25% between 25-45 return home to save for a house deposit

Over 25% between 25 to 45 feel the only option to save for a deposit for a house is to return home.

There is more of a shift for younger people to rent as opposed to buying, mainly due to the deposit required and especially in the Dublin area more so to the rest of the country, as home prices have seen a sharper increase. However younger people under 25 have more confidence than the 25 to 45 bracket.

Overall the mortgage market has picked up significantly over the last 18 months, with main street lenders in better position to meet their client’s financial requirements, mainly due to recovery of the banks in recent times.

Central Bank Lending Restrictions Has Slowed Mortgage Approvals

In February the Central Bank introduced limits on lending. This had had a knock on effect on mortgage approvals. However there are several reasons for this. Also house prices have increased over the past year according to a recent survey by MyHome.ie.

Read more….

5 Things To Do Before You Purchase Your Dream Home

Once you have decided to make your dream purchase, try to get ‘approval in principle’ for a mortgage first. At Mortgagesdirect.ie we have 20 years’ experience in the industry so we know how much you can borrow.

Contents:

Contact mortgagesdirect.ie
Documents required to make your application
Best advice when applying
Decision making process
Loan approval

Contacting Mortgagesdirect.ie

You can apply for a mortgage in two ways:

  • Directly to the lender (banks, building societies, certain credit unions and retail credit firms who are not banks or building societies) – in this case you will deal directly with the lender.
  • Through a mortgage intermediary (broker) – in this case, your intermediary will deal directly with the lender on your behalf and will be in a better position to offer best mortgage suitable to you as the broker is appointed by Banks, Building Societies, etc.
  • Therefore you have wider choice of products to choose from through your broker or Mortgagesdirect.ie.

If you want to use a mortgage intermediary (broker), you can get a list from the Central Bank’s registers website – but make sure you know what type of advisor you are using, how many lenders the broker represents and what they will charge you.

Documents required to make your application

  • Proof of your identity: such as a valid passport or driving licence.
  • Proof of your current address: such as a household bill in your name.
  • Proof of your income: your latest P60 and at least 3 recent salary slips.
  • Evidence of how you manage your money: bring current account and loan account statements for the previous 12 months.

Best advice when applying

  • It is of upmost importance we feel that you receive independent advice when applying. Don’t panic and take the first mortgage you are offered. At mortgagesdirect.ie we can apply to a number of lenders and if you are offered more than one mortgage, compare the rates carefully. Keep your eyes open for better offers from other lenders.
  • Don’t be seduced by ‘freebies’, like free legal expenses or discounted insurance without looking at the mortgage as a whole. Introductory and first-time buyer packages can save you money in the short term but remember to consider the long-term costs when the ‘introductory rate’ runs out.

Decision making process

When you apply for a mortgage, a lender will look at:

  • Your income – lenders will look at your annual income and some may take bonuses or overtime into account. Some lenders may factor in rental income if you plan to rent out spare rooms.
  • Your age and number of years to retirement.
  • Outstanding loans – if you have other loans, this may reduce the amount of money you can borrow or you may find it difficult to get a mortgage.
  • Outgoings – in addition to any loan repayments, other financial commitments you have.
  • Savings – this shows you have an ability to save and have built up enough money to pay for your deposit and other expenses.
  • Credit record  – this shows the repayments you have made on any loans you have. If you have missed repayments in the past, it may make it more difficult for you to get a mortgage.
  • The value of your house – this is the market value, or purchase price of your house.
  • The amount you need to borrow – this is the difference between the amount you have saved to put towards the house (your deposit), and the purchase price of the house.
  • Whether you are borrowing on your own or with someone else.

Loan approval

  • Many lenders give ‘approval in principle’. This means that your lender approves you for a mortgage of a set amount, based on the details you provided in your application.
  • Your mortgage loan approval will remain valid for a short period of time, usually 3 – 6 months. Your mortgage offer will have an expiry date – and you must draw down your mortgage before this date. Once a loan offer expires, you will need to apply again and if your circumstances have changed or your lender’s criteria has changed, you may not get approval again.
  • The interest rate shown on your mortgage loan approval is not necessarily the rate you will pay. Usually, the interest rate for your mortgage will be set only on the day that the money is actually lent to you.
  • Keep a copy of all correspondence and documentation from your lender in a safe place.
  • At mortgagesdirect.ie we provide a wide range of  mortgage protection and home insurance products.  When your mortgage is approved, your lender will ask you to fill in a direct debit form so your repayments can be collected from your bank account.

