Source: https://www.independent.ie/business/personal-finance/do-i-have-to-tell-my-insurer-we-have-ukrainians-living-in-our-home-41557829.html

Your personal finance questions – We earn €97,000 plus a bonus and have a €60,000 deposit. Can we afford to buy a house?

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]

The Ryan Review

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.

New figures from the Banking and Payments Federation Ireland (BPFI) show that a total of 5,033 mortgages, worth almost €1.3 billion, were approved in July – the most in any month since BPFI began collecting data in 2011.

On an annualised basis, 53,511 mortgage were approved in the twelve months ending July 2021, valued at €13.1 billion. This is up 3.15 per cent compared with the twelve months ending June 2021 and an increase in value terms by 3.72 per cent over the same period.

While the figures suggest an impressive recovery from the Covid-19 pandemic for the housing sector, if we dig deeper into the numbers, the bounce back may not be as strong as it initially seems.

Breaking down the numbers

Of the 5,033 mortgages which were approved last month, first-time buyers (FTBs) were approved for 2,766 mortgages (55 per cent of total volume) while mover purchasers accounted for 1,272 (25.3 per cent).

It represented a 3.3 per cent decrease in approval volumes compared to June, but when compared to last July, approval volumes were up by 48.2 per cent.

In total, mortgages approved in July 2021 were valued at €1.2 billion – of which FTBs accounted for €707 million (55.1 per cent) and mover purchasers for €382 million (29.7 per cent). The value of mortgage approvals rose by 0.6 per cent month-on-month and by 58.3 per cent year-on-year.

What is a mortgage approval?

A mortgage approval is defined as a “firm offer” to a customer of a credit facility secured on a specific residential property.

A mortgage approval arises when the lender issues a formal offer of mortgage finance to the customer (whether it be in print or some other durable form) for a specific residential property which contains the Notice of important information to be included in a housing loan agreement specified in the Consumer Credit Act 1995.

All mortgage loans must be secured on residential property in Ireland.

Speaking on the latest figures, Brian Hayes, Chief Executive, BPFI said: “The latest mortgage approvals for July show continued growth, especially for FTB mortgages. In total almost €1.3 billion in mortgages were approved, the most in any month since BPFI began collecting this data in 2011.”

“Looking at the annualised figures which allows us to more accurately assess emerging key trends, there were 53,511 mortgage approvals in the twelve months ending July 2021, valued at almost €13.2 billion – again, the highest level since the data series began.

“The value of approvals more than doubled since the twelve months ending October 2016, driven by growth in lending to FTBs and re-mortgages or switching.”

“These are significant figures and very much signal a robust pipeline for drawdown activity later in the year.”

Figures may not paint an full picture of the property market

While Hayes claims these figures show continued growth in the housing market, there are a number of factors we must consider while analysing them in order to get a complete picture.

As pointed out by Joey Sheahan, Head of Credit with MyMortgages.ie, 2020 was a tumultuous year for the housing sector, as activity in the market was very low as a result of the initial lockdown.

“Year on year comparisons on mortgage approval figures aren’t currently the most telling as the market has been an absolute roller-coaster during Covid,” Sheahan said.

“While the overall market is booming, we are seeing a lot of borrowers renewing their mortgage approvals as their previous approvals didn’t give them sufficient time to view and enter into an agreement on a house.

“Others were unable to progress previous approval due to being on the Employment Wage Subsidy Scheme (EWSS).

“These issues were particularly challenging during lockdown in the first four months of the year so the mortgage drawdown figures could be artificially high.”

The figures in context

While the figures suggest things are improving significantly in the housing sector, it is important to remember that the mortgage market was still relatively depressed in July of last year owing to uncertainty around the trajectory of the pandemic which impacted the property market generally.

Figures released by the Central Statistics Office earlier this month show the property market continues to be stoked by pandemic-related factors, such as increased savings and lower-than-anticipated supply.

Transaction prices in June 2021 were 6.9 per cent higher -than they were in the same month last year and the spread of price increases was countrywide.

Source: https://www.buzz.ie/news/irish-news/mortgage-approvals-hit-10-year-24854957

Rates range from 2.40% to 2.99% and will be available for up to 90% loan to value mortgages.

Non-bank lender Finance Ireland is launching a range of long-term fixed rate mortgages for home owners in Ireland, with options up to 20 years available.

