered in the future by Government. But with ordinary interest rates at zero, it’s difficult to see how parents could charge kids interest on a loan they’re happy to hand out.
If it’s gifted, it matters by whom and for how much. Such things don’t bother loving parents, but they do concern Revenue officials and banks.
With house prices inflating by 12.4pc year-on-year and rents up by more than 7pc, what is a saver to do?
Interest rates are not only zero, but negative, given the effect of inflation – currently running close to 5pc. Yet try to do anything risky with the cash by way of eking out a return and the lender immediately frowns. Coupled with having to shell out more income toward rental while also saving, makes it very difficult.
First-time buyers need not just 10pc of the purchase price, but an additional 2pc or so to cover stamp duty and fees. They need to be able to show capacity to service the debt, plus 2pc added for ‘stress test’ purposes along with their mortgage protection and home insurance. Oh, and they need to buy clothes, pay bills, food, pay creche fees and the other sundries of modern life.
Joey Sheehan, author of The Mortgage Coach, says the purpose of the Central Bank’s macroprudential rules on lending (which were not changed in its latest review), “is to ensure buyers cannot borrow more than they can afford to repay”.
He recommends transferring savings into one dedicated account to save a regular amount each month. “Avoid making withdrawals. It’s better to save less on a monthly basis and then add extra when you can rather than over-saving and dipping into it”.
He adds a lender will grant Approval in Principle (which lasts six months, but is easily renewed), when they can see the required percentage of purchase available.
When it comes to gifts, there are strict rules, both legal and financial, in place. Firstly, a gift must be just that. Banks don’t like to see additional loans being set up, either from the Credit Union or Mum and Dad, which could reduce a borrower’s capacity to service the mortgage.
They will typically demand a ‘gift letter’ or in some cases a Deed of Gift, witnessed by a solicitor to show that the parent has no expectation of getting their money back and that no secondary claim is put on the property. If there is capital acquisitions tax due, they’ll want evidence it has or can be paid.
A parent can gift up to €335,000 to a child without gift tax being applied. However, this is a lifetime cumulative limit, from both parents, for all gifts, and inheritances and any future amount over this threshold will be taxed at 33pc.
A grandparent can gift up to €32,500, again with the same rules applying.
Separately, there is a Small Gifts Exemption permitted of €3,000 per person, per year, from anybody to anybody else.
If it is done cleverly and with aforethought, four parents (his and hers) could gift a couple this amount over the two months (December and January) amounting to €48,000 in total without a tax implication, according to Eoin McGee, author of How to Be Good With Money.
Under the Government’s extremely generous tax refund scheme, a gift may not even be necessary, with Revenue refunding four years of tax, to a maximum of €30,000 toward a deposit for a first-time buyer.
Aside from the deposit, there are a lot of things you can do to get yourself mortgage ready. Banks like consistency, stability and diligence. Looking like an attractive borrower can be achieved in a few steps.
Have a good credit record: Missed repayments, even for an insurance premium or small loan is a red alert for lenders. Get your credit history from the Central Credit Register before the bank does.
Keep your spending ‘clean’: We’re all ‘tapping’ our way through life more than ever, so it will be crystal clear to a bank what you’re spending your money on. They get suspicious if they see unexplained large withdrawals of cash, frivolous spending or money being used to servicing a gambling account, even if you’re winning. If you use an app like Revolut or a different account to buy crypto currency or you have a store card, they’ll also want to see that.
Having a constant overdraft not only costs a lot, but it smacks of financial indiscipline. Control your direct debits, cut back and get rid of it six months before you apply for your mortgage.
Your income must be able to service a mortgage if interest rates were to rise by 2pc. This is the ‘stress test’ and banks will apply it before agreeing to lend. Work it out and be prepared to prove it.
Control your ‘nets’: No more than 35pc of net income should go on debt servicing. Pay off existing loans (highest-interest bearing ones) before applying for a loan, even if it means saving for longer.
Source: https://www.independent.ie/business/personal-finance/how-to-go-about-gifts-to-take-stress-out-of-mortgage-deposit-41139886.html
Q I am a teacher with a salary of €47,000. My husband, who works in tech in the private sector, earns €50,000 a year and can earn an annual bonus of up to 20pc of his salary, but it’s not guaranteed. Even though we are paying rent, we manage to save €2,000 per month and have saved a deposit of €60,000. We have a car loan that costs €400 per month. We clear our credit cards and overdrafts monthly. We spotted a house in Crumlin for €435,000. Can we borrow enough?
A Joey Sheahan, head of credit at MyMortgages.ie and author of The Mortgage Coach, says you could easily carry the €400 monthly loan repayment. If you are currently renting and can afford to buy now, then it’s probably a good time because rents are so high and your mortgage repayments will, most likely, be lower than the rental payments.
