The reality of getting a mortgage in a recession

Posted by fwadmin on September 2, 2010 under Mortgage | Be the First to Comment

Hi, my name is Allan Cuthbert and the company name is Financial Wellbeing. I help people to become mortgage and debt free and take the stress out of sorting peoples’ personal finances.

This week I ended up speaking to 3-different couples who all wanted to buy their first home. The issue here is that it is close to impossible to get a mortgage direct from your bank these days.

The rules in getting a mortgage have completely changed and without expert mortgage advice people are only going to get knocked back. Most think that because they have a good relationship with their bank that this will get them the mortgage.

Sorry to rain on your parade but loyalty and banking history have nothing to do with get a mortgage in poor economic times.

I had to tell one couple to go back to the drawing board and to get their personal finances back in shape before they even take the first step. I am more positive about the other couples and it now my job to guide them through the maze and help them jump over the hurdles the bank will put in their way to stop them buying their dream home.

Ideally, I always like to speak to first time buyers around 6-months out before they want a mortgage. I offer a free initial consultation to advise them how best to start the mortgage process.

If you have a mortgage question you like an answer to just let me know.

5-bits of money advice to instil in your kids

Posted by fwadmin on August 25, 2010 under DEBTS & LOANS | Be the First to Comment

School season often begins with having candid conversations with your children about money, budgeting and needs vs. wants.

Depending on their age(s) and maturity, you could negotiate school budgets with your kids and allow them to manage those budgets themselves. If they want anything above the agreed amount, let them use their allowance money or work it off by doing additional chores around the house or for their grandparents or neighbours.

I recently read that if you have money problems it is more than likely something you learned from your parents – GREAT!  One more thing to feel guilty about.

Here my top 5-tips on money and children

I.      Make certain your child is old enough to understand the concept of money before implementing an allowance. Some experts recommend age 8, others recommend, immediately after they know NOT to eat it, but you know your child best so you make that call.

II.      Ensure you talk to your children about COSTS (food, mortgage, clothes etc) SAVINGS, INVESTING (for their future)  and DONATING (charity begins at home, and is a valuable message to teach our children. It is important that they understand that money allows them to set goals and make important choices.

III.      Decide on an amount applicable for your child’s expenses – say it is €10, give them €20, then charge them €3 rent, €3 food costs, €2 Electricity usage, €2  clothing allowance or whatever applicable that week than out of the remaining €10 make them save €2. (Sounds harsh? I know, but they will thank you later, ok well maybe years later!)

IV.      Make certain they use a portion of their allowance/savings to pay for some items they want or need, such as sweets or school supplies.

V.      Give children control over what they do with their allowance (this one I find difficult).  Let them learn from their mistakes while the stakes aren’t too high. Teach them to live within their means and to distinguish between needs and wants.

I regularly sit down with parents who have poor money management skills. It has a very negative impact on their lives. As parent we have lots of responsibilities and teaching your kids about money is vital.

Trouble paying your Irish mortgage

Posted by fwadmin on August 18, 2010 under DEBTS & LOANS | Be the First to Comment

Financial Regulator launches consultation on code of conduct on mortgage arrears – deadline 3 September: http://bit.ly/9Op0eg

Document needed for mortgage approval

Posted by fwadmin on August 16, 2010 under Mortgage | Be the First to Comment

Your approval decision will be based on a number of different documents that you will need to provide to the banks, here is a list of the key items:

Identification

Either your driver’s licence or passport needs to be shown. Always double check to see that your identification is valid for the next 6-months. You must show original identification to the bank but the bank will just photocopied this and returned it to you there and then. It is not a good idea to post your original passport or driver’s licence to the banks so if you can’t do this in person then find an alternative way.

The name on the identification is the name that will be on the mortgage so if you have recently married or change your name then you must sort this out prior to showing your identification.

Address verification

You will need to produce one of the following with your current address clearly visible on it. This must correspond with your name as shown in you identification proof.

• Gas bill
• Electricity bill
• Landline phone bill
• Bank statement

Any of the above documents will do as long as it has your current address details on it. A mobile phone bill will not do and all address verification should be no more than 3-months old.

Loan Statements

You will need to produce 12-months statement on all loans that you currently have, even if you are going to clear these loans in the near future. The key information that banks will be looking at is what the outstanding balance, how much do you pay a month and have you missed any payments. If you are keeping the loan then the bank will factor this in to your borrowing capacity.

Savings

You will need to produce bank statements from your saving account, current account and or credit union that shows your savings records for at least the last 6-months. Internet print off will not be accepted by the banks. You can generally order statements from your bank or it can be quicker if you go in to your local branch and asked them to print off the statements and put the bank official stamp on it.

