Podcast: Mistakes that first time buyers make with Joanne Daly, episode 00001

Joanne Daly has been a broker for 13 years and in this piece she speaks to Karl Deeter about the errors that first time buyers make prior to making their mortgage application, thankfully most of what she mentions is easily rectified!

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Time to leave your home, give it up…

One of the downsides of financial advice is when a person comes to you and it is too late to help, recently I had a client who was about to give up their home, they couldn’t even afford to pay me for advice, but in hearing their story I thought I could turn them around and told them if it works they can take care of it some other day.

The first thing they showed me was a letter (click on it for the big version) which basically said ‘you can’t afford your home, time to give it up’. You’ll notice a big white space to the right of it which makes it less legible, that isn’t what happened when we scanned it up, it went to them like that.

So the demand to get out wasn’t even presented in a fully readable format. This couple are in …

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11 Mortgage tips

Being a first time buyer actively looking to purchase a home is often a daunting situation, often made worse by the unknown. While some people find it a painless process others have personal circumstances or lifestyle habits which stack the odds against them which they are not even aware of.

That is why we have made a list of eleven tips that first time buyer should be aware of prior to applying for a mortgage, because if you only find out about them after you make your application (and in particular if it results in a credit decline) then it could set you back months at least if not years.

1. Be in a permanent job finished probation and ideally working continuously for 2 years: This is a good rule of thumb, an ability to repay is the key consideration with lenders, and the way they determine this by seeing an income history that has a likelihood of continuing. A loan is only underwritten once, at origination, so the lender knows that taking a chance early on means taking a …

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Mortgage Market Trend Outlook 2011

It’s a new year and we have a new set of predictions for the Irish mortgage market in 2011. In our report (get it here or click on the image) we go through them in detail (bullet points below) and we also review our forecast for 2010 to see just how inaccurate we were on the calls we made for last year.

In our report this year the main areas are:

1.Banks will push up interest rates by another 100bps or 1% (independent of any move by the ECB) costing the average borrower (loan of €200k over 25yrs) an additional €1,280 p.a. Rate hikes may start as early as this month. 2. Variable interest rates will generally start to rest at or north of 5% by 2012. The state controlled banks in particular will be forced to make some painful decisions on interest rates they charge to customers. 3. Fixed rates may be temporarily removed from the market, offered on a limited basis or priced out …

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Is keeping families ‘in the home’ merely keeping them in the fire?

You must question the morality of ‘keeping people in the home’ when doing so will push them deeper into debt they already can’t afford. The misery of a repossession is not the day you are told you have to move house, rather it is the stress on the way down, the calls, letters, meetings, the apprehension merged with repeated requests to fill in budget forms, and all the time knowing that you are unable to walk away because of our draconian debt laws.

We have 36,500 households in arrears, the greatest attrition is moving from 90-180 days into the 180 days or more unpaid, meaning that the people who go into arrears are not coming back, they remain unable to pay; the figures are hardening in the worst possible sector of the statistics.

Oddly, an increase in the 3-6 month bracket (if the total sum was stagnant) would be a sign of recovery as people paid their way back down the chain towards having a …

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Who has the best mortgage rates?

The ‘best rate’ is a misnomer because interpretation of what is the ‘best’ is a subjective question, for a very conservative person a 10 year fixed rate is ‘the best’ and from that point the ‘best’ will likely be whatever is the cheapest ten year fixed rate, having said that, after careful consideration the best 10 year fixed rate mortgage might be one that allows you to pay off a lump sum during the fixed period without any penalty thereby ensuring that you can eat into your capital quicker, is a feature like that worth extra money each month if it isn’t the cheapest? To some people it may be, to others it isn’t.

If you are considering a property purchase and are not a cash buyer then you will need financing, and this comes at a ‘price’, the interpretation of that price is generally the rate, so which rate is better (we’ll assume you want a 1 year fixed rate), 2.5% or 2.6%? Naturally you’d be inclined to say it is …

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‘Are we there yet?’…. when will the bottom of the housing market be reached?

The most popular question I am asked as of late is whether or not we are at the bottom of the housing market, and the answer is ‘no…. but perhaps closer than we think’. Today we will consider a few of the things we will need to see in order for ‘recovery’ to occur.

First of all we need to see a reduction in the massive overhang of housing stock, even if the number reduces, they all need to be sold and a degree of scarcity will need to develop in order to make prices go up again, currently supply is swamping demand and that dynamic will leave uncertainty in its wake.

However (and here is part of the ‘perhaps closer’ bit), NAMA will likely take a lot of housing off the market, in particular it will take it off the market and drip feed it back in, if this happens then it will avoid devastating fire sales, it might also lead to stagnation …

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If you are in financial trouble, don’t be an idiot

A part of me feels bad about not having any pity for some of the people who recently had their homes repossessed. Note: I said some not ‘all’, the reality is that I agree with repossessions for people who bury their head in the sand. In many cases the person had made no payment in three or four years and avoided any contact from the lender.

How do you negotiate with a person who won’t even come to the table? Or worse yet, who refuses to acknowledge there is an issue to come to the table for! The IBF recently decided to start working with MABS on a new protocol for people in financial difficulty, we fully support such a move, and for people in mortgage arrears, or indeed any financial arrears we even wrote a guide for …

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