Why should I deal through a Broker?
Applying for a Mortgage can be an enduring process to undertake on your own. Enlisting the services of a Broker can help alleviate much of that burden. Your Broker will guide and advise you throughout the process and help you to get a mortgage that suits your needs and that doesn’t put you under undue financial pressure.
How much can I borrow?
The amount you can borrow depends on a number of factors. Factors such as credit history and job security will be taken into account. All of your incoming and outgoing revenues will be taken into account to determine the amount that the financial institution feels you will be able to afford to repay each month. Over a six month period you should demonstrate an ability to save amounts similar to potential mortgage repayments. You should also try to save 2% more than your projected repayments so that you can demonstrate your repayment capacity should there be an increase in mortgage interest rates.
What documents do I need to apply for a mortgage?
1. Application Form
- Must be fully completed and signed by all applying parties
2. Bank Statements
- At least six consecutive months of statements
- Any other proof of savings or income
3. Credit Card Statements
- 3 months of Credit card statements
4. Income Verification
- Most up-to-date employee status report which has been verified by your employer(s)
- At least 3 recent payslips from each applicant
- Most recent P60 from each applicant
- Certified copy of Passport and Drivers Licence for both applicants
- Verification of current address (a recent utility bill)
Should I expect to incur any other costs on top of my mortgage repayments?
Yes, you will have to pay additional fees to that of the mortgage repayments. You should be mindful of:
1. Legal Fees
- When your mortgage has been approved you will require a Solicitor to act on your behalf and oversee the terms and conditions you will be bound by
2. Valuation Fees
- Before you can be offered a mortgage you must pay an independent Valuation Expert to value the prospective property
3. Surveyors Fees
- Although not a requirement of the financial institution, for peace of mind most buyers will have the property surveyed to make sure it is structurally sound and will not require any work in the near future
4. Broker Fee
- Your broker may charge an application fee
5. Home Insurance
- By purchasing Home Insurance you can protect your home and its contents from theft or damage. This fee can be paid off in a lump sum once a year or in instalments throughout the year.
What are interest rates and how do they affect my application?
There are two main rates to take into consideration when taking out a mortgage - Fixed Rates and Variable Rates.
Fixed Rate mortgage interest repayments stay the same over an agreed period of time. This means that you can be sure of how much you will have to pay over a certain period of time - for example, over five years.
With a Variable Rate mortgage your interest repayments are in a state of flux. It is more unstructured than the Fixed Rate option but does allow you certain privileges in that you can pay off large portions of the loan at any time or even switch to a Fixed Rate at any time.
Sound complicated? Email us on firstname.lastname@example.org or call us on 1890 800 222 (select option 5). Alternatively, Request a Call Back and we will be happy to take you through it.
Key steps to getting Mortgage approval
1. Clients should meet the terms and criteria of the lender. For example:
- Evidence of financial planning
- Be in secure employment
- Adequate net income
- Healthy credit history
2. Clients should be in full-time permanent employment
- Lessens the risk involved for the lender
- Some exceptions may apply
3. Clients should display preparation for their mortgage by paying their proposed mortgage repayment plus 10% every month for a minimum of six months between a combination of savings and rent
- This shows a readiness and ability to meet similar mortgage repayments in the future
- Payments of rent should be evident from your account if applicable. Cash payments of rent should be avoided. Instead, a standing order should be set up to clearly show the funds leaving your account. Rent and savings are the two main items that will prove a person’s repayment capacity
4. First time buyers can receive funding of up to 90% of the value of a home up to a limit of €220,000. This means that first-time buyers will need a 10% deposit for the first €220,000 of their property’s cost and 20% of whatever is above this limit. For buy-to-let mortgages a lender can lend up to 70% of the value of the home, meaning a customer would need 30% of their own funds.
- Clients should remember that they will also need to fund stamp duty payment, solicitors’ fees and initial kit out of the property
5. In order to strengthen an application, clients should have as little short term debt as possible
- Excessive loans or evidence of gambling patterns may have a negative impact on applications
Reasons Mortgage applications are declined
1. Unsatisfactory credit rating as per Irish Credit Bureau result
- Potentially as a result of poor repayment history
- Outstanding loans against you or your partner’s name
2. Failure to show satisfactory repayment capacity
- No evidence of the applicants saving similar amounts of money to that of the proposed mortgage repayments
- Income versus sought after mortgage amount
3. Unsatisfactory management of Current Account Statements
- Direct Debits returned unpaid
- Regularly being in an unapproved overdrawn state
4. Using a Credit Card for ‘cash advances’
- Indicates poor cash flow management