August 27, 2024 • 36 mins
Welcome to episode 25 of the Crazy House Prices podcast! Today, we're diving deep into the world of mortgages with none other than Eoin O'Connor from Finance Solutions, aka The Mortgage Guy on Instagram. I've known Eoin for ages, and trust me, his mortgage knowledge is top-notch. If you're not following him yet, you definitely should!
We'll tackle your burning mortgage questions: combining mortgage and renovation costs, the ins and outs of the first home scheme, managing complex incomes, and whether to choose a fixed or variable rate in today's market. Plus, we'll discuss unique situations like buying property from family. Eoin's expert advice is a must-hear, especially if you're navigating the mortgage process or planning to soon.
Before we dive in, just a heads up that I'm in a partnership with Finance Solutions this year. They've been doing an incredible job for my followers.
You can order my book: "How to buy a home in Ireland" here
Please support the Podcast and Instagram if you can over on my Patreon
Make sure to follow me on Instagram and if you want to support the page and podcast, head over to my Patreon and get access to over 70 extra exclusive podcasts
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Music.
(00:12):
August, falch a rash to the Crazy House Prices podcast.
I'm your host, Ciarán McQueen, and today in episode 25, we're talking all about
the world of mortgages with none other than Eoghan O'Connor from Finance Solutions,
also known as the Mortgage Guy on Instagram.
I've known Eoghan a long time now and have done lots of work with him over the years.
He's such a dedicated and knowledgeable guy and he's so generous with that knowledge.
(00:36):
So if you don't already follow him on Instagram, you really should.
And in this episode, we'll be covering some of the most pressing questions about
mortgages that you, my listeners, have sent in.
We'll explore the ins and outs of combining mortgage and renovation costs,
which is a hot topic for those looking to purchase Fixer Upper.
Owen also breaks down the first home scheme, offering a clear explanation of
(00:57):
how it works, the benefits and the potential drawback.
We'll also touch on the best practices for managing
complex income situations like overtime when
applying for a mortgage and whether it's better to go with
a fixed or variable rate in today's market plus
we'll discuss the unique considerations when buying a property
from family you won't want to miss owns expert advice on these crucial topics
(01:19):
especially if you're navigating the mortgage process right now or you're planning
to in the near future now before we get into it i want to be clear that i am
in a partnership with finance solutions this year they're my trusted mortgage
broker and they've been doing an incredible job
for all of my followers that have used them. So let's get into it.
Now, today I have Eoin O'Connor of Finance Solutions, the mortgage guy on Instagram,
(01:42):
as you will all know him as, to come and chat to us about all things mortgages.
So Eoin, how are you?
I'm very good, very good. Happy Monday. Delighted to be asked Eoin.
Now we've done, we've done a good bit of work together. And as I will have said
in the intro, So, you know, I think you're great.
Um, and I think the whole team you guys have there is great.
(02:04):
And I'm a big, big believer in using a mortgage broker. I've said this from
day one. It's even in my book.
Um, I just think it's an absolute no brainer as a consumer to have somebody
there to hold your hand through the whole process.
Think of it like if you had a friend that bought a hundred houses a year.
(02:24):
Uh you'd you'd be going to them for advice
on how to buy a house so that's basically what your
mortgage broker is if they're doing this hundreds of times a year
they're going to have the most experience so just uh on your side of things
what what are you seeing from people in terms of you know what's your general
advice to people in terms of going to a mortgage broker rather than say going
(02:47):
direct yeah i'd always encourage anybody um to reach out to us at.
Least six months in advance anyway just to put a plan in place because without a
plan you know you could fall at the final order when you see the
dream home and then you've realized you haven't done and what
you needed to do and i always kind of break it down to five simple
steps simply your income will determine how much you qualify for you
need to demonstrate you can afford a monthly payment you need to have your 10 deposit
(03:09):
your accounts need to be earning a clean credit history and then
i suppose the delving to your question in terms of why use a
broker it's just more options you know
it's we walk into one bank and
they'll tell you how great their products are they can tell you what loan amount
you can get but if there's better rates elsewhere or
you can get more of a loan amount elsewhere that bank advisor
(03:30):
is not going to tell you that whereas a mortgage broker we're
impartial we're going to find out what lender meets
your needs that could be which lender will offer me max lend which
lender will offer me the lowest rates do they offer me the
ability to overpay because that's huge people are looking at this how to
clear me mortgage quicker or save myself some money so we
will have a consultation with a client and see what's important
(03:51):
to them and we'll simply basically look at
all the lenders because we currently in finance solutions deal with nine lenders try
find a lender to meet their needs and make a decision from there so that that'd
be number one for me it's just more choice experience is key you know we deal
with this kind of stuff every day we do deal with straightforward applications
but we also deal with a lot of complex and applications in terms of people that
(04:13):
may not not be permanent in the role, have credit history issues.
We deal with this kind of stuff every day. So experience is key.
Especially when you're making your biggest financial commitment that you'll probably ever make.
You want someone in your corner, experience that deals with this stuff every
day that's going to guide you from the very first conversation throughout the
process when you go sale agreed, if you need anything extended until you get your keys.
(04:34):
And then as long as you pay your mortgage, everybody's happy.
And then lastly, it's free. We don't charge a fee of finance solutions.
All brokers, brokers some broker charge a fee finance solutions
don't all brokers get paid one percent
so it's the same amount for every lender we're not biased towards any particular
lender we get paid one percent only when you draw down the mortgage okay so
(04:55):
that's a key thing for people people think there's some sort of catch with this
why should i go to you do i have to pay it is added onto my mortgage this is
not true at finance solutions we do not charge a fee our goal is simply to make
your dream of owning a home a reality.
It's it's one of those things where when people hear it say
they're starting out for the first time they hear it they're like but like there
(05:16):
has to be a string attached somewhere it's a it sounds
too good to be true but it actually is the case you're getting
paid the same regardless what lender it's basically a matchmaking
service you're finding okay well this lender will have you know will suit your
application a little bit better it's basically tinder for mortgages is it is
that how we describe it that's it we swipe right for the right uh the right
(05:39):
lender for that client i don't i don't know which way you swipe you see i'm too old for for a team.
We'll move on yeah we'll move on anyway we get i do anyway and i'm sure you
do as well get a million questions in about mortgages and i hate giving people
the answer it depends so i put a question box up and i told people send in your
(06:01):
questions i got i think it ended up being over
100 questions in so i have whittled
those down to five kind of bigger questions and then
we'll do five quick fire questions towards the end
and i ask people to put in as much detail as
they could into questions so that your answer isn't just it depends because
my application is not going to be the same as someone else's application everything
(06:23):
is different so that's why not to keep banging the broker drum but that's why
it is so important to go to an experienced
broker because they're able to actually go through it all and say
look this lender is a little bit more strict
on this or this lender will bring you up on the pay scale or whatever and
people just won't know that by themselves so that's where where the
broker comes in but um looking at say
(06:45):
we'll get straight into it so the first question here and this
is a really hot topic especially now with the
vacant home grant and all that but we'll talk about that later but
number one combining mortgage and renovation costs so the question that came
in was please could you explain how a mortgage works for a house you may buy
that needs a lot of work cosmetically and possibly adding an addition so it
(07:07):
could be deemed livable from the bank side but bought with the intention of
fixing it up and making it modern.
Yeah. So in terms of where people come to us, the main thing is they may not
have a property and they want to just get their mortgage approval.
Your mortgage approval, how much you qualify for solely based on your financials
in terms of your income. Okay.
So the main thing is to get your approval. First of all, in terms of regardless
(07:30):
of what the bank will offer you in terms of mortgage amounts,
they can only give you 90% of the purchase price.
So a lot of people think I'm I qualify for 400, I have approval here for 400 grand mortgage.
I've bought at 300, so I'm going to take the extra money anyway to do the works.
That is not the case because it's actually a central bank rule that the bank
can't give you more than 90% of the purchase price.
(07:52):
So what way it works is, when a client comes to us for a house,
that's whether it's habitable and they just want to do some construction works
or whether it's not habitable and it's in need of renovations,
we ask them to get a builder's quote for the works involved.
You'll probably get a structural survey, especially if there's a lot of works involved.
And we'll review that and we'll generally ask you to get costings done for the
(08:14):
works that is needed to make a habitable of what you're looking to do.
The main thing is the bank's not going to give you money for furniture,
you know, paint the doors, all that.
The lender will only lend additional money if the property value increases with these works.
