Buying a home is as big a step as many people will take in their lives. Doing it for the first time can be particularly daunting. A major part of this is getting your mortgage approved. Here are a few pointers that will help you through this process.
How much to borrow?
How much you can borrow depends heavily on your savings. Generally first time buyers are limited to borrowing 3.5 times their salary. Many commercial lenders have mortgage calculators on their websites, and these can be helpful in giving you an idea of how much you could borrow.
It’s advised that you should seek Approval in Principle before you start searching for properties. This essentially means getting a statement of how much your potential lenders are willing to lend you. Be aware that acquiring approval in principle does NOT mean your lender has approved your loan.
How much do I need as a Deposit?
If you are a first time buyer you will need a 10% deposit. This means if you plan to buy a house worth €220,000 you will need a deposit of €22,000 ready. If you are buying for a second time (or beyond) you will need a 20% deposit.
Do I need Mortgage Protection?
Yes. You must have Mortgage Protection in place before you can be approved for a mortgage. Mortgage protection ensures that your mortgage will be paid off in the event of yours or your partner’s death.
What Documents do I need?
Get all your paperwork together and organise them into a folder. You’ll need the following:
- Photo ID
- Proof of Address & address history
- Proof of Income: Latest P60 & 3 recent payslips
- Employment history
- Proof of mortgage protection
- Property and solicitor details.
Research is essential when applying for a mortgage. Shop around, as different lenders have different rates. However you should know what you’re looking for. When looking at different lenders there are a few essential things you should consider. Weigh up the different interest rates across the market. The Competition and Consumer Protection Commission (CCPC) has a handy mortgage comparison tool which will help you with this. Be aware of each lender’s track record on changing interest rates. Calculate whether you can realistically afford to stay on top of monthly payments.