At Last! Some Good News for First Time Buyers

The Central Bank have announced new rules that will allow First Time Buyers some relief from the 80% loan to value (LTV) limit. First time buyers can now borrow up to 90% on a property purchased up to €220,000 which will make it possible for more people to get on the property ladder.

The Central Bank of Ireland has abandoned the rules to phase out 90% funding for First time buyers, over concerns it would have for First time buyers. A typical example for a first time buyer purchasing a house for €350,00 means that they will need a deposit of €48,000 as opposed to €35,000 under the old rules.
This has made it virtually impossible for many to buy their first home so after extensive lobbying against the initial decision it appears that the Central Bank has reversed its decision on a cap of 80% on all purchases.
The Central bank has insisted that all applicants should not exceed the 3.5 times income, for example if you earn €60,000 per years the maximum you can borrow is €210,000, which also falls below the threshold of the €220,000 rule that allow you borrow at 90%.
With so many home owners in negative equity, any potential purchasers that fall into this category will be assessed separately. The customers may not fall into the new loan to value category.

If you are an existing homeowner looking to restructure or switch to another lender you are not covered by the new regulations.

Central Bank Governor Mr Patrick Honan said the measures would reduce financial vulnerabilities for lenders and borrowers

The rules for non first time buyers or trading up is somewhat different because the maximum they can borrow is 80% irrespective of the property value, and for The Investor market 70% will apply to the buy to let customer.

New legislation for mortgage brokers

The European directive on credit agreements for consumers relating to residential immovable property came into effect in February 2014.

Who and What is covered by the directive?

This directive provides protection for consumers. The definition of a consumer is a natural person who is acting outside their trade, business or profession.

The directive does not prevent Member states from extending the requirements under the directive to protect consumers in relation to credit agreements related to other forms of immovable property such as investment properties. Where Member States decide to exclude these types of credit agreements they must ensure that another appropriate framework for this type of credit is in place at national level. The directive does apply to refinancing but not to equity release or similar products. Unsecured credit agreements for renovations above 75,000 will fall under the scope of the directive.

Requirements

Pre-Contractual Information

The Directive specifies that advertising materials and personalised pre-contractual information should include adequate specific risk warnings about, for example the impact of a rate change etc. This is already in place in ireland through the consumer protection code that al intermediaries must comply with.

Consumers will now be given at least seven days to consider the implications of entering into a credit agreement. This can be provided for by the member states by either a period of reflection or a period of withdrawal. Member states may provide that consumers cannot accept the offer for a period not exceeding the first ten days of the reflection period.

Valuation of Property

The way in which a property is valued will now be standardised across the EU, taking into account the internationally recognised valuation standards.

Credit Intermediaries Minimum Competency And Fitness And Probity Requirements

There are now standardised minimum competency and fitness and probity requirements introduced through the directive. In Ireland there are already minimum competency and fitness and probity requirements in place and it is likely that these will remain the same.

Remuneration Of Credit Intermediaries And Staff

Member States may prohibit or impose restrictions on payment from a consumer to a creditor or credit intermediary prio to the conclusion of a credit agreement.

The directive also provides for rules impede compliance with the obligation to take account of the interests of the consumers. It specifically states that credits, credit intermediates and appointed representatives should not design their remuneration policies in a way that would conflict with their requirements to work in the best interests of the consumer.

There is also a requirement to disclose commissions or other inducements payable to credit intermediaries by creditors or any third party consumers prior to any work being carried out.

Member states will be free to introduce or maintain provisions prohibiting payment of fees by consumers prior to any work being carried out.

Member states will be free to introduce or maintain provisions prohibiting the payment of fees by consumers to some or all categories of credit intermediary.

Advisory Services

Providing advice in the form of a personalised recommendation is a distinct activity that may but need not be combined with other aspects of the granting of credit. Member states shall ensure that the consumer is explicitly informed whether advisory services are being or can be provided to the consumer before a transaction takes place.

This information can be provided to the consumer in the pre-contractual information and should specify.

Whether the recommendation will be based on considering only their own product range ir a wide range of products from across the market.

Where applicable the fee payable by the consumer for the advisory services or where the amount cannot be ascertained at the time of the disclosure , the method used for its calculation.

