Home economics: Answering your property questions
We are first-time buyers and have been saving hard for a deposit. But we can see house prices rising where we want to live and think we should make a bid now.
In order to make up the difference, we are proposing to get a credit union loan of around €15,000, which has been agreed.
However, we are concerned the bank might view this negatively but we are using all the savings we have.
Will they accept this as valid borrowing?
Sinead Ryan replies: Any extra loan is seen as a reduction in your mortgage borrowing capacity, and indeed, the disposable income available to you to meet repayments, so yes, the mortgage lender will be taking a close look at what you borrowed elsewhere and why.
I sense a slight tone of panic about how you are viewing the current market but you do need to balance off one decision against the other.
Karl Deeter of Irish Mortgage Brokers explains: "Mortgages are underwritten (authorised) based on an affordability model. If you take out a credit union loan for €15,000 which is often short term at rates of say, 10pc, then it chops down your ability to borrow for a mortgage by about €60,000. This will negatively impact your ability to get a mortgage and banks also take a dim view of people borrowing to obtain a down payment.
You can bid now or later anywhere you like, you don't even need loan approval, but I suggest you get help from family instead if it is available, or just keep saving because the idea of borrowing to make a deposit so that you can borrow even more on the back of it is creating a fly in search of a windscreen."
Tips for online auction
I am interested in a property for sale but am a little alarmed at being told I need to bid for it in an online auction. Is this kind of transaction common and have you any tips on how to proceed?
Sinead replies: The 'modern method' of auction includes online bidding options which, although different from sitting in a hotel room with an auctioneer offers sellers and buyers a very transparent way of managing a house sale without the danger of losing the run of yourself in a fast-bidding auction house.
While not common, their use is definitely on the increase and it can be described as a little like buying something on eBay.
There is a set timescale so you know when the auction ends – this cuts out the possibility of being 'gazumped' by a late purchaser.
The process itself is open to view, so you can see how many bids have been placed and where you are in the pecking order.
The timescale for exchanging contracts is generally a little longer (around 28 days for exchange and the same for completion) and the securing deposit due after the auction can be lower at around 5pc instead of 10pc – both good for the buyer.
Have a look at the website of www.iam-sold.ie for an example of how it works and check out a few of the live bids currently online. There's nothing to be wary of, although you should take the same steps legally and financially that you would using the traditional method.
The Ryan Review
One minute you're sending them off to Junior Infants with a shiny new pair of shoes and the next you're apartment-hunting for them for college.
The stresses (and expense) of education funding is never-ending, and I began my own search with one independent daughter in tow, prefaced with strong warnings about landlords really not liking the whole student market thing and not to get her hopes up.
They (students) break up the place and have alcohol-ravaged parties, and soon the nice two-bed with galley kitchen begins to resemble a warzone in the Gaza strip before long.
Not my daughter, obviously, but, well, you really can't be too surprised if the average flat owner turns up their nose at the notion of a 19-year-old wanting to have a city base.
Curiously, my warnings were completely unnecessary in the end.
We met a number of perfectly decent landlords/agents who were quite willing to consider teenagers wanting to play house for their property, but also drawing the line at those grown-up people in receipt of rent allowance.
I've covered this topic many times to thundering apathy, but how can it be legal, ethical or moral to be allowed to state in a viewing ad, 'Rent Allowance recipients need not apply'.
It wasn't right in the 1950s when in some countries it was ' no Irish' or 'no Blacks', and it's not fair now.