Source: https://www.independent.ie/business/personal-finance/your-personal-finance-questions-we-earn-97000-plus-a-bonus-and-have-a-60000-deposit-can-we-afford-to-buy-a-house-41071189.html
I am currently attempting to get a self build mortgage in the west of Ireland. I know the timing is not the best.
I had spent money on a QS to get costs of the build. I own the land, have the planning approved and an engineer ready. I have approached a number of lending institutions who are telling me that I don’t have enough disposable income.
When I ask for the formula used to calculate this no one will divulge this information. I have three children and am looking for €214,000 with €20,000 in savings and €1,500 a month added to that.
For a 20 year mortgage costing €1,105 per month I am still getting refused.
I’m not sure what they are looking for. If I can save enough each month that has €400 of contingency for interest rate increase or get 20 year fixed rate, why do they say I don’t earn enough? Can you help?
This must be irritating for you especially as it seems as though you could feasibly support this mortgage amount.
I would disagree with your first comment however, timing has never been better!
While construction costs are inflating, getting a mortgage is currently, for most, the easy bit. There are a few elements here which I’ve asked Joey Sheehan, author of ‘The Mortgage Coach’ to address, but first I’m curious as to why your email doesn’t mention the Help to Buy scheme.
This is a very valuable tax rebate available from Revenue which effectively refunds all the tax you (and your partner, if applicable) have paid over the last four years to a maximum of €30,000.
This would bring your deposit up to €50,000 which would appease any bank greatly as it de-risks the loan to value ratio for them. It is available on one off new builds as well as new home schemes and I can only assume if you have not applied for it, it may be because you are not a first time buyer.
Mr Sheehan adds: “This is frustrating however each bank has a different stress testing calculation.
“The first thing to do is to use the longest term possible which reduces the stress test. So for example, while you wish to avail of a 20 year term, if you are only say 35 years old, you could actually avail of a 35 year term (to age 70) which stress tests the application much easier and should help with a higher loan amount as the monthly repayments will be lower.
“You can always alter it during the term. If you are older, say 45, then your term will be limited to 70 minus your age which would be a 25 year term. I would definitely apply for the Help To Buy scheme as the loan amount is 70pc or more of the build cost plus site value”.
While every case is different a specialised mortgage broker may be able to do the leg work for you for a modest (or no) fee.
I’m interested in the shared equity scheme announced by the government as I am anxious to buy a home but cannot afford the mortgage necessary. Can you explain how it would work and what the limits on it are?
The Government announcement on this proved to be a little previous.
The Central Bank has taken issue with some elements and wants to take a further look. But they are due to report on this next month and we may have more clarity of how it will work then.
It’s based on an existing scheme in the UK which works quite well in expensive areas like London.
Essentially all that is happening is that if you, under certain conditions linked to your income, status and house, ‘buy’ a home for say €300,000, and cannot afford all of the loan on this, the State will take a stake in it, probably around 20pc for five years or so, and you only pay the mortgage on the remainder.
There would also be price caps on these homes in certain Local Authority areas.
On the plus side, it would create a building stimulus on unused land, with the guarantee that the homes would be somewhat affordable.
The concerns are whether it could be inflationary and force borrowers to take on too much debt.
If developers know that the State will be co-owner, then they might see the price as a target instead of a limit. In addition, there could be legal problems where the bank doesn’t have first call in the event of mortgage default, and whether they would be forced to lend in breach of their own rules, above the Central bank limits.
As for insurance, what life insurance, or indeed, home insurance do you effect and who owns the policy?
When all is clearer, and we have guidance on the scheme, I’ll be writing again on the topic, as will other commentators, and we’ll have a better sense of how it will work.
Email your questions to [email protected]
We may think we’re alone in having unaffordable mortgages on overly expensive homes, but we’re in the penny ha’penny place compared to Japan.
They were forced to introduce 100 year mortgage terms in the 1990s. The inter-generational home loan saw houses (and debt) passed from grandparents through children and grandchildren. It was because of the sheer price of the most expensive real estate on the planet (Tokyo), and also inheritance tax laws which saw most of a family’s wealth whipped away on death.
The long term loan meant the house was never unencumbered, and therefore saved to the next generation.
I was reminded of it with research from Aviva showing that 27pc of mortgage holders expect to still be paying off their loan into retirement, helped by part time jobs to supplement their pension income.
While we had a ‘moment’ here where banks were falling over themselves to offer mortgages with parents as guarantor, I’m not sure it would catch on.
But, hey, it’s the Irish housing market. Anything might happen.
Source: https://www.msn.com/en-ie/money/other/i-have-20-000-for-a-deposit-and-am-saving-1500-a-month-but-lenders-are-still-refusing-a-mortgage-for-my-self-build-home-project-what-are-my-options/ar-AAQ4kET?ocid=finance-verthp-feeds
As inflation bites across the board, the number of people switching their mortgage is at the highest level on record, figures reveal.
Mortgages borrowing is at its highest level since the height of the boom 15 years ago.