It is vital that you show good management of your current account because one referral charge and that could be you snookered!

Salary Certification

If you are an employee then you will need to get your employer to fill in a salary certification for you. This is a one-page form that asks your employer to confirm your salary details and to put a company stamp on it to show that it is authentic. You can get this form from your bank. The Human Resource or Accounts people are best to get this done for you.

If you are self-employed then you will need to produce 3-years of accounts for most banks. If you are new in business and only have two-years account some banks might make an exception if the case is strong enough. Anything less than 2-year of accounts then banks will not take your income in to consideration.

P60

Your latest P60 is need. If you haven’t your latest P60 then you can contact the Inland Revenue and ask for a revenue balancing certificate and this will do instead. It very similar to your P60 but comes on letter headed paper from the Inland Revenue.

Payslip

Your last three payslips if possible or three payslips that are less than 3-months old. Payslips with any bonus or overtime would be better because this proves to the banks that you are in receipt of additional income and they can factor this in.

Self builds

If you are building you own home on a site then you will need to produce your planning permission and costing for the build. If you are hiring a building firm on a fixed price contract then the contract will do. If you intend to build by direct labour then your engineer’s details and costing must be supplied.

Deposit

You will need evidence of were your deposit is coming from. General this will be seen in your bank statements if you have been saving up a deposit. If this is a gift then a letter from the person giving you the deposit stating that they will have no interest in the property and that it is an unconditional gift.

For joint application both applicants must produce all of the above items.

Step 1 – Get an approval from the bank

Posted by fwadmin on August 10, 2010 under Mortgage | Be the First to Comment

Application Stage

The first step in the process of getting a mortgage is to get a written approval from the Bank this is generally valid for 3-6 months. This approval in principle (often referred to as AIP) will show you in writing what your borrowing capacity from the different banks are. This will also be an early indication of any problems that will ultimately mean that you will be unsuccessful in getting a mortgage.

Your approval in principle is not a legal document but a written approval that your application has been accepted subject to certain conditions. Provided you meet these conditions then you are another step close to obtaining a mortgage.

Your approval is based on the information you will have to supply to the banks and this is the first commitment from the bank. This is an important document but additional check and information will be needed such as a clean credit history, valuation report on the new property and other information relevant to your individual circumstances before the bank will release your mortgage.

The benefit of getting this approval is that you will get a clear indication of how much your borrowing capacity is and what percentage of a loan you will get such as 100% (not a chance!), 95% (dream on!), 92% or in today economic climate it maybe a lot less.

This will then allow you to go view potential house with a budget in place. You will also be able to see what interest rates you can choose from and what your repayments will be each month. All this information is vital before you begin your house search.

Having an approval in principle also place you in a strong position when bidding for a house. You are able to strengthen any offer you put down by informing the Auctioneer that you are mortgaged approved. Auctioneers will get a heart attack if they find out you are approved. You will become part of the golden circle and expect to be treated like royalty. That is how rear an approval in principle is now.

With your approval in place you can have the confidence of putting your deposit down know that you are over the first step of the process. But do not under any circumstances sign a house contract based on getting a written approval. If you have a competent solicitor then this wouldn’t happen anyway.

What is a mortgage?

Posted by fwadmin on August 4, 2010 under Mortgage | Be the First to Comment

Recession Mortgage

The word Mortgage comes from the old French word “dead pledge” which means that the promise finishes when the obligation is fulfilled or the property is repossessed. Lets not beat around the bush; never before has the word repossession been taken SO seriously.

You want to buy a house and you cannot pay for it in cash. Like the rest of us you need a mortgage? Getting a mortgage can have many positive and possible negative repercussions if mistakes are made.

The following insider’s guide touches on the different stages of successfully applying for the mortgage that ultimately allows you to buy your dream home.

A mortgage is a long-term loan that is secured on a property. Mortgage loans are usually set up and paid on a monthly repayment basis and can stretch over a period of 5-years to 40-years.

A mortgage loan must be used to purchase a property as this is the security that the banks are lending on. The truth is that you do not actual own the property; it belongs to the bank as long as they have the mortgage deeds to your home. It is only when you have paid off the mortgage and gained back the deeds of the house that your home is truly yours.

There was thousands of different mortgage products on the market during the  property boom but now you have few options. Banks such as Halifax have left and now you have to be prepared to work hard to get a decent mortgage.

Banks will assess your application and either accept or decline your application based on the information you supply to them. There are around 19 different banks in the marketplace, you will find most of the Bank say they are opened for business but in reality they do not want to lend you money.