The company, which entered the residential mortgage market in 2018, will also offer 10 and 15-year fixed rate mortgages, with rates ranging from 2.40 per cent to 2.99 per cent, depending on the loan to value and the period.

The maximum term of 20 years is twice as long as currently available to Irish mortgage customers. Even then, the 10 year fixed rates are typically offered on loans with a loan to value of typically around 60 per cent, although some will offer on as much as 80 per cent loan to value.

Finance Ireland’s new products are targeting owner-occupiers, rather than buy to let investors, and could appeal to customers finishing fixed rates with existing lenders, including Ulster Bank and KBC Ireland who are set to leave the Irish market. The company distributes its mortgages through brokers. The State’s Ireland Strategic Investment Fund (ISIF) and US investment giant Pimco each hold 31 per cent stakes in the Billy Kane founded company.

The rates will be available for up to 90 per cent loan to value mortgages, and customers will be able to move their mortgages to new properties during the term without incurring penalties, Finance Ireland said.

The fixed rate can also be decreased as the loan is paid down versus the property value, and customers will be able to overpay up to 10 per cent of the outstanding mortgage balance as a lump sum in each year of the fixed term, should their financial circumstances allow.

Managing director Donal Doran said those details were essential to the product. “It’s very clear that you cannot put out a 20 year fixed rate without the flexibilities,” he said. “We’ve developed this based on feedback and what brokers believe their customers have been asking them.”

The loans will also allow for changes in personal circumstances, with the penalty for repaying the loan early capped at 5 per cent of the loan balance in the first five years of the loan term for 15 and 20 year loans, and 2.5 per cent for the following five years. In the final five years of the 20 year loans, no early redemption charge will apply.

‘Booster shot’

The move was welcomed by Brokers Ireland, who said it gives a “booster shot” to competition and brings security to Irish mortgage holders.

“We have always maintained that mortgages are long-term products for which lenders can readily source long-term funding. That makes them very secure – for consumers and for lenders,” said Rachel McGovern, director of financial services at Brokers Ireland. “That they are only now entering the Irish market indicates just how staid, unimaginative and above all non-consumer-friendly the Irish mortgage market has been. In fact 10 year mortgages have only been introduced in recent years.”

However, she noted the rates were still higher than in other European countries, where long-term fixed rates have been the norm for years.

The announcement was a “good news day for new and existing mortgage holders”, said chairperson of the Association of Irish Mortgage Advisors Trevor Grant.

The country had become “accustomed to accepting uncertainty around the cost of financing our home purchases”. “If a developer told us the price of a house could be €300,000 or maybe €350,000 or possibly even €400,000 and that they could only confirm the price after we bought the house, we’d run a mile, yet we seem to accept uncertainty when it comes to the cost of mortgages.”

Managing director of mortgage advice company doddl.ie, Martina Hennessy, said the news was “a boost to the broker market”. “Crucially, if you stay with Finance Ireland and you move house, you can transfer the rate on your current mortgage to your new home without incurring a penalty.”

The move is likely to put pressure on other lenders to see them follow suit, said

Joey Sheahan, head of credit at MyMortgages.ie.

“This news from Finance Ireland is really likely to shake things up – both in terms of how mortgage holders approach their choice of term and rates, and in the fact that if the demand for these products are strong, other lenders will make moves to bring similar offerings on stream.”

‘Significant innovation’

Mr Kane, chief executive of Finance Ireland, said, “I’ve been involved with the Irish mortgage market for over 30 years and I believe that this is one of the most significant innovations made here in that time,” said.

Finance Ireland entered the home loans market in late 2018 after it bought Pepper Money’s €200 million home loans portfolio and mortgages platform, with UK asset manager M&G Investments providing the funding.

It was forced to abandon plans for a €100 million-plus initial public offering in May 2020 as the rapid spread of Covid-19 globally threw equity markets into turmoil. Mr Kane, a former chief executive of Irish Permanent said last month it would look at floating on the stock market in the second half of next year at the earliest.

Source: https://www.irishtimes.com/business/financial-services/finance-ireland-first-to-offer-20-year-fixed-rate-mortgages-1.4563959

A new mortgage option is set to shake up the market here as it offers Ireland’s first 20-year fixed-rate mortgage, providing a massive boost for the struggling property market.

