Repayment Capacity

One of the most important elements of applying for a mortgage is repayment capacity. The lenders will want reassurance that you can pay the monthly mortgage amount that you would be due to pay.

You can demonstrate repayment capacity in many ways, the main three would be, savings, rent or your current mortgage.

As an example, if you mortgage repayments are going to be 1500 per month, the lenders will want to see you paying this amount for at least 6 months prior to an application. One common mistake we have seen recently is clients who are saving 1500 at the start of a month and gradually withdrawing it as the month progresses. If you save 1500 in at the start of the month and finish the month with an increase of 500 in savings, you have only saved 500 euros that calendar month.

We can offer our tips and explain the best way to monitor this at any stage, please feel free to contact me at james.curd(at)yes.ie

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No Deposit? No Worries!

In an inflated economy, saving up for a deposit can seem like the most difficult part of buying a home especially when most of your net income is going into paying rent and your monthly bills. While having a large deposit gives you the best chance of getting a good mortgage deal with a low interest rate and a bigger house, there are options available for people with lower deposits and government help to get you on the housing ladder.

The average first-time buyer puts down a 10% deposit on their first home, which could mean finding a daunting €30,000 (on a €300,000 property) or more. However, there are also a few government schemes to help first time buyers get on the property ladder. These include the Help to Buy & First home Shared equity scheme.

Although the Help to buy scheme only applies to new build properties, with the purchase price of less than €500,000 and has a maximum amount of €30,000 that you can claim (please see more information about the scheme on the Citizens information website or …

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Obtain a loan of up to 4x your income

The European Central Bank set a ceiling in 2015, allowing borrowers to take out loans from lenders who wish to lend them up to 3.5x their income. However, the ECB recently declared that as a borrower, you may request 4x your income. The loan-value caps will remain the same as before the change, so first-time buyers will be able to borrow 90% of the property’s value, while second-time buyers will be able to borrow 80% of the property’s value.

One unique suggestion received by the ECB was that borrowers earning less than €60,000 be able to obtain a loan of up to 4.5x their income. After the rate crash, the mainstream banks removed development lending. Thus, smaller builders needed alternative finance providers to realize some projects because the extent of the limits was affecting them. Clients now have their own criteria for obtaining a mortgage due to domestic inflation (which was 8.6 percent in September), rising cost-of-living crises, and rising interest rates on loans.

ICS Mortgages, a non-bank lender, tightens its loan acceptance criteria. So, if you take a loan …

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Negative interest rates are both gone and here at the same time.

Many commentators are talking about the end of negative interest rates in nominal terms and it’s true, interest rates are rising but in real terms they are still negative. Look at mortgage rates (for instance), you can borrow at 3% and below and meanwhile you have property price appreciation at 15% meaning that in real terms you are paying -12%.

If you can ever get something on a continuous basis at -12% that indicates ‘buy’, and that’s what people are doing, but notice that we mentioned ‘continuous’, the reality is that there is no arbitrage most of the time and this will be closed down by either rising costs, falling prices or some other outcome that we can’t forsee. Trees don’t grow to the sky, they never have and never will so the trajectory of house prices must rationalise but it’s hard to see how or where at present because the demand side seems so demonstrably strong.

I bumped into Kieran McQuinn on Pearse Street today and in our brief chat mentioned how the price changes are not sustainable, he …

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What is the Local Property Tax of 2022?

 

Local Property Tax is a self-assessed tax based on your property’s market value. Until recently, all Local Property Tax costs have been calculated using the prior property assessment date.

The next property valuation date is 1st November 2021, according to the most recent revisions to LPT released in June 2021. For the 2022 Local Property Tax charges, property owners must submit a revised self-assessed valuation of their property based on the new assessment date of 1st November 2021.

 If you sell your home after 1st November 2021, you will be responsible for the Local Property Tax in 2022.

Housing prices will be reassessed every 4 years under the current LPT system, and new properties will be added to the system every November.

Local Property Tax is payable by all holders of residential land, including rental homes. As a result of the current LPT system, first-time purchasers and new houses purchased since 2013—which were previously free from LPT—will be responsible beginning 1st November 2021.