And that's generally in structural works, you know, and it's not just as I said,
paint the doors. So the rule of thumb is the bank can give you up to 90% of
(08:38):
the purchase price and up to 90% of the construction cost.
So if we use an example of, let's say you bought a house at 300,000 and the
bank can only give you 90% of that, so that's 270.
So where the banks can give you money, let's say you came to us with a quote of 50,000 euro.
The bank can look to give you up to 90% of the 50,000, okay, so 45,000.
(08:59):
So therefore the 270 which is 90% of the
purchase price and the 45,000 which is 90% of their
construction costs that totals 315 so the
rule at home remember let's go back to the lender can only give
you up to 90% of the value the value of
the home will have to be when these works are played a minimum
of 350 if it's more even better because 90%
(09:21):
of 350 is the 315 therefore it's within
the rules and you probably think well how does the bank think quantifying how
much it's going to be worth but when you get that builder's quote a valuer goes
out to the property values in its current state and says it's worth whatever
300 now but i've looked at the quote with these works it's now worth 350 plus
therefore as long as your income
qualifies you for the amount you can then borrow the additional funds.
(09:43):
That's really well explained. And it's something that a lot of people are unaware
of. These things are available.
You can, I call them renovation mortgages. I'm sure there's a proper name for
them, but that's the more, the easier one to explain to people.
And it's something we did try to do, but we, we weren't able to get it in the end.
So we had to, we had to sort of kind of finance the renovation ourselves.
(10:03):
And I would have absolutely loved to only be paying a mortgage interest rate
on it rather than a credit union one.
So it's a really, again, it's so important that
people if if they're looking at going down that fixed rubber route
to chat to you at least six
months in advance if not longer to make sure that you've
got a really steady plan in place to know that this
(10:26):
is this is the the route we're going down because say you can't
afford new builds in your area so this is the route we're
going down and then that will lead me on then to question too
because if someone is struggling to afford a new build which
i think probably everyone is at the moment the government have
um these schemes mostly for
new builds and uh people people know my
(10:46):
own thoughts on these schemes but as i always say if they
get you into your home and you've done your research and and
the maths and it works out well for you then grant my issues with
the overall macroeconomic thing of it but that's a whole other
podcast but so let's say the first home scheme because to
help the buy scheme everyone is you know that's been around a long time now
everyone's fairly aware on that so in terms of the first home
(11:06):
scheme can you explain how the first home scheme
works specifically i'm curious about how it
affects your mortgage application so what are the benefits and
the drawbacks and then what happens when you want to maybe sell or remortgage
your property yeah so the first home scheme was introduced by the government
i was simply there to bridge the affordability gap between what people could
(11:27):
get approved for so you must max out your mortgage approval and what you're
looking to buy for in your 10 deposit so any Any gap there,
they're willing to bridge that by up to 20% of the purchase price.
Okay? If you're using the half-deboy scheme.
Because remember, the half-deboy scheme is where you can get up to €30,000 towards deposit on a new build.
If you're not using the half-deboy scheme, the government will bridge the gap
by up to 20% of the property value, okay?
(11:51):
So I suppose it's for forced non-borrowers.
Buying a new build or doing a self-build. There's also people that can qualify
for this scheme under the fresh start approach.
The fresh start approach is where you've been insolvent, bankrupt,
divorced, and even a relationship breakdown.
And you've sold the house previously and you want to buy a new build.
You can look to avail as a fresh start approach and you apply for that through
(12:15):
www.forcedhomescheme.ie.
But it's nothing to do with your
income. Still, a lot of people think how much income do I have to earn?
It's not you must be a first-time buyer you must buy
a new build or do a self build and there's caps
involved for each county okay which you know obviously dublin is up to 475 parts
from there 425 etc so once you're under them caps you can you can apply for
(12:39):
but if i just give you a quick example if you're let's say a couple on 80 000
euro of a of an income the max mortgage you can
qualify for four times is 320 000 so
if you're looking to buy a 450 you're thinking how the
hell am i going to buy a 450 i'm way off here well the bank
regardless of what scheme you're availing of need you to have a 10 deposit which
(13:00):
is 45 000 so let's say you used a 30 grand net buy and you've 15 000 in savings
there's a gap there of 85 000 and remember you can get up to 20 percent of the
four-star scheme and to bridge that gap which on a 450 property would be 90 so the fact there's a
gap of 85 000 therefore all of a sudden you can now buy a house at 450 000 and
(13:22):
people always ask as well well how do i apply for it do i apply for like to
have the buy scheme no you apply directly through the forced home scheme website
and you need two things you need the development address.
And you need your aip to show you max out your approval and then they'll issue
you within three working days what's called an eligibility cert and that gives
that allows you to give that to a broker to say, this is how I'm bridging the gap.
(13:45):
But the key thing I want to get from people is, because we get it every day,
people still think you can get your 10% deposit from the forced-time scheme.
It's not. You need to have your 10% deposit plus your legal fees and stamp duty.
It's only there to bridge the gap between your maximum market approval,
your 10% deposit plus fees, and the purchase price.
But it can be used with the Help to Buy scheme to help with your deposit.
(14:06):
Up to 20%, then you must be with a participating lender, which is currently
the AIB Group, which consists of Haven and EBS, Permits ESB, and Bank of Ireland.
So if you're with Finance Ireland, Avant, ICS, you're going to have to switch
lender if you're looking to add that.
But once again, when someone reaches out to us, we'll kind of tease you looking
at new bills, second-hand homes, and that could help us nudge.
(14:27):
If we know they're using the forced home scheme, we're probably looking at those
three lenders only. So that, once again, it's the key note going to a broker.
I remember looking at these schemes for when I was writing the book and there's
new ones out even since I wrote the book and I was on, I was on to the publishers
about, you know, maybe looking at doing a refresher of the book.
And even I haven't studied it before writing the book and researching it.
(14:51):
And even now I deal with this as you do all day, every day with questions and all.
I still do find it a bit confusing. So I would just say to anybody,
if you're feeling a bit confused about all that, the figures,
first home scheme, health employee scheme, all this, don't worry, it is confusing.
Just that's where, you know, an expert will help, like Eoghan,
(15:12):
will help you basically understand it.
And if you go in with a development in mind and figures, it tends to be a lot
easier to actually digest.
So i would say just reach out to finance solutions
and if that is the route you're thinking about
going down and it it's when you get
more individualized advice i think it starts to make
(15:35):
a bit more sense is that fair yeah and not not
only that kieran like the thing is there's obviously we
know the supply issues but once again it's highlighting as
well that without certain schemes because
it is a challenging market people wouldn't be able to buy these there's
over 4 000 people have applied for it and been approved for it
and over 1900 people got got a keys to
(15:56):
their home that they wouldn't have been able to buy without these schemes so
once again it's about finding putting the right mortgage lender for you but
being informed of having a broker that knows about all these schemes that knows
about complex issues that can guide you and literally hold your hand throughout
the process and that's what we do at finance solutions.
And now if only all the rentals were actually available
(16:17):
to buy that would be even better but let's not go down that one next next
is about um fixed rate
endings so currently so the question is currently switching after
a fixed rate ending trying to maximize approval with overtime included so i
work in health care much of my income comes from overtime not officially rostered
but consistent over the years i'm looking for the best mortgage provider who
(16:41):
will take this into account my new broker doesn't seem to fully understand the
nature of my job and how reliable my overtime is
any advice for finding a provider who recognizes consistent overtime?
So switching, you're looking at a couple of things there, switching fixed rate
overtime, it's quite a good question.
Yeah. So in terms of switching, it's quite easy because look,
(17:03):
you're not buying a new property. You're simply just looking to get a better
deal off another lender.
Just bear in mind as well, lenders will generally send you out your fixed rate
options three months before the fixed rates open.
We always say to clients, make sure you reach out to us. And we'd always try
to read forward for existing clients.
Once again, the advantage of another broker is not just a client for the initial
mortgage, client for life. We'll make sure you're getting the best rates throughout the term.
(17:24):
But let's go back to the switching. Switching is very, very straightforward.
