A few weeks ago, I wrote a First time buyers guide to getting a mortgage, outlining the basic criteria that lenders look at when you submit an application. But is is not that simple anymore, so this week I am going to look at tips for getting a mortgage.
The Irish Credit Bureau
Your record with the ICB is a deal breaker. If you have a bad record with them, you will not get a mortgage. Before even starting the mortgage application process, you should apply here for a copy of your credit report. It only costs €6 and if you have a bad record with them, it will save you a lot of time and disappointment when you get refused.
If you have a negative credit report, it will stay there for 5 years after the loan is closed.
If you went interest only or had a moratorium, it may show up on your ICB record. You need to explain why this was.
Banks do an ICB check at the beginning of the process and again at the end, just before issuing the cheque. DO NOT take out any more loans before you get that cheque, even if it’s 0% finance for furniture. The bank will see these new loans. You do not want your mortgage to fall through at the last moment because of a new 60″ tv.
Your ICB record shows how many times you applied for credit in recent times so banks are aware of how many different lenders you have applied to.
Most lenders are looking for 1 year of continuous employment. It doesn’t have to be with the same employer but you do have to be in a permanent position, no probation.
Those on contract will be looked at on a case by case basis. You will more or less have to do up a CV to submit with your application.
If you are self employed, the banks will look at your last 2-3 years accounts and take the average earnings over that period based on your Notice of Assessment.
If applying for a joint mortgage and both of you work for the same company, they may do a company search to see how viable the company is, have there been any redundancies recently or is there talk of them moving out of Ireland?
The banks want to see savings.
They want to see your savings go up each month. Have a separate savings account so they can see it build up each month instead of leaving it in your current account. Make it easy for them to see you saving.
Any amount reducing savings will have to be explained. They will allow for booking deposits but any other withdrawals will be deducted to reduce your average savings rate. This will affect your ability to make repayments.
If you pay off a loan early, save that money in your saving account so they can see that you don’t need that money to live on.
If you have very little savings but a large gift, you will find it difficult to get a mortgage. They want to see savings.
Any gift has to come from a blood relative.
For most self builds, the land is gifted and the the bank will lend 100% of the build cost.
If you buy the site, they will lend you up to 92% of site and build costs.
They usually cost is at €85 per square foot.
If your pricing comes in lower, you have to explain why e.g. doing a lot of the work yourself, otherwise they will expect you to come back looking for more funds and still underwrite you at €85 psf.
Referral fees or unpaid direct debit fees. For one bank, 4 missed payments in 6 months is an automatic decline.
Constantly in overdraft.
Withdrawing cash from your credit card.
Regular online gambling.
No visable, regular saving.
Getting a mortgage is now extremely difficult. If you have any unusual credits or debits from on your accounts, they must be explained. The lenders will through your bank statements thoroughly to see if there is anything unusual.
You must package your application as best you can, showing the lender that you are responsible with your money and are living within your means.