The property supplements in the Sunday newspapers are getting bigger each week and there’s a lot more positive talk about the housing market! So what do you need to do to give yourself the best chance of securing a mortgage to buy that house of your dreams?
It has certainly been an interesting couple of years for the Irish Property Market. After six consecutive years of price decreases in 2012, prices rallied with surprising force in 2013, but only in some parts of the country. In fact, December of 2013 marked the ninth month running of rising property prices while the year on year rate has been positive for the last seven months.
Throughout 2013, residential prices as a whole increased by 1.4% – the first positive change since 2007. The figures suggest a positive trend is likely to persist with a strong positive annual growth on the cards for 2014.
For anyone planning to purchase a property using a mortgage, we have put together a number of pointers, which will put you on the right path for mortgage approval.
Previous Credit History
Check your credit rating score with the Irish Credit Bureau (ICB). It is vital that you have a clear credit history when applying for a mortgage. You can request a report via the ICB website or by calling on 01 260 0388.
Having a good savings record is key
Lenders will look at past savings and rent to determine your ability to make repayments to a new mortgage. Ensure your rent and savings are evidenced in your accounts as lenders will require proof of this. Setting up a standing order or direct debit for regular savings and rent repayments is the best way to do this.
Maintain healthy current account activity
A mortgage underwriter will assess your mortgage application. Your account statements are one of the main sources of information to determine whether you present a good risk or not. It is important that your account statements show that you are responsible with money. Unpaid direct debits and standing orders as well as relying on an overdraft month on month are seen as negatives.
Lenders will also examine how you manage your credit cards bills in addition to your accounts. Your repayments must be made to your credit card on time. Avoid cash withdrawals from your credit card.
You will need a minimum of 8% to 10% of the purchase price of the property to complete the purchase transaction. Typically, lenders will want to see that a reasonable amount of the deposit is sourced from your personal savings. It is acceptable however to receive a gift for a portion of your deposit. For movers, equity from the sale of an existing property is acceptable as a deposit.
In addition to this, you will need to have funds set aside for stamp duty and legal fees – 1% of the purchase price for each.
While some lenders will allow you to borrow 92% of the purchase price, others will allow a maximum of 90%. Therefore, the total deposit required will be 10% to 12% at a minimum depending on the lender.
It is worth mentioning for PAYE workers that doing a tax refund can help with your deposit. You can register for the “PAYE anytime” service online via the Revenue website. The refund backdates for four years and you will be due money back if you have paid for medical or dental bills, education, rent and refuse. A complete list of qualifying items can be found on the Revenue website.
Gaining Mortgage Approval
If you are considering buying your new home, then you probably need a mortgage. The lending environment has become much more restricted since the Celtic Tiger years, with banks adopting more stringent lending criteria.
Help is at hand, however. At Lyons Financial Services, we will assist you with your mortgage approval every step of the way.
Having an intimate knowledge of the mortgage market, we will be able to place your application with the lender who best suits your needs, and at the most competitive rate available. A great emphasis will be placed on how the application will be “packaged”, in order to maximise the chances of its success.
With access to Ireland’s leading lenders, you do not have to bring your application around to a number of different banks; we’ll find the right lender for you.
Mortgage Protection and Home Insurance will be a compulsory part of your mortgage deal. You will need to have both insurances in place prior to draw down. Competitive quotes for both insurances will be provided at the loan offer stage and can be set up by us as part of our service.
There will also be a number of parties involved in the application process; banks, estate agents, a solicitor and possibly a surveyor or an architect. We will endeavour to communicate with all 3rd parties, if and when the need arises, to ensure the process goes as smoothly as possible. It’s our job to make the whole process as painless as possible for you.
Our service is focused on getting you results and making the process hassle free for you. And unlike many other brokers, we do not charge you a fee for arranging your mortgage. We look forward to your call!