As long as you're making your mortgage payment and you're not
under financial pressure as in since you took the
initial mortgage you've taken 10 loans you know that's affecting your
net disposable income it's very straightforward yes there's
solicitor fees involved which average about 1500 euro yes
you can get a valuation on your home which is about 150 euro but
(17:45):
a lot of lenders cover those fees avants will give you one percent of your
mortgage and to switch to them you know permits will
give you two percent cash back based on your mortgage balance so there's no
kind of cost to it the lenders will incentivize you
to switch them and their job as a broker is to make sure
it's worthwhile switching because if we're doing figures
at the start and challenge you there has to be some sort of financial incentive
to do it but it's quite quick as well you're probably looking at the quickest
(18:08):
lender we'd probably have you wrapped up within three to four weeks the longest
lender probably two months so it's a lot quicker than just a normal mortgage
application but certainly reach out to us for finance solutions we deal with
nine different lenders in terms of the switch and to go back to a second point
in terms of maxing out the income i assume They're probably looking for.
To release some equity and if they're looking for additional borrowance
(18:29):
and in terms of the additional income the main
thing like people can think their overtime commission.
Bonus is guaranteed but the main thing with lenders there needs
to be consistent you know you can't just go into a new job and.
Say i'm getting a bonus next year of 100 grand so that's.
Great but you haven't heard yet you know so there's certain sectors as
well that we'd be familiar with just from experience that we know it
(18:51):
technically is guaranteed you know whether that's on every
payslip you can clearly see it or we'll ask for the
last three years employment details from which is basically our old
p60 and that shows the total income earned over the
last three years so we'll ask for that additional documentation now if we need
to squeeze as much of the person's income out of
the lender we will make sure
and we ask for that additional documentation to back
(19:13):
up the information back up what the client's saying they're saying this is
basically guaranteed so once again every lender has different rules in
terms of how much of a percentage they'll take but once again
as a broker and finance solutions quickly given nine different lenders we
know which lender will look at taking the maximum for
them and assuming if they're in health care they're probably going
up on the pay scale as well so releasing equity is
(19:34):
is a it could be great you know good finance then putting
an extension on or whatever so it's a it's a
really really good question uh next one buying a
house from family next year moving to ireland
this year and getting everything in place for mortgage approval will
buying from family affect which mortgages we can
apply for or do banks not look at that no so the main thing we asked for was
(19:57):
when someone said agreed is to finalize everything because people think when
you go up for mortgage approval you have to finalize the purchase price the
loan amount the rate right now it's when we initially meet with a client it's
finding the lender that meets our needs okay so to go back to the question in terms of.
Does it matter whether you buy from family the answer is no you know
the main thing is we will ask the estate agent
(20:19):
details when you give us property details and if someone says why not
family or family or family friend that's fine
it's a private sale we just ask the the valuer to arrange
access to the property with that person so whether that's a family member
or family friends doesn't matter the lender will solely walk off
the contract price so if there's a discounted price brilliant
so generally what happens there is let's say you
(20:41):
might be buying off your mom and dad and they're moving to another property and they
might be let's say the house is worth 500 but they're selling it for 400
that's fine the valuation will still say 500 000
but the lender be like hold on a second there's a hundred grand of a difference but that's
where the family are gifting them equity so there's
very various ways it can be looked at usually when
you're buying on family there's a discount but there's not a discount it's simply
(21:03):
a straightforward um application it doesn't
matter lenders are happy once the valuation comes in
at the same price price as the purchase price or the
property value but if it is discounted a gift letter
will box that off for your buy-in for family so it's very straightforward the gift
letter is important uh good question good answer thank you next one this is
a really common one and very current at the moment with fixed rates and variable
(21:26):
rates so the question is my mortgage is with the credit union and i've decided
to go with the five percent variable rate for now considering the rumors that
interest rates are due to drop.
My options were 4.75% for a five-year fixed, 5% for a three-year fixed, or 5% variable.
Do you think a variable rate is the best option right now, or should I lock
(21:47):
myself into a fixed rate considering the current economic climate?
So once again, everybody is different in terms of what they want in terms of
rates and their opinions on interest rates.
I'll give you a bit of background in terms of why I don't think rates are going
to drop significantly we're not going to probably see the likes of two and a
half percent or under three percent anytime soon the reason behind that is.
(22:09):
Obviously, due to inflation and the way things have gone, the European Central
Bank passed on 10 rate increases, totaling 4.5%.
So the average Irish lender passed on three of those rates, up to 1.5%.
So what does that tell you?
That tells you the Irish lenders, although the ECB went up significantly,
they were slow to pass on the rate increases.
(22:30):
So in my opinion, and this is simply my humble opinion, is the Irish lenders,
I believe, will be slow to pass on any rate decreases.
So we've already know we already know the ecb have
slightly reduced the rates and then they they decided not to on
the latest rate and reduction to pass on a rate reduction
so remember it's up to the relevant lender whether
they pass that or not if they do and rates fall through the cliff happy days
(22:54):
the variable rate was a great decision but from a lot of forced homebuyers point
of view i kind of want to know exactly what my repayments are and the majority
that rates are actually quite high with the credit union and the majority of
rates out there the the lower rates are fixed rates.
So from my point of view, if I'm buying a house where there's a portion renovating
a new home, I want to get used to my mortgage payments without worrying about
(23:15):
whether rates are going up or down.
So the majority of real estate clients are kind of going for a four-year fixed
rate. And the reason behind that is the majority of the lowest rates out there are four-year fixed.
That's number one. A number of lenders that offer this four-year fixed rate
allow you flexibility to overpay.
So you get the security and you get the flexibility to make overpayments as well.
And the lowest four-year fixed rate, if you're paying a 10%,
(23:37):
percent of it is 3.8 percent
if the ber of the home so the energy rate
which you will see on every ad that you look up if it's a green mortgage as
in if it's b3 or higher the lowest four-year fixed rate 3.45 so those rates
are significantly lower than this five percent on the variable rate so that
person is clearly expecting a massive drop off personally i don't see it and all i would say is.
(24:03):
You go with the rate that you think suits your needs.
We will have that conversation with every client. Do they want security?
Do they want flexibility to overpay?
But right now, the majority of fixed rates that are low are fixed rates.
I personally can't see a massive drop off in rates anytime soon.
I think people, a lot of people maybe aren't aware that historically it used
(24:27):
to be your variable rate was lower than your fixed.
And the fixed rate usually was higher and you were paying that premium
to have that security every month
and knowing exactly what it's going to be it's just since interest
rates went really really low and even went into minus for
a while uh that things kind of flipped around and the fixed rates became lower
(24:48):
than the variable rates i know that's just a more historical thing but also
people are maybe looking at the the fixed rate and then looking at the variable
rate and then wondering okay is this going to drop I don't think we're ever going to see this kind of,
minus interest rate again and I know we in Ireland had amongst the highest interest
(25:10):
mortgage rates in Europe for a good few years and that was because the lenders
didn't pass on as many of those ECB drops but now we're getting the benefit of that that.
They're not they didn't pass on the increases as well so
ours have been a little bit more steady and haven't
been as volatile going from say i know in denmark you
were able to get a mortgage for 0.8 percent for a good few years um but now
(25:35):
they might be looking at six percent so ours have kind of been a little bit
more consistent which is a good way to look at it so um just like well just
the the main thing is like interest rates would rise and fall throughout the
mortgage term term, we had a very good,
our generation had a very good, where all we see is rates just go down and down.
The average interest rate between 1993 and 2023 is 6%.
(25:57):
So when you think about it that way, it's like, the rates that are being offered
right now is good. It's just, we haven't seen it before. So we've seen rates go up significantly.
It's like, hold on a second, but bear in mind, as a broker, we have that chat
where every client that goes in agreed in terms of what rates use them.
Because you can go fixed from one year up to 20 years if you want,
I've had that for a 20 year term.
But it's just about finding the rate that meets your needs and everybody has
(26:18):
their opinion but it's about having that conversation with a broker that's experienced
that's been in the industry a number of years to kind of manage expectations and say,
kind of put it back to the client what do you want from a rate and then make
your decision once you're fully informed I don't have many regrets in life but
probably my biggest regret is not grabbing that 1.95% Avant 30 year thing I
did because we were we could have switched to it,
(26:40):
it's like the effort of it I should have hindsight is a killer I know No, anyway.
Right, we'll do five quick fire questions then before we finish up, right?
So first one, switching mortgage rates midterm. So once you're in a five-year
fixed term, is it possible to change after one year?
I have four years left, but I have the opportunity to better my BOR rating to
(27:01):
a B3 or higher, which will give me the option then of the green mortgage rates.
But can I change before my five years are done?
So the only person that'll be able to tell you that will be your bank.
So make the call today, give them a ring and ask them, can they do that?
