Saturday 25 October 2014

I have a mortgage dilemma

Published 18/01/2013 | 05:00

I am in a dilemma. I was offered Approval In Principle on a mortgage with AIB which I applied for on my own six months ago. I've since got married but my husband has already been turned down for a mortgage owing to severe negative equity on his apartment. Should I go ahead and draw it down in my own name?

You may not have a choice. Being married substantially changes the nature of the offer as you are now potentially married to your husband's negative equity as well as to him!

Although mortgage approvals were up 27pc in the latest figures from the Irish Banking Federation, you may not qualify as a married couple if there is the liability of negative equity hanging over you but Approval in Principle (AIP) is not the same as drawing down a cheque in any event.

There are many hoops to be jumped through yet and mortgages very often fail at the 'legal pack stage', according to Karl Deeter, of Irish Mortgage Brokers, where a solicitor will be required to disclose all relevant information to the bank regarding your situation – your marriage will be a key component.

At the very least they'll be able to handle much of the paperwork and negotiations for you.

Speak with a specialist mortgage broker to get advice. Unfortunately, many banks see existing apartments as a liability rather than the asset they used to be. You may have to re-apply to a different lender.

The ICS is probably lending marginally more and are good with lower incomes, for instance and the PTSB has announced ambitious lending plans for 2013.

I am starting a new business and have recently converted my garage to a workshop. I will be manufacturing goods there and selling them online. A colleague told me that it may affect my house insurance – can you clarify?

Congratulations on the new business. Many successful small enterprises started as "cottage industries" but there are things to take into account.

John Kavanagh from O'Leary Insurances says that some household insurance policies have a specific exclusion for work tools, etc., and may not pick up a business risk in the event of theft or fire.

Therefore, a separate policy may be required.

"It depends on how industrial it is – someone operating a business with a computer and phone poses a different risk to somebody requiring public liability insurance because people are coming onto the premises," he adds.

You may need a Health & Safety Assessment if so, and perhaps planning permission for change of use to your property if you have built a workshop. If there is a lot of noise involved, this may annoy neighbours – you don't want any objections after you've gone to the expense of setting up shop.

Also bear in mind that you may have a Capital Gains Tax liability if you sell the property now that some of it is "industrial" use.

Why not call your local Enterprise Board and get the low down on specifics?

Best of luck with the business.

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