Bank of Scotland Ireland (BOSI) effectively closed their doors to new mortgage business yesterday. They have hiked their new business rates to a totally uncompetitive level and as such are effectively saying to customers that they do not want your mortgage business.
Their variable rate for new business now stands at 6.06 APR and the 5 Year Fixed is now an incredible 7.12 APR. These rates seem crazy when you compare them to the likes of Bank of Ireland and AIB with variable rates as low as 2.28 APR and 5 Year Fixed as low as 3.92 APR.
A new trend has emerged in the Irish Mortgage Market since the government bailout of banks here and abroad. The banks coming under the Irish Guarantee are open for new mortgage business. There is no question that the Irish Banks have tightened their lending criteria but they still have attractive interest rates for those who qualify. The foreign owned banks have been bailed out in their mother countries and the last thing they want to be seen to be doing is aggressively competing for new mortgage business in another country.
Foreign owned banks like BOSI, First Active and Ulster Bank are not only knocking back new business with high interest rates they are also putting off new customers with restrictive criteria. BOSI for example will now only offer First Time Buyers 80% of their new property purchase price.
The only good news from BOSI is that they have confirmed the rate increases will not affect existing customers, only new business. So they are effectively saying that their doors are closed for new mortgage business.
Friday, June 26, 2009
Tuesday, June 23, 2009
No Proven Repayment Capacity? No Mortgage
92% mortgages are now the norm for First Time Buyers with many getting a helping hand from the folks. However getting your hands on the 8% deposit is not the only barrier to getting onto the property ladder. Prospective First Time Buyers are slowly but surely becoming more familiar with the phrase "proven repayment capacity."
In order to get a mortgage nowadays you need to have a steady income and access to at least an 8% deposit but now more and more risk adverse mortgage lenders also want to see a proven repayment capacity.
What is a capacity to repay? and how do I prove that I can pay?
Mortgage lenders will look for a combination of one or more the following to show that you are a good candidate for a mortgage approval.
1/ If you are renting a property then this in itself is proof that you can pay a mortgage. You will need to pay your rent through your bank account by standing order if possible. If you can show your rent being taken from your current account for at least six consecutive months prior to seeking a mortgage you are well on your way to proving repayment capacity.
2/ If you are living at home with the folks rent free then you will need to show that you can save at least an amount equal or more to the monthly repayment of the mortgage you require. Again six consecutive monthly amounts into a savings account will suffice as repayment capacity.
3/ If you have loans or credit cards then getting a mortgage will be a bit harder as the monthly repayments will be taken off your qualifying income. However if you use the six months before applying for a mortgage to reduce or clear your debts then this is another way to prove repayment capacity.
With the advent of the credit crunch mortgage lenders want to make sure that you not only qualify for the mortgage but also have a proven track record or capacity to repay.
Whether we like it or not we are now back to the position my father was in when he got his first mortgage. Don't expect any favours from your local bank manager. Get yourself into a position where you can show your repayment capacity. Seek advice from a good Independent Mortgage Broker.
In order to get a mortgage nowadays you need to have a steady income and access to at least an 8% deposit but now more and more risk adverse mortgage lenders also want to see a proven repayment capacity.
What is a capacity to repay? and how do I prove that I can pay?
Mortgage lenders will look for a combination of one or more the following to show that you are a good candidate for a mortgage approval.
1/ If you are renting a property then this in itself is proof that you can pay a mortgage. You will need to pay your rent through your bank account by standing order if possible. If you can show your rent being taken from your current account for at least six consecutive months prior to seeking a mortgage you are well on your way to proving repayment capacity.
2/ If you are living at home with the folks rent free then you will need to show that you can save at least an amount equal or more to the monthly repayment of the mortgage you require. Again six consecutive monthly amounts into a savings account will suffice as repayment capacity.
3/ If you have loans or credit cards then getting a mortgage will be a bit harder as the monthly repayments will be taken off your qualifying income. However if you use the six months before applying for a mortgage to reduce or clear your debts then this is another way to prove repayment capacity.
With the advent of the credit crunch mortgage lenders want to make sure that you not only qualify for the mortgage but also have a proven track record or capacity to repay.
Whether we like it or not we are now back to the position my father was in when he got his first mortgage. Don't expect any favours from your local bank manager. Get yourself into a position where you can show your repayment capacity. Seek advice from a good Independent Mortgage Broker.
Monday, June 22, 2009
Have you considered asking your parents for a helping hand?