And some might charge a fee some might be fine and say yes send me in your b
or i will adjust your rate but the only person that i'll be able to let you
know is your current lender,
(27:22):
from my own personal experience i had a three-year fixed
and i switched after one year at just over
one year and there was no there was no breakout fee so that was grand and you
can get a better rate go for it but just give me make sure next one my boyfriend
and i are planning to apply for our mortgage we're both in permanent jobs but
since speaking to our broker i I applied and interviewed for another job.
(27:45):
It doesn't make sense to apply now.
So once again, it depends whether you're in the same industry.
You could be getting a promotion within the company, therefore it should be okay.
But the main thing I'd say to you is, is there probation? That's the main thing you have to find out.
And it might be worth having that conversation because people are nearly afraid
when they're being offered new jobs to say, look, I'm in the middle of a mortgage
application, I want to apply now.
(28:06):
But the probation would stop me from drawing down if I find a house.
So the main thing is the probation there.
Lenders generally want you to pass your probation. You can get approved while
on probation. A lot of people still aren't aware that you can get approved while on probation.
But a lot of lenders won't allow you to draw down. So it depends how quick you
find a property. So just have that chat with your prospective new employer.
How long is the probation? It's usually six months. So just find that out before you do anything.
(28:29):
Okay, deadly. Next one, is it worth to save as much money as possible for the
down payment or the deposit?
And does having more than the recommended 10% mean the loan will be easier to
pay or give you an option to get a bigger loan?
So in terms of your deposit, a lot of people think I have a great deposit.
I don't need to show certain things like the main thing is you need to have a minimum of 10 deposit,
(28:51):
the more you pay down lenders actually offer
you lower rates so if you end up paying a 20 deposit let's take
avon for example they offer a four-year fix that 3.8 if you pay a 20 deposit
3.6 so lenders incentivize you because the more deposit you pay the less they're
giving you therefore the risk is minimized okay so in terms of putting down
(29:12):
a max deposit it depends on the person's circumstances,
you could have someone with a lot of money, you know, and as long as you have
an emergency fund, because I bear that in mind, I hate someone to put all their
money into a mortgage, because you can't take it back out once you put your
money out, and then have to borrow for car finance.
Something goes wrong on the house, they have to go to the credit union to borrow
on that, and all of a sudden you're thinking, should I have just paid the 10%
(29:34):
deposit and just, you know, held on to some of that money?
So it all depends on your circumstances. Certainly if you have the money and
you leave yourself an emergency fund after that,
The less you borrow, the better for you because you pay less money back to the
bank. There's also nothing to do with mortgages, but let's say you have a big
chunk of money there, you're lucky and you have a load of money there.
Is that, if you have enough there to cover your deposit, is the extra money
(29:58):
you have there, could that be better invested in a fund with a much higher interest
rate than you're paying on your mortgage?
So, you know, that's where it comes to getting professional advice is so important.
Or invest in your pension, you know. know impact relief on
that lump sum that you pay towards your pension you know plan for retirement so
there's lots of things you can do but it's it's terribly
you look at all angles before you make that decision um next
(30:21):
one how forgiving are the lenders with historical bad debts if the debts have
been cleared and the wait time has elapsed so the wait time is the key aspect
here and it all depends how how long ago the general rule of thumb with lenders
especially if it's a the significant arrears is two years from when the debt was cleared.
A lot of people that have credit history issues in terms of missed payments
(30:44):
from whether it was 10 years ago, 20 years ago, whatever it was,
they don't realize that stays in your credit report until five years after the debt's cleared.
People think, I haven't paid in five years, it's going to go. It does not go away.
And the key thing the lenders look for, I always say, because the lender's going
to find out, because when we actually submit an application,
we can tell you everything's perfect.
But when the lender gets the application, they run the credit check.
(31:05):
So any active facilities will show there anything paid back
within the last five years more importantly something that hasn't been paid back
will show it depends it depends how
many arrears there is if the debt was paid back did you engage with
the lender this is the conversation we will have with clients so it
advises anybody if there's a five percent chance that you
could have a credit history issue don't be afraid of your missus
(31:26):
if what she's gonna think or don't be afraid of what the broker's gonna think we're not
here to you know judge you we're here
to help you is get your credit reports and you get your credit
report on www.centralcreditregister.ie and
it's free if it's not there give peace of mind now
when you submit the application notes kind of pop up and if something's there we
know what lenders will look at and what lenders want so please get your credit
(31:46):
check and there can be things there that people aren't aware of if they got
like they bought a tv on like zero percent or whatever you know or on the home
thing or whatever it's called like those things do appear on your central credit
register and you may not even know oh,
you know, you just didn't want to fork out two grand for the telly so you're
paying whatever a month or a couch or whatever.
(32:07):
I think it seems I've cleared it.
I've cleared the debt. Surely the bank's going to give me the money now.
It's like, no, you literally cleared it because you applied for a mortgage and
you've only decided to clear it because you know it's going to affect your application.
So literally, if there's any inkling or you know you have a debt out there,
pay it back today. Use this podcast as an incentive to just get rid of it today.
It doesn't matter if your savings are depleted by two or three grand.
Get rid of it today. You don't realize how much it affects you mortgage application
(32:30):
decision, regardless of how your higher income or deposit is.
And then the last one then is another one on mortgage for renovation.
So if I want to buy a pre-loved house, I like that word, for 300 grand through
a mortgage and the house is not really livable, is it possible to get a mortgage
higher than the cost of the house to allow the extra money?
So that's going back to the first one. So it's like a renovation mortgage,
(32:53):
but I guess the thing, the difference in that question is if it's not livable,
because the first one was it's livable, but you know, you want to do some structural,
this is maybe a home that's not deemed habitable.
So it is a different mortgage, isn't it then?
It's the same principle. You get your max approval for your AIP and then when
you go celebrate, the lender's going to look at the ad first of all and see
(33:14):
it's probably not habitable and then you get the valuation.
So a structured survey will be needed whether the property's over 100 years
old or whether the value or field is proven to get one.
So if there's a walk, once again, it's making sure you have someone going out there, getting quotes.
Because the lender won't lend more than 90% of the purchase price unless you
can get quotes. We need to see the walks.
And don't forget there is a scheme there called the Greek-Honglian scheme in
(33:36):
which you can get up to €50,000 towards the renovation works
if it's vacant over two years and it's classified as derelict that's topped
up by a €4,000 or €20,000 so you can actually get money towards and now it's
paid at the end when works are actually complete so make sure you keep your
receipts and you apply to your local accounts for that so there is help there
but once again the same incentive you get your approval you provide the bank
(33:57):
with all the information it's the same type
but it is definitely is possible and i just did a podcast on
the vacant home ground so people can check that out where i speak to
a couple of people who've gone through it and stuff it's uh i think
the concept of it is really good especially that you
know it can be more owner occupier focused which is uh what we're all about
here so um that's that's it for all the questions thank you so much on your
(34:19):
legend i i i just know from from working with you for so long i know how dedicated
you are to your job to your clients and it's why i'm always sending people to
you and i know we're look we're in a
partnership this year but even before that i was always sending people to
you and i always work because you're just you're you're so generous with your
time and me i know i know better than anyone how how tough it is to keep getting
(34:41):
back to people in dms and you're doing it as well on top of a full-time job
doing everything on the instagram putting the content out there so really really
appreciate you coming on and giving us your expertise.
Brilliant. Thanks a lot, care good time to you go August Sine Lehigh on episode
two of the Crazy House Prices podcast I hope you found my conversation with
Owen O'Connor as insightful and helpful as I did we tackled some of the most
(35:05):
common yet complex questions Good chatting to you guys.
From renovation financing to whether a fixed or variable rate is right for you
and remember whether you're a first-time buyer looking to switch your mortgage
or navigating unique circumstances like buying from family owns advice highlights the importance of
of having a knowledgeable broker on your side.
If you're in the process of buying a home or just starting to think about it,
(35:28):
be sure to reach out to Finance Solutions, who, as I said, are my trusted mortgage
broker, and they can guide you through the maze of options and help you make the best decisions.
If you're enjoying the podcast and my Instagram and want to show your support,
head over to patreon.com forward slash crazy house prices.
Your support not only keeps this podcast and the Instagram page going,
but it also gives you exclusive access to bonus content like detailed Q&A is
(35:52):
where I answer every single question sent in.
Plus, you'll get the unique opportunity to engage with my community of over
105,000 followers, asking them questions that Google just could never answer for you.