The following is a list of individuals that are liable for Local Property Tax:

Individuals with a …

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5 tips to improve your credit rating

Your credit rating is crucial when applying for a mortgage or any type of loan. The better your credit rating, the higher the chance you will qualify for a good rate from your lender. Having an average or below average rating can greatly reduce your choice of lender and have an adverse affect on your rate. Here are some tips to make sure your credit rating is as high as possible.

1. Use Credit cards wisely

Using credit cards responsibly on a regular basis is key to boosting your score. Banks may ask you for 12 months of credit card statements, and being behind on your credit payments will decrease your chances of getting a loan. Instead, use your credit card for small amounts, and keep up with your monthly repayments. This shows that you can reliably pay back the money you borrow.

2. Don’t miss loan repayments

Making all your payments on time is the factor that impacts your credit score the most. When you pay your credit cards or other loans on time, it goes on your file …

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Central Bank accused of unjust regulations on credit unions

Credit union chief executives have recently criticized the Central Bank’s regulations on the sector, calling them “excessive and unjustified”. After conducting research, a group of CEOs from credit unions across Ireland, chaired by Queen’s University Belfast professor Donal McKillop, have claimed that under the Central Bank’s current regulations, Irish credit unions are forced to set aside unjustifiably high levels of their capital into reserves, much higher than that of Irish and European banks.

Under the Central Bank’s current rules, credit unions must set aside a minimum of 10 percent of their total assets in reserves. This means that when a credit union member saves €100 with a credit union, the credit union must then put €10 in its reserves, if a member saves €1000, the credit union must put €100 in reserves, and so on. In its research paper, the Credit Union CEO Forum deemed these rates “excessive” and many credit unions have put limits on amount of savings they will accept from members, with some capping savings at just €10,000.

The CEO Forum’s paper states that these reserve capital …

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How you can be approved for a mortgage in Ireland despite Central Bank’s rules

It’s no secret that house prices are continuing to rise in Ireland. Because of this, it is more important now than ever to maximize the amount that you are allowed to borrow. The Central Bank’s rules often do not make this process any easier, as many have criticized the Central Bank on its restrictive rules in terms of how much people are allowed to borrow. To be approved for a mortgage in Ireland, you first have to fall within the Central Bank’s income rules. Second, your lender will evaluate your repayment capacity.

First, the Central Bank restricts lenders to loans of 3.5 times the borrowers’ income (joint and single), unless they are granted an exemption. This means that someone making €40,000 can borrow up to €140,000, and a couple making €100,000 combined can borrow up to €350,000, respectively.  However, to be approved for a mortgage, they must also pass a stress test, per Central Bank rules. This tests the ability of the borrower to repay the loan each month should interest rates rise by 2 percent above what the lender …

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Why Are Banks Not Lending Mortgages?

Getting a mortgage over the recent year has proven to a high hill task; more recently is the COVID-19 pandemic that has affected the world economy in different ways. In Ireland, the mortgage market has been on-demand as properties price has been increasing over a fortnight ago. Research from central banks has shown that many banks have reduced the rate of mortgages despite the high prices of properties, especially in cities and coastal regions of Ireland. The big question that many ask is: why are few or no banks giving out mortgage loans?

Many banks have feared giving out loans because of many reasons about economic stability. Moreover, different types of loans are now more challenging to obtain due to the pandemic’s economic and employment effects, as the mortgage market has been severely harmed. As the prices of properties continue to surge, many banks are opting away from giving out mortgage loans because of the following: –

Economy meltdown or recession. The lockdown demonstrates that Irish banks still have a large number of credits on their books due to …

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Central Bank warns of New Home shortage

House prices have been surging in Ireland lately, and the new home market has been hit especially hard. The rise in house prices has been caused by a number of factors, and significantly accelerated due to the economic strains of the Covid-19 pandemic. Two recent reports from property websites myhome.ie and daft.ie have suggested that home prices are currently inflating at a 13 percent annual rate. Now, the Central Bank has warned that the pandemic will have a significant affect on the housing supply for the foreseeable future. The Central Bank projects that approximately 25,000 fewer new homes will be built between 2020 and 2023 when compared to pre-pandemic projections.

Among the many factors already driving an increase in pricing has been pent up savings. Consumers have had significantly less things to spend money on since March of last year, especially during those times when the country was under level 5 lockdowns-the strictest possible measure. People have not been able to shop at non-essential retail stores, eat or drink at their favorite pubs, or commute to work, leading to a …

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