Advisory services should be based on a fair and sufficiency wide-ranging analysis of the products offered. Member states will be allowed to prohibit the use of the term advice or advisors or other such terms when advisory services are being provided to consumers by creditors, tied credit intermediaries or appointed representatives of tied credit intermediaries.

Where member states do not prohibit the use of the term ‘advice’ or ‘advisors’ they shall impose the following conditions on the use of the term ‘independent advice’.

  • Creditors, credit intermediaries or appointed representatives shall consider a sufficiently large number of credit agreements available on the market and
  •  Creditors, credit intermediaries or appointed representatives shall not be remunerated for those advisory services by one or more credit intermediary.

Point B shall apply only where the number of creditors considered is less than a majority of the market.

Member states may impose more stringent requirements on the use of the term ‘independent advice’ or independent advisor including a ban on commission.

Member states shall ensure that advisory services are only provided by creditors, credit intermediaries or appointed representatives. However member states may decide not to apply this to certain persons:

Carrying out the credit intermediation activities or providing advisory services where those activities are carried out or services are provided in an incidental manner in the course of a professional activity, and that activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the carrying out of those activities or the provision of those services.

Providing advisory services in the context of managing existing debit who are insolvency practitioners where that activity is regulated by legal or regulatory provisions or public or voluntary debt advisory services which do not operate on a commercial basis or

Providing advisory services who are not creditors credit intermediaries or appointed representatives where such persons are admitted and supervised by competent authorities in accordance with the requirements for the credit intermediaries under this directive.

Sanctions

Member states shall lay down the rules on sanctions applicable to infringements of the national provisions adopted on the basis of this directive and shall take all measures necessary to ensure that they are implemented. Those sanctions shall be effective, proportionate and dissuasive.

Member states shall provide that the competent authority may disclose to the public any administrative sanction that will be imposed for infringement of the measures adopted in the transposition of this directive unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.

Accessing the Client – Creditworthiness

The creditors’ decision as to whether or not credit will be granted will depend on the clients creditworthiness. Creditworthiness will be based on the information on the financial and economic situation including income and expenses of the consumer.

Each member state shall ensure access for all creditors from all member states to databases used in that member state to databases used in that member state for assessing the creditworthiness of consumers and for the sole purpose of monitoring consumers compliance with the credit obligations over the life of the credit agreement. The conditions for such access shall be non discriminatory. Member states may within their jurisdiction, allow credit intermediaries to have access to credit databases.

 Rates And Calculatrion Of Annual Percentage Rate Charge (APRC)

The Calculation of APRC will be uniformed to provide comparability of information. Member states shall ensure that any fees paid to the credit intermediaries by the consumers for their services will be communicated to the creditor by the intermediary for inclusion in the calculation of APRC. The method of the APRC is clearly laid out in Annex 1 of the Directive.

Member states should be able to maintain or introduce restrictions or prohibitions on unilateral changes to the borrowing rate by the creditor and where changes are imposed to ensure that the consumer is entitled to receive an updated amortisation table.

Early Repayment

Consumers will have the right to early repayment of the credit agreement. In such cases the consumer shall be entitled to a reduction consisting of the interest and the costs for the remaining duration of the contract.

Where the early repayment falls within a period for which the borrowing rate is fixed, exercise of the right may be made subject to the existence of a legitimate interest, eg unemployment or divorce.

Member states may provide that the creditor is entitled to fair and objective compensation, where justified, for the possible costs directly linked early repayment but shall not impose a sanction on the consumer.

Bundling Security And Insurance

Member states shall allow bundling practices but shall prohibit tying practices. Member states may provide that creditors can request consumer on their family members to;

  • Open or maintain a payment or a savings account to accumulate capital to repay the credit or as additional security
  • Purchase or keep an investment product or as private pension product that provides additional security
  • Conclude a separate credit agreement in conjunction with a shared equity credit agreement to obtain the credit.

Member states may allow creditors to require the consumer to hold a relevant insurance policy related to the credit agreement.There are a number of articles that allow member states discretion in how stringent and practical these regulations will be when they are enforced by March 2016.

PIBA have been in consultation with the department of Finance and the Central bank in relation to how the directive will be transposed into Irish law. This interaction is ongoing and will hopefully ensure that our member’s views are taken into account.