Also, my book, How to Buy a Home in Ireland is available nationwide.
Just Google it and you'll find
it in stock somewhere or else rent it from your local library for free.
Anyway, thanks a million. I'll chat to you soon. Slán go fíos.
(36:14):
Music.
Music.
(00:12):
August, falch a rash to the Crazy House Prices podcast.
I'm your host, Ciarán McQueen, and today in episode 25, we're talking all about
the world of mortgages with none other than Eoghan O'Connor from Finance Solutions,
also known as the Mortgage Guy on Instagram.
I've known Eoghan a long time now and have done lots of work with him over the years.
He's such a dedicated and knowledgeable guy and he's so generous with that knowledge.
(00:36):
So if you don't already follow him on Instagram, you really should.
And in this episode, we'll be covering some of the most pressing questions about
mortgages that you, my listeners, have sent in.
We'll explore the ins and outs of combining mortgage and renovation costs,
which is a hot topic for those looking to purchase Fixer Upper.
Owen also breaks down the first home scheme, offering a clear explanation of
(00:57):
how it works, the benefits and the potential drawback.
We'll also touch on the best practices for managing
complex income situations like overtime when
applying for a mortgage and whether it's better to go with
a fixed or variable rate in today's market plus
we'll discuss the unique considerations when buying a property
from family you won't want to miss owns expert advice on these crucial topics
(01:19):
especially if you're navigating the mortgage process right now or you're planning
to in the near future now before we get into it i want to be clear that i am
in a partnership with finance solutions this year they're my trusted mortgage
broker and they've been doing an incredible job
for all of my followers that have used them. So let's get into it.
Now, today I have Eoin O'Connor of Finance Solutions, the mortgage guy on Instagram,
(01:42):
as you will all know him as, to come and chat to us about all things mortgages.
So Eoin, how are you?
I'm very good, very good. Happy Monday. Delighted to be asked Eoin.
Now we've done, we've done a good bit of work together. And as I will have said
in the intro, So, you know, I think you're great.
Um, and I think the whole team you guys have there is great.
(02:04):
And I'm a big, big believer in using a mortgage broker. I've said this from
day one. It's even in my book.
Um, I just think it's an absolute no brainer as a consumer to have somebody
there to hold your hand through the whole process.
Think of it like if you had a friend that bought a hundred houses a year.
(02:24):
Uh you'd you'd be going to them for advice
on how to buy a house so that's basically what your
mortgage broker is if they're doing this hundreds of times a year
they're going to have the most experience so just uh on your side of things
what what are you seeing from people in terms of you know what's your general
advice to people in terms of going to a mortgage broker rather than say going
(02:47):
direct yeah i'd always encourage anybody um to reach out to us at.
Least six months in advance anyway just to put a plan in place because without a
plan you know you could fall at the final order when you see the
dream home and then you've realized you haven't done and what
you needed to do and i always kind of break it down to five simple
steps simply your income will determine how much you qualify for you
need to demonstrate you can afford a monthly payment you need to have your 10 deposit
(03:09):
your accounts need to be earning a clean credit history and then
i suppose the delving to your question in terms of why use a
broker it's just more options you know
it's we walk into one bank and
they'll tell you how great their products are they can tell you what loan amount
you can get but if there's better rates elsewhere or
you can get more of a loan amount elsewhere that bank advisor
(03:30):
is not going to tell you that whereas a mortgage broker we're
impartial we're going to find out what lender meets
your needs that could be which lender will offer me max lend which
lender will offer me the lowest rates do they offer me the
ability to overpay because that's huge people are looking at this how to
clear me mortgage quicker or save myself some money so we
will have a consultation with a client and see what's important
(03:51):
to them and we'll simply basically look at
all the lenders because we currently in finance solutions deal with nine lenders try
find a lender to meet their needs and make a decision from there so that that'd
be number one for me it's just more choice experience is key you know we deal
with this kind of stuff every day we do deal with straightforward applications
but we also deal with a lot of complex and applications in terms of people that
(04:13):
may not not be permanent in the role, have credit history issues.
We deal with this kind of stuff every day. So experience is key.
Especially when you're making your biggest financial commitment that you'll probably ever make.
You want someone in your corner, experience that deals with this stuff every
day that's going to guide you from the very first conversation throughout the
process when you go sale agreed, if you need anything extended until you get your keys.
(04:34):
And then as long as you pay your mortgage, everybody's happy.
And then lastly, it's free. We don't charge a fee of finance solutions.
All brokers, brokers some broker charge a fee finance solutions
don't all brokers get paid one percent
so it's the same amount for every lender we're not biased towards any particular
lender we get paid one percent only when you draw down the mortgage okay so
(04:55):
that's a key thing for people people think there's some sort of catch with this
why should i go to you do i have to pay it is added onto my mortgage this is
not true at finance solutions we do not charge a fee our goal is simply to make
your dream of owning a home a reality.
It's it's one of those things where when people hear it say
they're starting out for the first time they hear it they're like but like there
(05:16):
has to be a string attached somewhere it's a it sounds
too good to be true but it actually is the case you're getting
paid the same regardless what lender it's basically a matchmaking
service you're finding okay well this lender will have you know will suit your
application a little bit better it's basically tinder for mortgages is it is
that how we describe it that's it we swipe right for the right uh the right
(05:39):
lender for that client i don't i don't know which way you swipe you see i'm too old for for a team.
We'll move on yeah we'll move on anyway we get i do anyway and i'm sure you
do as well get a million questions in about mortgages and i hate giving people
the answer it depends so i put a question box up and i told people send in your
(06:01):
questions i got i think it ended up being over
100 questions in so i have whittled
those down to five kind of bigger questions and then
we'll do five quick fire questions towards the end
and i ask people to put in as much detail as
they could into questions so that your answer isn't just it depends because
my application is not going to be the same as someone else's application everything
(06:23):
is different so that's why not to keep banging the broker drum but that's why
it is so important to go to an experienced
broker because they're able to actually go through it all and say
look this lender is a little bit more strict
on this or this lender will bring you up on the pay scale or whatever and
people just won't know that by themselves so that's where where the
broker comes in but um looking at say
(06:45):
we'll get straight into it so the first question here and this
is a really hot topic especially now with the
vacant home grant and all that but we'll talk about that later but
number one combining mortgage and renovation costs so the question that came
in was please could you explain how a mortgage works for a house you may buy
that needs a lot of work cosmetically and possibly adding an addition so it
(07:07):
could be deemed livable from the bank side but bought with the intention of
fixing it up and making it modern.
Yeah. So in terms of where people come to us, the main thing is they may not
have a property and they want to just get their mortgage approval.
Your mortgage approval, how much you qualify for solely based on your financials
in terms of your income. Okay.
So the main thing is to get your approval. First of all, in terms of regardless
(07:30):
of what the bank will offer you in terms of mortgage amounts,
they can only give you 90% of the purchase price.
So a lot of people think I'm I qualify for 400, I have approval here for 400 grand mortgage.
I've bought at 300, so I'm going to take the extra money anyway to do the works.
That is not the case because it's actually a central bank rule that the bank
can't give you more than 90% of the purchase price.
(07:52):
So what way it works is, when a client comes to us for a house,
that's whether it's habitable and they just want to do some construction works
or whether it's not habitable and it's in need of renovations,
we ask them to get a builder's quote for the works involved.
You'll probably get a structural survey, especially if there's a lot of works involved.
And we'll review that and we'll generally ask you to get costings done for the
(08:14):
works that is needed to make a habitable of what you're looking to do.
The main thing is the bank's not going to give you money for furniture,
you know, paint the doors, all that.
The lender will only lend additional money if the property value increases with these works.
And that's generally in structural works, you know, and it's not just as I said,
paint the doors. So the rule of thumb is the bank can give you up to 90% of
(08:38):
the purchase price and up to 90% of the construction cost.
So if we use an example of, let's say you bought a house at 300,000 and the
bank can only give you 90% of that, so that's 270.
So where the banks can give you money, let's say you came to us with a quote of 50,000 euro.
The bank can look to give you up to 90% of the 50,000, okay, so 45,000.
(08:59):
So therefore the 270 which is 90% of the
purchase price and the 45,000 which is 90% of their
construction costs that totals 315 so the
rule at home remember let's go back to the lender can only give
you up to 90% of the value the value of
the home will have to be when these works are played a minimum
of 350 if it's more even better because 90%
(09:21):
of 350 is the 315 therefore it's within
the rules and you probably think well how does the bank think quantifying how
much it's going to be worth but when you get that builder's quote a valuer goes
out to the property values in its current state and says it's worth whatever
300 now but i've looked at the quote with these works it's now worth 350 plus
therefore as long as your income
qualifies you for the amount you can then borrow the additional funds.
