Mortgage Question

invadernim

Actually several questions but if anyone can help it would be very much appreciated:

1/ I am starting to save with the long term goal of applying for a mortgage,
just wondering as far as increasing the likely hood of being accepted, would it be better to save with the likes of the credit union or with a bank?

2/ Would it make a difference if you saved with the credit union and then say applied for a mortgage with BOI or would you have been better of saving with BOI all along and then applying for a mortgage with them?

3/ I know when applying for a mortgage you need to show a history of saving, how long would you need to be saving to increase the likelyhood for being accepted for a mortgage?

4/ How much would you need to have saved to get a mortgage of say €200,000?

I know nothing when it comes to this area so thanks in advance for any advice anyone can give me.

unclebill98

Hi, firstly you do not have to have any savings to get a mortgage. Its all mainly based one your capicity to repay the mortgage. If you have between 40-50% of you income be it sole or joint income left after you pay all your set out goings(Mortgage, Life ins and home ins) and have no other loans then most of the main banks will deal with you. If you need stamp duty or are looking to furnish the house this will not be covered in the mortgage. So savings would have to be used.

To show you've saved it up and not borrow of a parent then you simple just have to show that as the months went by the amount in your savings was built up, not just an account show 10k lodged into it.

Banks do like to see your in the savings habit. Cause lets say your take home is 1600p/m and you always spending every penny of it then the bank would like to know where all you cash is going. Mainly becuase your trying to tell them that you've got the 800 or what ever it might be free to pay for the mortgage. In your mind you like, well I'll stop going out and spending it and the banks saying well, we can not be certain you'll do that!!

Yes a good savings history is great, but its not aslways needed.

As for applying for the mortgage, always be honest. Them Credit Cards balances will always show up!!!

In the end of the day the person doing the mortgage for you has to personally say what they think about the application, so best not to lie to them.

stepbar

invadernim wrote:

Actually several questions but if anyone can help it would be very much appreciated:

1/ I am starting to save with the long term goal of applying for a mortgage,
just wondering as far as increasing the likely hood of being accepted, would it be better to save with the likes of the credit union or with a bank?

2/ Would it make a difference if you saved with the credit union and then say applied for a mortgage with BOI or would you have been better of saving with BOI all along and then applying for a mortgage with them?

3/ I know when applying for a mortgage you need to show a history of saving, how long would you need to be saving to increase the likelyhood for being accepted for a mortgage?

4/ How much would you need to have saved to get a mortgage of say €200,000?

I know nothing when it comes to this area so thanks in advance for any advice anyone can give me.

Getting a mortgage all depends on your capacity to repay or as the bank calls it "Repayment Capacity". So lets say you earn 2k net but have a loan of 350 to pay p.m and living expenses of 600 p.m, you have 1,150 left p.m. So you have a capacity to repay 1.15k p.m. Loans, minimum credit card repayments etc reduce your repayment capacity.

Typically, BOI (and most other banks) look at your gross wage and repayment capacity together. Usually the bank will give you 4.5 times your salary (single) and 5 times (joint) - (assuming that you have sufficent repayment capacity). As well as that, lenders try to keep repayments p.m to <35% - 40% of net income. Savings can be useful, as they "can" be taken as security or used to reduce the loan to value (LTV) of the mortgage. Lower LTV can mean a better rate.

To get a mortgage of 200k (100%) you would have to earn circa 45k p.a, although this can vary from lender to lender.

unclebill98

"Savings can be useful, as they "can" be taken as security or used to reduce the loan to value (LTV) of the mortgage. Lower LTV can mean a better rate."

Yeah thats very true, should have said that....I was assuming that invadernim has no savings in which case you should apply now to see whats on offer. Lower LTV will always give you a better interest rate with any bank. 200k over 35 yrs would be around 1kp/m not inc life/home insurance. 45k would give you a take home pay of 3k'ish p/m leaving about 1300-1500 allowable for the mortgage. 200k over 35yrs would be roughly 1k p/m....not much room for a single person doing on there own. But do able.

00112984

When I was applying for my (well, "our") mortgage last year, the bank was less interested in savings and more interested in how much we were/were not in debt.

Given the choice between having €5k in the credit union of paying €5k off a loan/creditcard, I'd pay the loan.

Probably not an answer to your question but another way of looking at things.

sofireland

Any commitments to anything other than mortgage impacts on the amount you can borrow,such as loans, credit card, hire purchase etc

If you're applying on your own, some lenders top up your income by giving the room rental allowance on top of your salary. This varies from lender to lender though.

invadernim

Thanks everyone for replying

parsi

It's only a minor thing but from now on you should keep all your payslips, revenue documents and bank statements etc so that you will have a few months worth when the time comes to apply for your mortgage as the banks need to see them.

wasim21k

yeh they ask for last years income proof (p60 or p21) and your last few payslips as well. in my case i had loan with BOI about 8k and 2k bills in credit cards, bank approved my mortgage but with condition that i have to clear my loan before mortgage cheque. and i also had saving account with BOI (about 8K).
but few things i should done by myself which could save lot like mortgage protection (now i m paying 900/year) got quota from 123.ie just 361/year:D
well i would say shop around for every thing and don't worry about few small things as first time when i sign first paper for mortgage was really hard time that i dont have enough money for furnishing. as time pass now i m moving in my new house in next week and going to have every thing (i still need few things there but i dont mind them).

stepbar

Deffo, shop around. Different banks have different offering geared towards different market segments.