KBC To Reduce Variable Rate

 

The recent move by KBC Bank to reduce its variable rate for new home buyers and switches is in stark contract to recent rises imposed by other lenders. The bank says it will save new buyers and mortgage switchers €322 a year over the life of the mortgage.

Finance experts said the development will ramp up pressure on AIB and Bank of Ireland. The two banks have about 1.2m current account customers each, and are issuing most new mortgages.

But the big two have been pushing up charges and fees for current accounts, and have been leading the charge in variable mortgage rate hikes.

And from next month an extra 50,000 Ulster Bank customers are set to be hit by fees after the bank changed its current account rules.

The KBC Bank move will be a shot in the arm for banking competition – which has suffered with the closure of a raft of retail banks, most recently Danske and ACC Bank which have shut retail operations here.

The new deal will see new mortgage customers and switchers who open a KBC current account get 0.2pc knocked off their mortgage rate for the life of the loan. They will have to get their salary paid into the account.

KBC Bank’s executive director Dara Deering (pictured)said the rate cut, as part of the bundled deal, would mean the lender would have the lowest variable rate for those with a 10pc deposit. It will take the bank’s variable rate for those with a 10pc deposit to 4.27pc, just below the EBS rate.

It will save a buyer €322 a year, based on a €250,000 mortgage over 20 years.

KBC Bank, which is opening six branches or hubs this year, began offering credit cards and personal loans earlier this year. It only launched its current account last year.

Financial experts said its current account was better value than those offered by AIB and Bank of Ireland. There is a quarterly charge of €6, but transaction charges can be avoided if €2,000 in credit is kept in the account.

In a clear sign that the Belgian-owned bank is making a competitive play in this market, it is also offering new mortgage borrowers one year’s free home insurance. This is estimated to be worth €350.

Existing mortgage holders who are not in negative equity and switch to it are offered free home insurance plus €1,000 to cover the cost of legal fees. This sort of offer has not been seen since the property boom.

The bank has also been attempting to build up its customer base by offering a higher regular savings rate of 4.5pc, which it says is the highest in the market.

The bank was recruiting 9,000 new customers every quarter, Ms Deering said.

The KBC move comes as Bank of Ireland is slashing the interest it pays to savers.

The country’s largest bank is telling customers that it is cutting about 0.2 percentage points off interest rates paid to regular savers.

Those using the bank’s regular dual-saver account will now earn a tiny interest rate of just 0.03pc. The interest is also taxed by the Government.

Savers with up to €1m and a 30-day notice period will only earn a rate of 0.85pc. Customers who are unhappy with the rates can close their accounts free of charge.

ICS Building Society is also cutting the interest it pays to savers.

The decision to cut both the cost of borrowing and lending are related as the European Central Bank has cut interest rates to historic lows. Some banks must now even pay the ECB to keep money on deposit.

Level of early arrears down in first quarter, but long term distress grows – Central Bank

The number of mortgage accounts in arrears for over 90 days fell for the second quarter in a row in the three months to the end of March, new figures from the Central Bank show.  

The Central Bank figures show that the proportion of residential mortgages in arrears for more than 90 days was 12.2% at the end of the quarter, down from 12.6% in the previous three months.

The number of mortgage accounts in early arrears – less than 90 days – fell by 2.4% in the first quarter. This compares to a fall of 5.7% in the previous three month period.

However the numbers of arrears for more than 720 days rose by 5%, leaving more than one in four homeowners in distress for two years. The proportion of buy-to-let arrears over 90 days also edged up to 21.5% from 21.1%.

Overall, a total of 132,217 – or 17.3% – of mortgage accounts were in arrears at the end of the first quarter of 2014, a decline of 3.2% compared to the last quarter of 2013.

It also marked the third quarter of decline in a row.

The Central Bank said that a total of 92,442 principal dwelling house mortgage accounts were classified as restructured at the end of March, an increase of 10% on the previous three month period.

Of these restructured accounts, over 80% were deemed to be meeting the terms of their new agreement.

Today’s figures also show that just over 3,000 legal proceedings were issued against homeowners in the first three months of the year, double the amount in the previous three months.