(09:43):
That's really well explained. And it's something that a lot of people are unaware
of. These things are available.
You can, I call them renovation mortgages. I'm sure there's a proper name for
them, but that's the more, the easier one to explain to people.
And it's something we did try to do, but we, we weren't able to get it in the end.
So we had to, we had to sort of kind of finance the renovation ourselves.
(10:03):
And I would have absolutely loved to only be paying a mortgage interest rate
on it rather than a credit union one.
So it's a really, again, it's so important that
people if if they're looking at going down that fixed rubber route
to chat to you at least six
months in advance if not longer to make sure that you've
got a really steady plan in place to know that this
(10:26):
is this is the the route we're going down because say you can't
afford new builds in your area so this is the route we're
going down and then that will lead me on then to question too
because if someone is struggling to afford a new build which
i think probably everyone is at the moment the government have
um these schemes mostly for
new builds and uh people people know my
(10:46):
own thoughts on these schemes but as i always say if they
get you into your home and you've done your research and and
the maths and it works out well for you then grant my issues with
the overall macroeconomic thing of it but that's a whole other
podcast but so let's say the first home scheme because to
help the buy scheme everyone is you know that's been around a long time now
everyone's fairly aware on that so in terms of the first home
(11:06):
scheme can you explain how the first home scheme
works specifically i'm curious about how it
affects your mortgage application so what are the benefits and
the drawbacks and then what happens when you want to maybe sell or remortgage
your property yeah so the first home scheme was introduced by the government
i was simply there to bridge the affordability gap between what people could
(11:27):
get approved for so you must max out your mortgage approval and what you're
looking to buy for in your 10 deposit so any Any gap there,
they're willing to bridge that by up to 20% of the purchase price.
Okay? If you're using the half-deboy scheme.
Because remember, the half-deboy scheme is where you can get up to €30,000 towards deposit on a new build.
If you're not using the half-deboy scheme, the government will bridge the gap
by up to 20% of the property value, okay?
(11:51):
So I suppose it's for forced non-borrowers.
Buying a new build or doing a self-build. There's also people that can qualify
for this scheme under the fresh start approach.
The fresh start approach is where you've been insolvent, bankrupt,
divorced, and even a relationship breakdown.
And you've sold the house previously and you want to buy a new build.
You can look to avail as a fresh start approach and you apply for that through
(12:15):
www.forcedhomescheme.ie.
But it's nothing to do with your
income. Still, a lot of people think how much income do I have to earn?
It's not you must be a first-time buyer you must buy
a new build or do a self build and there's caps
involved for each county okay which you know obviously dublin is up to 475 parts
from there 425 etc so once you're under them caps you can you can apply for
(12:39):
but if i just give you a quick example if you're let's say a couple on 80 000
euro of a of an income the max mortgage you can
qualify for four times is 320 000 so
if you're looking to buy a 450 you're thinking how the
hell am i going to buy a 450 i'm way off here well the bank
regardless of what scheme you're availing of need you to have a 10 deposit which
(13:00):
is 45 000 so let's say you used a 30 grand net buy and you've 15 000 in savings
there's a gap there of 85 000 and remember you can get up to 20 percent of the
four-star scheme and to bridge that gap which on a 450 property would be 90 so the fact there's a
gap of 85 000 therefore all of a sudden you can now buy a house at 450 000 and
(13:22):
people always ask as well well how do i apply for it do i apply for like to
have the buy scheme no you apply directly through the forced home scheme website
and you need two things you need the development address.
And you need your aip to show you max out your approval and then they'll issue
you within three working days what's called an eligibility cert and that gives
that allows you to give that to a broker to say, this is how I'm bridging the gap.
(13:45):
But the key thing I want to get from people is, because we get it every day,
people still think you can get your 10% deposit from the forced-time scheme.
It's not. You need to have your 10% deposit plus your legal fees and stamp duty.
It's only there to bridge the gap between your maximum market approval,
your 10% deposit plus fees, and the purchase price.
But it can be used with the Help to Buy scheme to help with your deposit.
(14:06):
Up to 20%, then you must be with a participating lender, which is currently
the AIB Group, which consists of Haven and EBS, Permits ESB, and Bank of Ireland.
So if you're with Finance Ireland, Avant, ICS, you're going to have to switch
lender if you're looking to add that.
But once again, when someone reaches out to us, we'll kind of tease you looking
at new bills, second-hand homes, and that could help us nudge.
(14:27):
If we know they're using the forced home scheme, we're probably looking at those
three lenders only. So that, once again, it's the key note going to a broker.
I remember looking at these schemes for when I was writing the book and there's
new ones out even since I wrote the book and I was on, I was on to the publishers
about, you know, maybe looking at doing a refresher of the book.
And even I haven't studied it before writing the book and researching it.
(14:51):
And even now I deal with this as you do all day, every day with questions and all.
I still do find it a bit confusing. So I would just say to anybody,
if you're feeling a bit confused about all that, the figures,
first home scheme, health employee scheme, all this, don't worry, it is confusing.
Just that's where, you know, an expert will help, like Eoghan,
(15:12):
will help you basically understand it.
And if you go in with a development in mind and figures, it tends to be a lot
easier to actually digest.
So i would say just reach out to finance solutions
and if that is the route you're thinking about
going down and it it's when you get
more individualized advice i think it starts to make
(15:35):
a bit more sense is that fair yeah and not not
only that kieran like the thing is there's obviously we
know the supply issues but once again it's highlighting as
well that without certain schemes because
it is a challenging market people wouldn't be able to buy these there's
over 4 000 people have applied for it and been approved for it
and over 1900 people got got a keys to
(15:56):
their home that they wouldn't have been able to buy without these schemes so
once again it's about finding putting the right mortgage lender for you but
being informed of having a broker that knows about all these schemes that knows
about complex issues that can guide you and literally hold your hand throughout
the process and that's what we do at finance solutions.
And now if only all the rentals were actually available
(16:17):
to buy that would be even better but let's not go down that one next next
is about um fixed rate
endings so currently so the question is currently switching after
a fixed rate ending trying to maximize approval with overtime included so i
work in health care much of my income comes from overtime not officially rostered
but consistent over the years i'm looking for the best mortgage provider who
(16:41):
will take this into account my new broker doesn't seem to fully understand the
nature of my job and how reliable my overtime is
any advice for finding a provider who recognizes consistent overtime?
So switching, you're looking at a couple of things there, switching fixed rate
overtime, it's quite a good question.
Yeah. So in terms of switching, it's quite easy because look,
(17:03):
you're not buying a new property. You're simply just looking to get a better
deal off another lender.
Just bear in mind as well, lenders will generally send you out your fixed rate
options three months before the fixed rates open.
We always say to clients, make sure you reach out to us. And we'd always try
to read forward for existing clients.
Once again, the advantage of another broker is not just a client for the initial
mortgage, client for life. We'll make sure you're getting the best rates throughout the term.
(17:24):
But let's go back to the switching. Switching is very, very straightforward.
As long as you're making your mortgage payment and you're not
under financial pressure as in since you took the
initial mortgage you've taken 10 loans you know that's affecting your
net disposable income it's very straightforward yes there's
solicitor fees involved which average about 1500 euro yes
you can get a valuation on your home which is about 150 euro but
(17:45):
a lot of lenders cover those fees avants will give you one percent of your
mortgage and to switch to them you know permits will
give you two percent cash back based on your mortgage balance so there's no
kind of cost to it the lenders will incentivize you
to switch them and their job as a broker is to make sure
it's worthwhile switching because if we're doing figures
at the start and challenge you there has to be some sort of financial incentive
to do it but it's quite quick as well you're probably looking at the quickest
(18:08):
lender we'd probably have you wrapped up within three to four weeks the longest
lender probably two months so it's a lot quicker than just a normal mortgage
application but certainly reach out to us for finance solutions we deal with
nine different lenders in terms of the switch and to go back to a second point
in terms of maxing out the income i assume They're probably looking for.
To release some equity and if they're looking for additional borrowance
(18:29):
and in terms of the additional income the main
thing like people can think their overtime commission.
