Rent payments: Should they be calculated when applying for a mortgage?

Rent payments: Should they be calculated when applying for a mortgage?

Anyone looking to buy a home at present will be all to aware how difficult it is.

Firstly, there’s the task of finding something suitable to your needs – something that is not always easy given the fact that demand still far exceeds supply.

That’s a situation unlikely to get much better in the not-too-distant future either with the latest figures from the Housing Agency showing that many areas of the country were behind on the target set for 80,000 new builds to be built nationally by 2018.

Dublin and Galway both lagged behind but also did the commuter counties of Wicklow, Meath, Kildare and Louth.

Even when you do find that ‘dream home’ though, you still have to pay for it and that has been made that bit more difficult by the Central Bank’s lending rules.

A 10% or 20% deposit is quite a substantial sum of money and with interest rates on the floor, saving for one is all the harder.

Even if you do manage to come up with a deposit, you still have to meet the bank’s criteria to be approved for a loan.

One of the many sticklers in the mortgage application process nowadays is that people with a track record of paying rent do not have this taken into account when applying for a home loan.

In a lot of cases people are actually saving money each month by buying a property rather than renting but this is not accounted for.

Could that be set to change though? The Construction Industry Federation feel it should.

This week they called for rent payments to be taken into account in the mortgage application process and warned that developers were reluctant to build if mortgages are not available for buyers.

Director General of the Construction Industry Federation, Tom Parlon, has said the Central Bank should give credit to people who have a track-record of renting, to make it easier for them to get a mortgage.

He said: “The typical first time buyer now, the typical people getting married now are older, because they haven’t been buying for the last number of years.

“So the chances are they have been renting for a period, they could be paying €1600 a month, that is €19,000 a year and they have a track record of that.

“Their actual mortgage would actually be less than that in a lot of situations.”

  • Do you agree with the CIF?
  • Should rent payments be taken into account in the mortgage process?
  • Are you looking to buy and feel you could have cheaper monthly repayments on a mortgage than by renting?

Have your say below…

There are 9 comments for this article
  1. traceydriscol at 12:13 am

    The future of this country is the young and industrious. If we have people paying rents and showing how they are contributing to their credit rating by being reliable and conscientious it makes good economic sense to take this into consideration. Where is the common sense – did we throw that out too with the recession???!! Politicians need to get involved and help house buyers otherwise earners will get cheesed off and leave!

  2. Janice at 11:38 pm

    Of course it should if u live with parents u should have to save 1000 per month for 3 years if renting prove u can pay at least 1000 a month rent for 3 years the so called crash didn’t happen because people didn’t have a deposit it happened because of the greed of the elites. Sick of living in such an unfair society😡

  3. Pingback: Rent payments: Should they be calculated when applying for a mortgage? | Rosalie Rodney
  4. Michaela at 11:24 pm

    after 15 years of renting we got chance to buy a house,instead 1400 rent 800 mortgage

  5. Stephen at 6:55 pm

    Yes, a history of good rent payment should certainly be taken into account as part of the lending criteria. But, I am not really sure what Tom Parlon means by giving credit to does who are good rent payers. Borrowing rates are at their lowest for decades (recent reduction by European Central Bank). However, there is rarely any mention in the media with regard to those who save(Ridiculously low interest rates with 41% DIRT)

  6. Michael at 6:25 pm

    Yes,the ability of one being able to maintain rent payment ,should be treated as savings.Contrast this ability and ability to pay mortgage.

  7. Deirdre Mooney (@DeirdreMooney) at 4:17 pm

    I’m surprised it is not already calculated into the ability to pay – or does some Bright Spark believe that the new mortgage holder continues to rent!

    Total agreement with CIF

  8. Ciara F at 3:43 pm

    there most definitely needs to be something done here I private rent and have done now for 5 years. I can well afford to pay my rent but cannot save for a deposit along with this and feel I will never be able to own my own home in this current climate

    • Declan at 5:25 pm

      really wish they would do something, I’m on a decent salary and could afford 1200-1400 a month on mortgage. Have been renting 10 years never missed a rent payment but difficult to save with other commitments
      Unfortunately parents aren’t in a position to help

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