What MortgagesDirect.ie can do for you as a mortgage broker

As a leading mortgage broker, you can trust MortgagesDirect.ie to get you the most competitive mortgage for your circumstances

Taking on a mortgage is the biggest financial decision a person can ever make. It can be overwhelming – especially if you are a first time buyer. It is therefore important to get the right advice beforehand. As a mortgage broker, our team of highly experienced financial advisors will use their expertise to source you the most affordable mortgage and related insurance polices that match your specific needs.

Whether you are looking to refinance, move home or make that first step onto the property ladder, we’ll make the entire mortgage process easy from the initial application to the getting that loan cheque. And there are many reasons why you should use a mortgage broker like us:

1. We manage the whole process from start to finish

Whenever you apply for a mortgage with us, you will be assigned a financial advisor who will personally look after the application process. We advise you on every stage and liaise with all interested parties (mortgage lender, solicitor etc.) to ensure a prompt and efficient loan approval.

2. We deal directly with 5 mortgage lenders

This allows us to thoroughly compare the market and guarantee the lowest interest rates available. If you go through directly to a bank, you restrict yourself to their products and services which may not necessarily be the best deal you could get.

3. We will help you work towards approval – even if you’re not ready now or have been turned down

Have you been turned down for a mortgage? Want to get one but feel you’re not ready yet? No problem – we can still help you get approved. If you have been unsuccessful in past applications or feel that you’re not financially ready yet, we offer advice on what you need to do (and how long it takes to do it!) in order to work towards a strong application that will get you that mortgage.

4. We offer big discounts on Car, House and Life Insurance

When you take out a mortgage with us, we can also offer further discounts on your insurance needs. Our advisors offer generous discounts if you take out a House and Life Insurance policy (which are often necessary to be approved for a loan) at the same time. If you need to get a good deal on car insurance, we can get further discounts on that too!

We make the process easy – applying is even easier!

Make that first step towards approval and apply for a mortgage with MortgagesDirect.ie. You can also request a call back for a more convenient time or call to speak to a mortgage advisor on 1890 746 759 today.

PTSB has reduced problem mortgages to one-tenth of peak levels

Permanent TSB has reduced it’s portfolio of non-performing mortgages to 10 per cent of their peak levels it has been reported. The bank has offered a total of 19,000 resolution strategies to customers with a total of 15,700 accepted.

The bank said in a statement that non-performing home loan and buy-to-let mortgages are falling across both early and late arrears. At the end of April this year, PTSB’s internal bad bank, the Asset Management Unit, had engaged with over 80 per cent of struggling customers, with over 2/3rds receiving so called ‘sustainable treatments’.

In this morning’s statement, the bank urged “the minority of our long-term arrears customers who have not yet engaged…to do so, as it is our clear preference to restructure a loan, where appropriate, rather than resort to legal action.”

PTSB said that its approval rate for mortgages increased by 80 per cent at the end of April compared to the same month last year. Market share for new mortgages stands at around 13 per cent, up from a low of 1.6 per cent at the end of 2012.

However there was no mention of the level of mortgage draw-downs. The bank alluded to the ongoing process of selling its commercial property loan book, which is reportedly advancing with several international equity players, including Lone Star, eyeing the portfolio.

It said: “The group is actively exploring disposal opportunities for these loans.”

What is mortgage approval in principle?

Approval in principle from a mortgage broker or lender gives prospective buyers an idea of how much they would be approved for based on the information they provide about their finances

The ‘approval in principle’ stage forms part of the initial consultation phase of the mortgage application process. Buyers are required to give details relating to a financial advisor about their current financial situation such as salary, monthly outgoings and the loan amount and term sought. Based on the information given, a financial advisor would then calculate how much an applicant would be able to borrow.

A big advantage for those still looking around for that ideal home is that this part of the process is quick, simple and informal. No documents have to be submitted and all applicants are told how much they would be able to borrow straight after the initial consultation phase, allowing prospective buyers to shop around for their dream home within a realistic budget.

When an applicant has chosen what property they want to buy, the formal application process can then begin. At this stage, applicants would have to submit various documents verifying the information that was given in the first stage described above – and providing that everything is in order, you should then receive full approval for the sum agreed in principle.

As experienced mortgage brokers, MortgagesDirect.ie can offer you approval in principle over the phone or in our office – within a matter of minutes. We offer three convenient options for those looking to get approved:

1. Speak to one of our mortgage advisors over the phone on 1890 746 759
2. Request for a mortgage advisor to call you back at a time that suits you
3. Complete our online mortgage application form