Finance Ireland is launching a range of competitive long-term fixed-rate loans with rates for a 20- year fixed term mortgage ranging from 2.4% to 2.99% for up to 90% loan-to-value mortgages.

And best of all, the non-bank lender is backed by taxpayer cash, as the State-owned Strategic Investment Fund has a 30% stake in Finance Ireland.

The welcome move will pile pressure on banks to offer more competitive mortgage rates, something that is seen as a major boost for homebuyers.

The new cut-price rates would see homeowner repayments of just €1,052 a month on a €270,000 30-year mortgage with the first 20 years fixed at 2.99%.

Finance Minister Paschal Donohoe was not involved in the decision to back the deal but a spokesman said yesterday: ‘The Department [of Finance] welcomes the announcement which provides a new product for customers and will help to drive competition in the mortgage market.’

It came as President Michael D. Higgins yesterday became the latest to comment on the country’s housing crisis, saying that ‘radical solutions’ are ‘urgently needed given the magnitude of a housing crisis that is not abating’.

Reports published this week highlight a chronic shortage of properties that have resulted in soaring house prices while rents continue to skyrocket.

The historical new low 20-year fixed-term home loan was hailed by housing campaigners last night as welcome news for families struggling to get on the property ladder, saying other banks are sure to follow suit.

The announcement was a ‘good news day for new and existing mortgage holders’, Association of Irish Mortgage Advisors chairperson Trevor Grant said.

Currently, the longest fixed-rate mortgage available in the Irish market is seven years – with a handful of providers offering a ten-year term but capped at an LTV of 80%. The Finance Ireland fixed rates are available for up to 90% LTV mortgages.

Rachel McGovern, director of financial services at Brokers Ireland, said: ‘That they are only now entering the Irish market indicates just how staid, unimaginative and, above all, non-consumer-friendly the Irish mortgage market has been. In fact, ten-year mortgages have only been introduced in recent years.’

Joey Sheahan, head of credit at MyMortgages.ie, said: ‘This news from Finance Ireland is really likely to shake things up – both in terms of how mortgage-holders approach their choice of term and rates, and in the fact that if the demand for these products are strong, other lenders will make moves to bring similar offerings on stream.’

The new lender is offering European-style home loans fixed for 20 years from as low as 2.6%.

Its arrival is sure to be welcomed by borrowers after recent announcements by KBC and Ulster Bank that they are pulling out of the Irish banking market.

Finance Ireland chief Billy Kane said: ‘I’ve been involved with the Irish mortgage market for over 30 years and I believe that this is one of the most significant innovations made here in that time.

‘We’ve been working on the introduction of longer dated fixed-rates for some time now in order to allow customers benefit from the historically low interest rates now available. These fixed terms, combined with flexible features, provide exceptional certainty for customers and are a stated priority of the Government.

‘We only distribute our mortgages through regulated intermediaries which ensures that all of our customers have advice about the suitability of any product to their specific needs.’

A spokesman for the Ireland Strategic Investment Fund (ISIF) said: ‘All ISIF investments are made on a commercial basis, in line with its double bottom line mandate of generating a commercial return and supporting economic activity and employment in Ireland. The announcement of new mortgage products today is a result of a commercial decision by the management of Finance Ireland, in which ISIF holds a minority shareholding.’

The maximum term of 20 years is twice as long as currently on offer in the mortgage market and will mean some home-buyers may be able to have a fixed rate for the full term of their mortgage.

The fixed-rate terms launched yesterday are for periods of ten, 15 and 20 years.

The fixed rates range from 2.40% to 2.99% depending on loan-to-value and the fixed-term period.

A 20-year fixed-rate mortgage for up to 90% of the value of the home is priced at just 2.99%.

Customers can also move their mortgage to a new property during the term of the fixed rate without incurring any penalty, can pay back a lump sum of up to 10% of their outstanding balance, without penalty, in each year of the fixed term.

Trevor Grant, of the Association of Irish Mortgage Advisors, said: ‘Given the recent negative news regarding KBC and Ulster Bank, this is a good news day for new and existing mortgage-holders and for competition in the market.’

Source: https://extra.ie/2021/05/14/business/property/new-mortgage-option

By Joanne Hunt, Irish Times