The Last Word on TodayFM features Irish Mortgage Brokers, 30/04/2020

We were part of a discussion around Covid19 and mortgages on Matt Cooper’s ‘The Last Word’ show on Today FM yesterday. The other participant was Brian Hayes of the Banking and Payments Federation of Ireland.

For our part we were impressed with the fact that the banks have been able to do more than 2,000 mortgage restructures per working day since the pandemic driven mortgage breaks were announced. To put that in perspective, it took six years to do 100,000 restructures after the financial crisis. This time around that figure could be achieved in a little over two months, that is something to be commended.

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How to buy a house in Germany

The property prices in Germany depends on the location of the property (for example living environment and view), the features of the land and of the building (for example the size, the number of rooms and the type of the house). About fifty percent of the people who rent an apartment want to buy a house, but the costs for a one or two-family house in Germany are on average two thousand five hundred to three thousand euros per square meter. Many people cannot afford that.

To get a mortgage in Germany they must be at least eighteen years old and have equity of at least twenty percent of the mortgage value. Many legal regulations concerning the purchase of a house can be found in the Civil Code.

People who want a mortgage must submit various documents to the bank to prove their creditworthiness. For example, the bank requires the last three salary statements, the last income tax assessment, current pension information and the proof of further loans. Self-employed persons must provide additional evidence, for example an extract from the …

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Help To Buy For First Time Buyers

The name provides a definition for itself. First time home buyers are people in the market buying a home for the first time. Compared to other home buyers, such as trader-up borrowers and mortgage switchers, first time buyers have different benefits and restrictions when borrowing than other borrowers. The Central Bank of Ireland requires a 10% down payment for first time buyers. Now, for first time buyers, a 45,000 euro down payment for a 450,000 euro home may be somewhat daunting. However, the Central Bank has offered assistance for their first time buyers to keep them in the market. The Central Bank offers a help to buy program. This benefit allows for first time buyers of new houses and apartments to take a 5% tax rebate off of properties less than 500,000 euros. In a recent case at Irish Mortgage Brokers, a married couple came looking for a mortgage on their first home. The couple did not have a home in mind at the time, but based on their income, the couple had roughly below 500k to spend. Both individuals …

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House Moving Made Easy

House moving can be overwhelming. Here are different types of mortgage options for you to try out.

Portable Mortgage – You can move your current mortgage to your new property using a portable mortgage. You probably have to fill out a request to switch and you may have to increase the size of your mortgage if the new home has a higher property value than the old home. Watch out for a higher interest rate in the new loan. Remortgage with current lender – This method can help the home mover find better rates, but there are other costs associated with this loan that make up for this. Depending on how deep you are into your current mortgage, the fee for remortgaging with the current lender is usually a cost between 1-5% of the previous mortgage. Exit, arrangement, and valuation fees may also apply. Remortgage with a new lender – This mortgage helps because it pays off your existing mortgage. You may also be able to sell off your old home. If the property value in your area has risen, …

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Tracker Mortgage Scandal

A tracker mortgage is a mortgage that has its rate tied to the European Central Bank rate. AIB and other banks looked to force people as many people as it could off of loss-making mortgages. After the market crash in 2008, it became expensive for many banks to borrow. The banks hurt themselves a lot with bad lending practices before the market crash. Once the market did crash, many of the mortgages were actually costing the banks money.

Instead of taking the financial burden, many of the banks looked to be sneaky. They looked to push people off of the mortgages in questionable ways.  The Irish Times estimate that scandal costs have surpassed 1.5 billion Euro.

What is even more crazy is that financial services knew about the banks being suspect. Many people went to court and lost. However, it is believed that many of the banks had a voice on these committees.

PTSB and Springboard Mortgages were the first two banks caught in the scandal. It is estimated that 1,400 people had their loans mismanaged by both companies. Some …

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The 8 Types of Mortgages

Mortgages can be scary for first time buyers. It may help to understand the different types of mortgages when you apply for a mortgage. Here are the 8 most common types of mortgages:

Repayment Mortgage – This is the most typical mortgage. You pay back the principle you borrowed along with the interest applied in fixed (typically monthly) installments. Fixed Rate Mortgage – This means the interest rate that the bank gives you is fixed for a specified period of time. It is a safe mortgage because the monthly payments do not change over time. Standard Variable Rate (SVR) Mortgage – The rate is changed by the banks typically to reflect how the economy is doing. This rate typically follows the LIBOR or Federal Funds Rate set by the central banks. Interest-Only Mortgage – This mortgage pays off the interest before principle. After the interest is paid off, the borrower starts to pay off the principle amount he or she borrowed. Federal Housing Administration (FHA) Loan – These loans protect people who may not be able to pay back their …

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The Qualified Mortgage Patch

In less than a year, the Consumer Financial Protection Bureau (CFPB) is letting the “Qualified Mortgage Patch” (QM Patch) expire. Why does this matter for first time buyers?

The QM Patch states that mortgage buyers must have a debt-to income ratio less than or equal to 43% in order to buy a home. This rule was created to protect borrowers from racking up too much debt. Removing the QM patch could have drastic effects for the European economy. Let me explain:

I grew up living in the United States during the Mortgage Crisis of 2007. It started with many investors looking for low risk high reward profits. They turned to the housing market to buy those loans. Banks would convert thousands of marketable securities and turn them into shares for investors to buy. They believed the investments were safe because house prices were rising dramatically during this time and credit unions gave many of these securities AAA ratings. AAA rating is the best rating a house can receive.

Investors loved these loans because they were very profitable. They started pushing the …

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Soaring Cost of Living in Ireland

For a lot of people living in Ireland, considering the cost of living never really crosses their mind. They pay rent, buy groceries and live their lives. The price of all of it is just that, the price. For others who haven’t grown up here or have traveled outside the country, the everyday price of living is more prevalent. Compared to most European countries, and many countries around the world, Ireland is a very expensive place to live.

The European Union (EU) has a lot of cheap places to live nevertheless, such as Bulgaria and Poland. In order to find out how cheap or expensive, we look at the Cost of Living Index. Based off of Prague, which is the central reference city, we can statistically see just how expensive certain countries are to live in. Both Bulgaria and Poland received scores hovering around 80. This means its 20% less expensive to live in those two countries than the average in the EU. Ireland and specifically Dublin received a score of 202! This translates to a cost of living 102% …

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Mortgage Switching is More Common than Central Bank States

Competition between mortgage providers has increased dramatically over the past couple of years. People are switching more frequently than every before trying to find the best mortgage rate for themselves. Over the last three years, the percentage of mortgage holders prepared to switch providers has doubled according to a banking sector report. Additionally, these figures are higher than what the official figures from the Central Bank are. Also, the Irish Banking & Payments Federation (IBPF) marks the rate of switching at over 15% which compares to the slightly more than 1% rate that the Central Bank has pit forward.

The federation suggests that the much lower calculations from the Central Bank could have a negative effect on how willing consumers are to search around for value. The IBPF notes the difference in numbers is caused by the Central Bank using the number of mortgages being switched as a percentage of total outstanding private dwelling house credit. IBPF stated, “This gives rise to a figure of less than 1 per cent for the current level of mortgage-switching activity” and “Crucially, this …

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