There are many obstacles these days which make buying your first home seem an almost impossible task. With the advent of the credit crunch Mortgage Lenders have tightened up their qualifying criteria making it difficult to get your finance approved.
For those lucky enough to get an approval the maximum available is 92%. This leaves a shortfall of an 8% deposit which needs to be funded from an unborrowed source. If you are paying rent then it could take forever and a day to save the 8% needed. However there are a number of ways that your parents can help you.
The first and most obvious way your parents can help is to simply hand over the 8% needed. If your folks have the cash at hand and are willing to hand it over then you are in luck. However not all parents have thousands of euro lying idle on deposit.
Another option would be to ask your parents if they are willing to let you live with them rent free for a while. With no rent or bills to pay you should be able to save the 8% deposit in no time.
Thirdly if your parents have some spare land (many boggers do! no offence intended) then they could offer you a gift of a site. Most mortgage lenders are willing to lend you the full cost of construction if you have a site. The site is effectively your deposit.
Finally if your folks are unable to help then you should turn to your attention to your local council. Most local authorities have Affordable Homes available. These are basically homes that are available to you at a discounted price. It is possible to get a 100% mortgage on the discounted purchase price so a deposit is not necessarily needed.
Despite the current doom and gloom there are options available for First Time Buyers. Falling property prices can make things look scary however a lifetime of rent down the drain is a much scarier prospect. Over the medium to long term we will undoubtedly see some positive growth again in property prices.
For those lucky enough to get an approval the maximum available is 92%. This leaves a shortfall of an 8% deposit which needs to be funded from an unborrowed source. If you are paying rent then it could take forever and a day to save the 8% needed. However there are a number of ways that your parents can help you.
The first and most obvious way your parents can help is to simply hand over the 8% needed. If your folks have the cash at hand and are willing to hand it over then you are in luck. However not all parents have thousands of euro lying idle on deposit.
Another option would be to ask your parents if they are willing to let you live with them rent free for a while. With no rent or bills to pay you should be able to save the 8% deposit in no time.
Thirdly if your parents have some spare land (many boggers do! no offence intended) then they could offer you a gift of a site. Most mortgage lenders are willing to lend you the full cost of construction if you have a site. The site is effectively your deposit.
Finally if your folks are unable to help then you should turn to your attention to your local council. Most local authorities have Affordable Homes available. These are basically homes that are available to you at a discounted price. It is possible to get a 100% mortgage on the discounted purchase price so a deposit is not necessarily needed.
Despite the current doom and gloom there are options available for First Time Buyers. Falling property prices can make things look scary however a lifetime of rent down the drain is a much scarier prospect. Over the medium to long term we will undoubtedly see some positive growth again in property prices.
Friday, June 19, 2009
To Fix or not to Fix?
I have commented on fixed rates before in this blog and I am going to make the same recomendation here again. Now is a good time to fix your mortgage rate for 3 to 5 years.
If you are on a variable or tracker mortgage then you have benefited from the dramatic ECB rate reduction. Last September the ECB rate was 4.25 but now stands at 1%. However it does not seem likely that there will be any further reductions any time soon. In the medium to long term it looks like rates will be on the up.
AIB has just this week put its 5 year fixed rate up from 3.69 to 3.89. This is not a huge jump and their 5 year fixed is still the best on the market but it is a sign of things to come.
In brief if you are interested in locking into a fixed rate now is the time to do it before rates rise and you miss out on the low fixed rates that are currently available.
The first thing you should do is contact your existing mortgage lender to see what fixed rate options they have available. Then you should check with a reputable mortgage broker like MortgageLine, who can search the market, to see if it is worthwhile switching your mortgage.
If you are on a variable or tracker mortgage then you have benefited from the dramatic ECB rate reduction. Last September the ECB rate was 4.25 but now stands at 1%. However it does not seem likely that there will be any further reductions any time soon. In the medium to long term it looks like rates will be on the up.
AIB has just this week put its 5 year fixed rate up from 3.69 to 3.89. This is not a huge jump and their 5 year fixed is still the best on the market but it is a sign of things to come.
In brief if you are interested in locking into a fixed rate now is the time to do it before rates rise and you miss out on the low fixed rates that are currently available.
The first thing you should do is contact your existing mortgage lender to see what fixed rate options they have available. Then you should check with a reputable mortgage broker like MortgageLine, who can search the market, to see if it is worthwhile switching your mortgage.
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