Bonus is guaranteed but the main thing with lenders there needs
to be consistent you know you can't just go into a new job and.
Say i'm getting a bonus next year of 100 grand so that's.
Great but you haven't heard yet you know so there's certain sectors as
well that we'd be familiar with just from experience that we know it
(18:51):
technically is guaranteed you know whether that's on every
payslip you can clearly see it or we'll ask for the
last three years employment details from which is basically our old
p60 and that shows the total income earned over the
last three years so we'll ask for that additional documentation now if we need
to squeeze as much of the person's income out of
the lender we will make sure
and we ask for that additional documentation to back
(19:13):
up the information back up what the client's saying they're saying this is
basically guaranteed so once again every lender has different rules in
terms of how much of a percentage they'll take but once again
as a broker and finance solutions quickly given nine different lenders we
know which lender will look at taking the maximum for
them and assuming if they're in health care they're probably going
up on the pay scale as well so releasing equity is
(19:34):
is a it could be great you know good finance then putting
an extension on or whatever so it's a it's a
really really good question uh next one buying a
house from family next year moving to ireland
this year and getting everything in place for mortgage approval will
buying from family affect which mortgages we can
apply for or do banks not look at that no so the main thing we asked for was
(19:57):
when someone said agreed is to finalize everything because people think when
you go up for mortgage approval you have to finalize the purchase price the
loan amount the rate right now it's when we initially meet with a client it's
finding the lender that meets our needs okay so to go back to the question in terms of.
Does it matter whether you buy from family the answer is no you know
the main thing is we will ask the estate agent
(20:19):
details when you give us property details and if someone says why not
family or family or family friend that's fine
it's a private sale we just ask the the valuer to arrange
access to the property with that person so whether that's a family member
or family friends doesn't matter the lender will solely walk off
the contract price so if there's a discounted price brilliant
so generally what happens there is let's say you
(20:41):
might be buying off your mom and dad and they're moving to another property and they
might be let's say the house is worth 500 but they're selling it for 400
that's fine the valuation will still say 500 000
but the lender be like hold on a second there's a hundred grand of a difference but that's
where the family are gifting them equity so there's
very various ways it can be looked at usually when
you're buying on family there's a discount but there's not a discount it's simply
(21:03):
a straightforward um application it doesn't
matter lenders are happy once the valuation comes in
at the same price price as the purchase price or the
property value but if it is discounted a gift letter
will box that off for your buy-in for family so it's very straightforward the gift
letter is important uh good question good answer thank you next one this is
a really common one and very current at the moment with fixed rates and variable
(21:26):
rates so the question is my mortgage is with the credit union and i've decided
to go with the five percent variable rate for now considering the rumors that
interest rates are due to drop.
My options were 4.75% for a five-year fixed, 5% for a three-year fixed, or 5% variable.
Do you think a variable rate is the best option right now, or should I lock
(21:47):
myself into a fixed rate considering the current economic climate?
So once again, everybody is different in terms of what they want in terms of
rates and their opinions on interest rates.
I'll give you a bit of background in terms of why I don't think rates are going
to drop significantly we're not going to probably see the likes of two and a
half percent or under three percent anytime soon the reason behind that is.
(22:09):
Obviously, due to inflation and the way things have gone, the European Central
Bank passed on 10 rate increases, totaling 4.5%.
So the average Irish lender passed on three of those rates, up to 1.5%.
So what does that tell you?
That tells you the Irish lenders, although the ECB went up significantly,
they were slow to pass on the rate increases.
(22:30):
So in my opinion, and this is simply my humble opinion, is the Irish lenders,
I believe, will be slow to pass on any rate decreases.
So we've already know we already know the ecb have
slightly reduced the rates and then they they decided not to on
the latest rate and reduction to pass on a rate reduction
so remember it's up to the relevant lender whether
they pass that or not if they do and rates fall through the cliff happy days
(22:54):
the variable rate was a great decision but from a lot of forced homebuyers point
of view i kind of want to know exactly what my repayments are and the majority
that rates are actually quite high with the credit union and the majority of
rates out there the the lower rates are fixed rates.
So from my point of view, if I'm buying a house where there's a portion renovating
a new home, I want to get used to my mortgage payments without worrying about
(23:15):
whether rates are going up or down.
So the majority of real estate clients are kind of going for a four-year fixed
rate. And the reason behind that is the majority of the lowest rates out there are four-year fixed.
That's number one. A number of lenders that offer this four-year fixed rate
allow you flexibility to overpay.
So you get the security and you get the flexibility to make overpayments as well.
And the lowest four-year fixed rate, if you're paying a 10%,
(23:37):
percent of it is 3.8 percent
if the ber of the home so the energy rate
which you will see on every ad that you look up if it's a green mortgage as
in if it's b3 or higher the lowest four-year fixed rate 3.45 so those rates
are significantly lower than this five percent on the variable rate so that
person is clearly expecting a massive drop off personally i don't see it and all i would say is.
(24:03):
You go with the rate that you think suits your needs.
We will have that conversation with every client. Do they want security?
Do they want flexibility to overpay?
But right now, the majority of fixed rates that are low are fixed rates.
I personally can't see a massive drop off in rates anytime soon.
I think people, a lot of people maybe aren't aware that historically it used
(24:27):
to be your variable rate was lower than your fixed.
And the fixed rate usually was higher and you were paying that premium
to have that security every month
and knowing exactly what it's going to be it's just since interest
rates went really really low and even went into minus for
a while uh that things kind of flipped around and the fixed rates became lower
(24:48):
than the variable rates i know that's just a more historical thing but also
people are maybe looking at the the fixed rate and then looking at the variable
rate and then wondering okay is this going to drop I don't think we're ever going to see this kind of,
minus interest rate again and I know we in Ireland had amongst the highest interest
(25:10):
mortgage rates in Europe for a good few years and that was because the lenders
didn't pass on as many of those ECB drops but now we're getting the benefit of that that.
They're not they didn't pass on the increases as well so
ours have been a little bit more steady and haven't
been as volatile going from say i know in denmark you
were able to get a mortgage for 0.8 percent for a good few years um but now
(25:35):
they might be looking at six percent so ours have kind of been a little bit
more consistent which is a good way to look at it so um just like well just
the the main thing is like interest rates would rise and fall throughout the
mortgage term term, we had a very good,
our generation had a very good, where all we see is rates just go down and down.
The average interest rate between 1993 and 2023 is 6%.
(25:57):
So when you think about it that way, it's like, the rates that are being offered
right now is good. It's just, we haven't seen it before. So we've seen rates go up significantly.
It's like, hold on a second, but bear in mind, as a broker, we have that chat
where every client that goes in agreed in terms of what rates use them.
Because you can go fixed from one year up to 20 years if you want,
I've had that for a 20 year term.
But it's just about finding the rate that meets your needs and everybody has
(26:18):
their opinion but it's about having that conversation with a broker that's experienced
that's been in the industry a number of years to kind of manage expectations and say,
kind of put it back to the client what do you want from a rate and then make
your decision once you're fully informed I don't have many regrets in life but
probably my biggest regret is not grabbing that 1.95% Avant 30 year thing I
did because we were we could have switched to it,
(26:40):
it's like the effort of it I should have hindsight is a killer I know No, anyway.
Right, we'll do five quick fire questions then before we finish up, right?
So first one, switching mortgage rates midterm. So once you're in a five-year
fixed term, is it possible to change after one year?
I have four years left, but I have the opportunity to better my BOR rating to
(27:01):
a B3 or higher, which will give me the option then of the green mortgage rates.
But can I change before my five years are done?
So the only person that'll be able to tell you that will be your bank.
So make the call today, give them a ring and ask them, can they do that?
And some might charge a fee some might be fine and say yes send me in your b
or i will adjust your rate but the only person that i'll be able to let you
know is your current lender,
(27:22):
from my own personal experience i had a three-year fixed
and i switched after one year at just over
one year and there was no there was no breakout fee so that was grand and you
can get a better rate go for it but just give me make sure next one my boyfriend
and i are planning to apply for our mortgage we're both in permanent jobs but
since speaking to our broker i I applied and interviewed for another job.
(27:45):
It doesn't make sense to apply now.
So once again, it depends whether you're in the same industry.
You could be getting a promotion within the company, therefore it should be okay.
But the main thing I'd say to you is, is there probation? That's the main thing you have to find out.
And it might be worth having that conversation because people are nearly afraid
when they're being offered new jobs to say, look, I'm in the middle of a mortgage
application, I want to apply now.