You have your main high street banks such as your AIB, PTSB and EBS. Then you have specialist lending banks such as IIB, ICS and a range of other banks that deal primarily through mortgage brokers such as Haven (broker division of EBS).

There are also Banks that deal primarily with the sub prime section. This is with people that cannot get a mortgage through their banks due to them not meeting the criteria set out by banks. This inside guide does not tackle sub-prime mortgages and this is one of the many reasons we find ourselves in the tough economic climate.

What I will talk about is the process of applying for a mortgage, getting approval and moving through the process until you get the house keys. The benefit of this is that you can make a more educated choice of what is the best mortgage in the market place for you, which means, ultimately means you will save thousands of euros.

A word of caution before you read on! This insider’s guide is no substitute for professional advice from your Bank, Mortgage Broker, Solicitor and other professional advisors.

But be cautions, very cautious of the advice you are getting!

Banks are treating people struggling to pay mortgage

Posted by fwadmin on July 28, 2010 under DEBTS & LOANS | Be the First to Comment

I have done a live documentary to reveal what happening to people when they find it hard to pay their mortgage. This is a really case with a real outcome.      Trouble paying mortgage

TYPICAL MONTHLY BUDGET SHOULD INCLUDE

Posted by fwadmin on July 16, 2010 under DEBTS & LOANS | Be the First to Comment

Done budget – No money left over

Posted by fwadmin on July 7, 2010 under DEBTS & LOANS | Read the First Comment

Question

I have sat down and done a budget. My major issue is that after paying “necessary bills” I have no additional money left over to pay my loans and other bills.

Answer

If, after you made a budget, you’ve come to the conclusion that you won’t have any money left over to pay your creditors, you need serious help.  I am glad you aren’t burying your head in the sand and trying to do something about your situation. This will help you in the long run.

My recommendation is that you contact MABS (Money Advice & Budgeting Service www.mabs.ie ). They will provide you with a free service that will help you get out of debt. The three main areas they can help you on are:

(1) Keeping a roof over your head. Paying your mortgage is the most important thing to do. MABS will work with you to come up with an alternative solution to pay your mortgage. The government have put in place measures to pressurise the banks to work with you rather than allow the banks to kick you out on the street.

(2) They can help prioritise primary creditors: water, gas and electricity. You mustn’t overlook life, house & general insurance – they protect you and it is essential that you keep up your repayments.

(3) MABS will also help you contact all your secondary creditors.  You will have to put together alternative arrangements to pay all your creditors back when you can afford to. Debt is such a major issue for Irish people, you’ll find most companies have departments dedicated to restructuring debts like yours.

As I often say to my clients – be positive, look on the bright side because nobody diagnosed you with a serious illness. I know trying to cope with debt is a stressful situation –  but take action today is the only way out.

This article was prepared by Money Advisor Allan Cuthbert QFA. Have a question you like an answer to then email allan@financialwellbeing.ie or call him direct on 086 335 3013.

DEBTS & BUDGET

Posted by fwadmin on July 2, 2010 under DEBTS & LOANS | 2 Comments to Read

Question

My husband and I are struggling to manage our debts. Can you give us some suggestion to help sort out our money problem?

Answer

It’s very important to realise that you are not the only one with debt problems. Many good people have got into trouble with money. Many have taken on debts they find too hard to pay back –  now that their circumstances have changed. The most important thing for you to do is:  take back control of your situation.

There is a lot you can do, and people who will help you do it. Your first step is to create a budget. The act of budgeting will help you gain control of your money situation. When you have a budget, you are in a good position to assess your debt problem.

Gather all your papers

Open up all the unopened mail. Put everything on the table in front of you and discuss this matter openly with your husband. This is not a time for the blame game, but essential that debts do not cause a strain on your marriage.

(1) Bank statements

(2) Mortgage statements

(3) All credit card statements

(4) Every HP & loan statement

(5) Your essential household bills (gas, electric…)

Start to write down a record of what you’re spending money on. See where the money is going. This stops you from feeling overwhelmed. This clears your mind –  and helps you to think straight.

Start to budget

Next, use a budget to control your daily spending. It’ll help you see where you can find money to start paying off your debts. The thing to do is act immediately, short term – but think long term. It may take a while to pay off your debts but the key thing is to see a way to pay them off, bit by bit.

As soon as you clear one loan, redirect all your efforts in to clearing the next loan. You will begin to achieve a snowball effect that will lead you to a debt- free lifestyle. The major benefit of this action is that you are now in control of your future financial health. You have also maintained a “clean” credit history.

This article was prepared by Money Advisor Allan Cuthbert QFA.  Have a question you like an answer to then email allan@financialwellbeing.ie or call 021 234 8990.