One of the benefits of dealing with a broker like Simpler is that we deal with a large number of first-time buyers; I personally talk to at least ten first time buyers every week. Some people are prepared, some people are not prepared but almost everyone is worried.
A mortgage is a big commitment and it’s completely normal to be stressed but there are some things that you shouldn’t let hold you back. Here are the three most common worries I hear from customers at our first meeting.
“I have a lot of outstanding loans”
Normally not true, most people that come to us have quite a low amount of outstanding loans. I had someone come into the office recently, completely average applicant he earned about €35,000 a year and he had a monthly loan repayment of around €150 per month. He asked me did he we often process cases with “large” loans like his. Most people overestimate their loans impact on their application.
I have shown an approximate table below showing when a loan amounts begins to affect your mortgage application. This is based on combined income and monthly loan payments. If your loan is less than this amount it will probably have no impact in your application.
|Combined Income||Combined Monthly loan payments|
Bear in mind this is based on a 35-year mortgage for an applicant with no dependants
Now some people do have legitimate problems with loans and missed payments. If you think you have a problem in this regard the best thing to do is order a credit report from the CCR. This can be done online and usually takes 3 – 4 days.
“My current account is a mess”
This is often true but it usually doesn’t harm an application. When lenders are looking at your application they are trying to figure out if you have other financial commitments that you have not already mentioned.
Common example includes:
- Maintenance payments
- Nursing home fees for parents
- Loans to families and friends
Then there are other things like gambling that banks don’t like if there is an excess amount. If you spend 20 euro on paddy power once a month nobody cares, if you are transferring small amounts every day or transferring large amounts each month then lenders are going to start asking serious questions. Gambling is the classic example but it goes for any expense that is large and consistent, if you are spending large amount on something each month then lenders will ask questions.
You should take extra care to make sure that your account doesn’t go into overdraft or that you don’t have any bounced/failed transactions. Again, it’s all about consistency, if you do this twice in 6 months it won’t be an issue.
We would prefer if we could clearly see where you transfer money to your savings account but it is not necessary. We often have clients with no savings accounts at all, they just let their savings build up in their current account. Sometimes it is better to talk to a broker.
“My deposit is too small”
This is a legitimate worry for most people with the cost of rent it can be difficult to get money together to save. If you are first time buyer the you need a deposit of 10%.
Over half of our first-time buyers receive gifts from family members to help them buy their first home, it may just be a small gift of €3,000 to €5,000 it could be €100,000, we see all types of gifts.
If you are really struggling to get the money together don’t feel bad about asking your family for help… everyone else is doing it.
You should also make sure that the property you are buying is eligible for a 10% deposit. If it is a one bed apartment or in an obscure location then lenders may insist on a 20% deposit. Once you have identified a lender it is better to ask these questions right away or better yet ask us.
The current Central bank rules state that you can’t borrow more than 3.5 times your income.
Moving out of a small Dublin apartment to a spacious house outside of the city is a situation we see often.
There are two ways to get a mortgage in Ireland you can go direct to a bank or you can go to a mortgage broker like Simpler.