Keith McAuley: 'Our dreams were shattered in an instant'
Andrea Byrne hears how a couple nearly lost their prospective new home after they were refused a mortgage
THIS weekend, Dublin couple Keith and Sinead McAuley and their 11-month-old daughter Ava were due to move into their dream home in Drumcondra, but instead they faced the prospect of losing the sale following a last-minute refusal by AIB to grant them mortgage approval.
According to the couple, they had agreed to close the deal on the house on August 30. But Keith and Sinead learnt that their application was refused a day after the sale was supposed to go through.
They were devastated when they heard. Sinead says that they had spent three months planning around the new home, placing Ava into a creche close to the house.
"It was devastating, we had our heart set on it, and Keith worked hard to secure it for us. Our dreams were shattered in an instant," she says.
The couple have been married for three years, and sold their house in Lusk earlier this year, and moved into Sinead's mother's house while they searched for their new home.
"We did a lot of research, and AIB was by far the most competitive, offering 92 per cent loans at the lowest interest rates. Having been a customer of AIB for over 20 years, and having my main savings account with them, it was always an easier decision to apply for a mortgage with them," says Keith, who is sales manager for one of Ireland's largest steel stockholders.
"After a lot of looking, we found a house in Drumcondra for €430,000 and we put a booking deposit for €7,500 on it and applied to AIB for a 92 per cent mortgage.
"We were told that if we supplied the relevant documentation to prove our salary claims, we would receive mortgage approval for the requested amount.
"We submitted all the necessary documentation on July 2. Our application was stress-tested and passed by the bank manager at the Artane branch and sent on to the lending department.
"We're both in permanent, full-time jobs, earning good salaries, with impeccable credit ratings and we recently sold our house in Lusk for a good price, so we didn't envisage there being any problems whatsoever with mortgage approval."
Sinead, who works as a paralegal, says she was very happy with the initial service from AIB.
"A nice woman went through everything with me. I explained my maternity leave, and she said there should be no issue with this at all. We even submitted forms that we were not asked to, just because we had them handy," she says.
After about two weeks, Sinead claims, she was asked for more statements, which were duly submitted.
"Then a period of five weeks passed from approximately July 11 to August 20, when nothing happened except for about three or four phone calls to clarify matters that had already been explained. At no point was there ever any mention of a potential problem with the application."
Sinead adds: "Over the next couple of weeks, we naturally presumed that notwithstanding the piecemeal request for information, at last it was being processed. I actually even started buying stuff for the house."
On August 20, alarm bells began to ring for the couple. "Having already explained the circumstances of my maternity leave, and submitting salary certs and all that, AIB said they needed my 2011 Bank of Ireland statements.
"When I queried why, I was told to show the salary being paid. I immediately replied that I could email my payslips straight away, then I was told no, they needed statements.
"I said that we were due to close on August 30, and the statement could take a week at best. The closing date was only 11 days away at this stage."
With the closing date on the sale of the house now having passed, Keith finally demanded an answer on Friday, August 31.
"I was phoned at 4pm that afternoon and told that my application was declined. I said I did not accept this, and I could not see any justification for it.
"I was then asked to meet with the bank manager on Monday, September 3, which we did. During the meeting, the manager made a couple of attempts to justify the decision, which I picked apart without difficulty," says Keith.
AIB doesn't usually comment on individual client cases. However, Keith and Sinead waived their right to client confidentiality, in order to provide AIB with an opportunity to reply.
A spokesperson for the bank said: "AIB has made significant progress in growing its overall new mortgage business and is currently approving seven out of 10 mortgage applications.
"Notwithstanding this, we acknowledge that from time to time there will situations where customers may be dissatisfied with our service.
"AIB does not wish to engage in a public debate regarding individual mortgage applications. However, AIB is comfortable that it adhered to its internal policies and procedures at all times in the consideration of this application.
"These lending policies and procedures include a requirement that the bank does not make a final decision on an application until all documentation required by the bank has been submitted. Once all documentation is in place, the decision is heavily influenced by the bank's assessment of the affordability to repay."
On the very same day that Keith and Sinead's application was declined by AIB, the couple managed to get a meeting with Bank of Ireland. Keith furnished all relevant documentation to the BoI representative, and within less than 24 hours he was given full mortgage approval for the requested amount, albeit at a marginally higher interest rate.
"For me, it simply verifies how financially sound we are as a couple. What took one institution three months to make a decision on, another did in 24 hours."