But it comes amid a backdrop of thousands of hopeful homebuyers being squeezed out of the market by a dearth of properties for sale.
Millions of euro in lockdown savings are also adding fuel to property bidding wars.
A report on Tuesday from the Banking and Payments Federation of Ireland shows many have used lockdown to find better deals.
Switching activity grew strongly in September, with volumes up by 36.6% year on year and almost 7,000 switcher mortgages approved in the 12 months ending September 2021 – the highest annualised level on record.
But the booming figures don’t necessarily spell good news for prospective house buyers.
Housing campaigner David Hall, of the Irish Mortgage Holders Organisation, warned: ‘This is a very difficult environment for those seeking a home. It shows a continued strong performance; however, less than half those approved seem to draw down, indicating a severe lack of supply.’
He also called for more action to tackle property investors snapping up homes ahead of would-be first-time buyers.
‘It is essential some legal mechanism is found to exclude vultures from buying starter-homes,’ Mr Hall added.
A total of 11,479 new mortgages to the value of €2,784million were drawn down by borrowers during the third quarter of 2021.
This represents an increase of 40.9% in volume and 42.3% in value on the corresponding third quarter of 2020, when the country was in the middle of a lockdown.
First-time buyers remained the single largest segment by volume (52.7%) and by value (52.8%).
And their report also showed that total of 4,769 mortgages were approved in September 2021 – some 2,639 were for first-time buyers (55.3% of total volume) while mover purchasers accounted for 1,167 (24.5%).
Mortgages approved in September 2021 were valued at €1,205million – of which first-time buyers accounted for €668million (55.4%) and €336million by mover purchasers (27.9%).
BPFI chief Brian Hayes said: Almost 54,400 mortgages were approved in the 12 months ending September 2021, valued at almost €13.5billion, suggesting a strong pipeline for future demand as we move into the last quarter.’
Trevor Grant, chairperson of the Association of Irish Mortgage Advisors, said: ‘Ireland’s mortgage market is the busiest it has been in years. There’s no doubt that supply issues are making it difficult for prospective homebuyers, but healthy and intensifying competition between lenders mean first-time buyers and existing mortgage holders are in a strong position when it comes to securing good rates and terms.
‘While the volume of mortgage applications would traditionally slow down towards the end of the year, the feedback we’re getting from mortgage brokers across the country is that they do not expect the pace to slow to the extent that it usually would in December.”
Joey Sheahan, Head of Credit, MyMortgages.ie and author of The Mortgage Coach, said: ‘Switching – or at the very least reviewing your mortgage – is something I cannot recommend strongly enough. Every single mortgage holder in the country (bar perhaps those on a tracker mortgage) should undergo a mortgage review every three years or so.
‘I think what precludes a lot of people is either a) they believe the process is complex and convoluted and/or b) they are on a fixed rate and so believe they can’t move. While the process itself does involve some form filling and document gathering, it’s nowhere near as daunting a task as taking out your first mortgage, and if you take the advice of a broker, they’ll do just about all of the leg work.
‘Also, those on fixed rates are not “stuck” with a lender until the end of their fixed term. In many cases, the breakage fee to exit a fixed rate early can be zero, depending on which lender you’re with, and how far away you are from the end of the fixed rate etcetera.
‘The savings could be huge – for example, a borrower could save €56,000 in interest over the life of their mortgage by reducing their rate from 2.95% to 1.95%. Based on €300,000 loan at 60% loan to value over 30 years.’
As the economy opens up and discretionary spending increases, Martina Hennessy, managing director of doddl.ie cautioned first-time mortgage applicants to manage their spending and continue to save regularly, even if they have already saved their full deposit.
‘Even if your income is strong and you’ve saved your deposit, your application will not be successful if you are not clearly demonstrating repayment capacity prior to application.
‘As a general rule of thumb, you should show evidence of €500 per month for every €100,000 you wish to borrow to show repayment capacity.’
Source: https://www.msn.com/en-ie/money/other/number-of-people-switching-their-mortgage-is-highest-on-record/ar-AAQ097d?li=BBr5Fap
Characterised by sometimes unloved properties at knockdown prices, auctions can appear to be dominated by investors and cash buyers looking for an asset, not a home. A well-organised first-time buyer who can act fast and hold their nerve could get lucky, but there are challenges.
Properties listed for online auction sometimes have a back story. An online auction brings a quick sale and there is usually a good reason the vendor needs it. It could be that they, or their bank, need to cash out quickly. If there is an issue with rising damp, a sitting tenant or a niggle with the title, online auctions can attract more seasoned cash buyers with the experience and the resources to sort things out.
Source: https://www.irishtimes.com/life-and-style/homes-and-property/buying-at-auction-are-there-deals-to-be-had-1.4705548?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Flife-and-style%2Fhomes-and-property%2Fhow-to-get-a-good-deal-at-a-property-auction-1.4705548