(28:06):
But the probation would stop me from drawing down if I find a house.
So the main thing is the probation there.
Lenders generally want you to pass your probation. You can get approved while
on probation. A lot of people still aren't aware that you can get approved while on probation.
But a lot of lenders won't allow you to draw down. So it depends how quick you
find a property. So just have that chat with your prospective new employer.
How long is the probation? It's usually six months. So just find that out before you do anything.
(28:29):
Okay, deadly. Next one, is it worth to save as much money as possible for the
down payment or the deposit?
And does having more than the recommended 10% mean the loan will be easier to
pay or give you an option to get a bigger loan?
So in terms of your deposit, a lot of people think I have a great deposit.
I don't need to show certain things like the main thing is you need to have a minimum of 10 deposit,
(28:51):
the more you pay down lenders actually offer
you lower rates so if you end up paying a 20 deposit let's take
avon for example they offer a four-year fix that 3.8 if you pay a 20 deposit
3.6 so lenders incentivize you because the more deposit you pay the less they're
giving you therefore the risk is minimized okay so in terms of putting down
(29:12):
a max deposit it depends on the person's circumstances,
you could have someone with a lot of money, you know, and as long as you have
an emergency fund, because I bear that in mind, I hate someone to put all their
money into a mortgage, because you can't take it back out once you put your
money out, and then have to borrow for car finance.
Something goes wrong on the house, they have to go to the credit union to borrow
on that, and all of a sudden you're thinking, should I have just paid the 10%
(29:34):
deposit and just, you know, held on to some of that money?
So it all depends on your circumstances. Certainly if you have the money and
you leave yourself an emergency fund after that,
The less you borrow, the better for you because you pay less money back to the
bank. There's also nothing to do with mortgages, but let's say you have a big
chunk of money there, you're lucky and you have a load of money there.
Is that, if you have enough there to cover your deposit, is the extra money
(29:58):
you have there, could that be better invested in a fund with a much higher interest
rate than you're paying on your mortgage?
So, you know, that's where it comes to getting professional advice is so important.
Or invest in your pension, you know. know impact relief on
that lump sum that you pay towards your pension you know plan for retirement so
there's lots of things you can do but it's it's terribly
you look at all angles before you make that decision um next
(30:21):
one how forgiving are the lenders with historical bad debts if the debts have
been cleared and the wait time has elapsed so the wait time is the key aspect
here and it all depends how how long ago the general rule of thumb with lenders
especially if it's a the significant arrears is two years from when the debt was cleared.
A lot of people that have credit history issues in terms of missed payments
(30:44):
from whether it was 10 years ago, 20 years ago, whatever it was,
they don't realize that stays in your credit report until five years after the debt's cleared.
People think, I haven't paid in five years, it's going to go. It does not go away.
And the key thing the lenders look for, I always say, because the lender's going
to find out, because when we actually submit an application,
we can tell you everything's perfect.
But when the lender gets the application, they run the credit check.
(31:05):
So any active facilities will show there anything paid back
within the last five years more importantly something that hasn't been paid back
will show it depends it depends how
many arrears there is if the debt was paid back did you engage with
the lender this is the conversation we will have with clients so it
advises anybody if there's a five percent chance that you
could have a credit history issue don't be afraid of your missus
(31:26):
if what she's gonna think or don't be afraid of what the broker's gonna think we're not
here to you know judge you we're here
to help you is get your credit reports and you get your credit
report on www.centralcreditregister.ie and
it's free if it's not there give peace of mind now
when you submit the application notes kind of pop up and if something's there we
know what lenders will look at and what lenders want so please get your credit
(31:46):
check and there can be things there that people aren't aware of if they got
like they bought a tv on like zero percent or whatever you know or on the home
thing or whatever it's called like those things do appear on your central credit
register and you may not even know oh,
you know, you just didn't want to fork out two grand for the telly so you're
paying whatever a month or a couch or whatever.
(32:07):
I think it seems I've cleared it.
I've cleared the debt. Surely the bank's going to give me the money now.
It's like, no, you literally cleared it because you applied for a mortgage and
you've only decided to clear it because you know it's going to affect your application.
So literally, if there's any inkling or you know you have a debt out there,
pay it back today. Use this podcast as an incentive to just get rid of it today.
It doesn't matter if your savings are depleted by two or three grand.
Get rid of it today. You don't realize how much it affects you mortgage application
(32:30):
decision, regardless of how your higher income or deposit is.
And then the last one then is another one on mortgage for renovation.
So if I want to buy a pre-loved house, I like that word, for 300 grand through
a mortgage and the house is not really livable, is it possible to get a mortgage
higher than the cost of the house to allow the extra money?
So that's going back to the first one. So it's like a renovation mortgage,
(32:53):
but I guess the thing, the difference in that question is if it's not livable,
because the first one was it's livable, but you know, you want to do some structural,
this is maybe a home that's not deemed habitable.
So it is a different mortgage, isn't it then?
It's the same principle. You get your max approval for your AIP and then when
you go celebrate, the lender's going to look at the ad first of all and see
(33:14):
it's probably not habitable and then you get the valuation.
So a structured survey will be needed whether the property's over 100 years
old or whether the value or field is proven to get one.
So if there's a walk, once again, it's making sure you have someone going out there, getting quotes.
Because the lender won't lend more than 90% of the purchase price unless you
can get quotes. We need to see the walks.
And don't forget there is a scheme there called the Greek-Honglian scheme in
(33:36):
which you can get up to €50,000 towards the renovation works
if it's vacant over two years and it's classified as derelict that's topped
up by a €4,000 or €20,000 so you can actually get money towards and now it's
paid at the end when works are actually complete so make sure you keep your
receipts and you apply to your local accounts for that so there is help there
but once again the same incentive you get your approval you provide the bank
(33:57):
with all the information it's the same type
but it is definitely is possible and i just did a podcast on
the vacant home ground so people can check that out where i speak to
a couple of people who've gone through it and stuff it's uh i think
the concept of it is really good especially that you
know it can be more owner occupier focused which is uh what we're all about
here so um that's that's it for all the questions thank you so much on your
(34:19):
legend i i i just know from from working with you for so long i know how dedicated
you are to your job to your clients and it's why i'm always sending people to
you and i know we're look we're in a
partnership this year but even before that i was always sending people to
you and i always work because you're just you're you're so generous with your
time and me i know i know better than anyone how how tough it is to keep getting
(34:41):
back to people in dms and you're doing it as well on top of a full-time job
doing everything on the instagram putting the content out there so really really
appreciate you coming on and giving us your expertise.
Brilliant. Thanks a lot, care good time to you go August Sine Lehigh on episode
two of the Crazy House Prices podcast I hope you found my conversation with
Owen O'Connor as insightful and helpful as I did we tackled some of the most
(35:05):
common yet complex questions Good chatting to you guys.
From renovation financing to whether a fixed or variable rate is right for you
and remember whether you're a first-time buyer looking to switch your mortgage
or navigating unique circumstances like buying from family owns advice highlights the importance of
of having a knowledgeable broker on your side.
If you're in the process of buying a home or just starting to think about it,
(35:28):
be sure to reach out to Finance Solutions, who, as I said, are my trusted mortgage
broker, and they can guide you through the maze of options and help you make the best decisions.
If you're enjoying the podcast and my Instagram and want to show your support,
head over to patreon.com forward slash crazy house prices.
Your support not only keeps this podcast and the Instagram page going,
but it also gives you exclusive access to bonus content like detailed Q&A is
(35:52):
where I answer every single question sent in.
Plus, you'll get the unique opportunity to engage with my community of over
105,000 followers, asking them questions that Google just could never answer for you.
Also, my book, How to Buy a Home in Ireland is available nationwide.
Just Google it and you'll find
it in stock somewhere or else rent it from your local library for free.
Anyway, thanks a million. I'll chat to you soon. Slán go fíos.
(36:14):
Music.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
CrimeLess: Hillbilly Heist
It’s 1996 in rural North Carolina, and an oddball crew makes history when they pull off America’s third largest cash heist. But it’s all downhill from there. Join host Johnny Knoxville as he unspools a wild and woolly tale about a group of regular ‘ol folks who risked it all for a chance at a better life. CrimeLess: Hillbilly Heist answers the question: what would you do with 17.3 million dollars? The answer includes diamond rings, mansions, velvet Elvis paintings, plus a run for the border, murder-for-hire-plots, and FBI busts.