Some helpful considerations before applying for a mortgage

Getting organised for a mortgage is such an exciting chapter of ones’ life. The mortgage process is usually not previously encountered therefore the ‘unknown’ can cause some stress and anxiety. You are requesting a loan, and a pretty big one at that, therefore the process of the application can be long and drawn out – usually taking 6 months to reach draw down from the time you submit your mortgage application. Here are some helpful points to have in your back pocket...

It is good to remember that lenders will look at prior affairs therefore in essence, to be organised for a mortgage you should be getting affairs in order 12-6months in advance of the application..

Help To Buy Scheme

A fantastic scheme which can assist those looking to purchase a newly-built house or apartment. It also applies to once-off self-build homes. It is good practice to apply for the HTB through your Revenue account(s) to review the maximum claim allowable based on your circumstances.

• This scheme limits your property choice however it is a great support and a worthwhile consideration when you’re stepping onto the property ladder.

Find out more information here on the schemes limits and terms:

• https://lnkd.in/dAK-7wkn
• https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx

Deposit and Lending Limits

A prospective buyer needs to have an interest in the property they are purchasing. It is good to understand what form of buyer you are, as this equates to the amount of deposit which will be required by the lender and review your budget. Lenders will request proof of savings and proof of a clear saving timeline will be required. Gifts through a donor letter can be accepted, as can proof you qualify for the HTB.

There is a general limit of 3.5 times gross annual income for all new mortgage lending for principal dwelling homes, with some scope for flexibility.

More information on scope and limits can be found here:

• https://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/paying_for_a_home.html#l4e5b7

Type of Employment

Review your contract or ask your employer to complete a salary certificate to understand your form of employment – is your employment full time and permanent? Note that temporary contacts or recent changes in employment can affect your mortgage application and the income a lender allow you to use for lending purposes.

Any one in need of a salary certificate - get in touch and we can discuss.

Additional Fees

The process comes with fees on top-of the deposit – it is good practice to calculate your stamp duty and then add approx.. €3,000-5000 for additional fees:

• Stamp duty (1%-2% of the price of the house)
• Legal fees (€2,500 – €5,000 including conveyancing)
• Survey costs (€200)
• Engineers report (€450)
• Moving costs/ Repairs, decoration, furniture
• Does your intermediary charge a fee? Many brokers will get paid through the lender for introduction of business however some intermediaries can also charge a service fee. Ask your broker. I will answer for Mortgage Search - we don't currently charge an additional service fee. The firm gets paid 1% at point of sale from the lender.

Spending

Try to keep spending ‘clean’ - If you apply for a mortgage today, all bank statements will be reviewed for the prior six months. A good exercise is to print your prior six months bank statements and look at areas of spending and saving. Take these insights forward with you so you are ready in six months’ time. Obviously, all lenders will know the applicant’s life is for living however this exercise brings awareness to spending.

Statements for all bank accounts will be requested.

Mortgage brokers, such as myself can do a preliminary review on bank statements.

Know your credit history

Request your credit check. All lenders will complete this check on your behalf however it is good practice to review this first. Poor credit information can slow down the mortgage process, especially if identified late in the process.

If there are submissions you can identify the reason, confirm the submission is correct, and it can be brought to the lenders attention at application stage, some lenders are better than others if there is evidence of poor credit history, therefore good to know upfront.

Talk to your advisor if you do have a poor credit history to see which lenders are more favuorable in these circumstances.

More information on Credit checks:

• https://www.citizensinformation.ie/en/money_and_tax/personal_finance/loans_and_credit/your_credit_history.html

Hopefully you found some gems within the above information. Keep this knowledge handy for when you're ready to apply.

Success is the sum of small efforts - repeated day in and day out

- Robert Collier