We are really pleased to be among the very small and select group of brokers in the country who were asked to be part of the AvantMoney lending panel. If you want a low cost fixed rate from the mortgage arm of AvantCard then you must go through a broker and we’d be happy to help you should you want to work with a firm that has been around for almost 20 years and where every advisor has at least a decade of experience. Call us to find out more 01 6790990
Are banks lending?
A highly debated element of the recapitalisations to date and the NAMA debate have to do with credit flow, that if banks are given money that they will start to lend it out, the problem being that we currently have a rapid credit contraction.
The new Financial Regulator Matthew Elderfield made his first public appearance since arriving nearly three months ago, and he said “A robust recapitalisation exercise will ensure that Ireland’s banks start this process in a stronger position and with a better funding outlook”. He is alluding to the thing that many people are forgetting, that when a bank has as high loan to deposit ratio they naturally hoard credit during times of widespread credit deterioration in order to ensure they have sufficient capital to face the impairments.
NAMA won’t ‘force lending out’, this is the aspect of fiscal policy not being able to ‘push on a string’, fiscal and monetary policy can pull a string and reign credit …
Mortgage Question: I have no savings, can I borrow a deposit?
The majority of lenders now insist that your deposit comes from a non borrowed source, and will decline your application if you plan to borrow it. The lenders who will consider your application will assess your application with the new deposit loan as a financial commitment which decreases the amount you can borrow on the mortgage, and because it is a short term loan it will eat into borrowing capacity much more than you may expect.
[eg: €100,000 loan over 30yrs costs c. €420 before tax relief, but one tenth of that, €10,000 at personal loan rates over 3yrs will cost c.€313 per month which would reduce the amount you can borrow by approximately €80,000!]
Short answer: You should aim to have your own equity in the deal via savings, if you borrow a deposit then you are running an additional risk and our firm are of the belief that this is generally not in the best interest of the borrower.
How much of a deposit do I need?
When making a mortgage application this is a question that many first time buyers want to know, how much money do I must I have for a deposit? Well, that kind of depends on which bank provides the mortgage finance!
Lending criteria is different for every bank/building society/lender, this goes for rates, the general underwriting criteria as well as the ‘loan to value‘, the deposit you need is 100% minus the Maximum LTV and that will give you the deposit amount you require. For instance, ICS have a maximum LTV of 92% so the deposit you need – if you are obtaining finance through them – is 100% – 92% = 8%.
What is interesting in that example is that when you go ‘sale agreed’ on a property the estate agent will ask for a security deposit and the balance of 10% at the signing of contracts, this is an example …