Improving your chances of mortgage approval

NearlyForty

Just looking for a bit of advice please..
We are thinking of going to see a mortgage broker but would like to see if I could get some good tips and pointers here first?
So we are first time buyers hoping to buy our first house in the next year.. But I’m afraid that our age, 5 dependants etc may go against us.. or do the banks concentrate on income, savings, ability to pay etc..
I will be 40 on my next birthday and my partner will be 44.. So that would leave us with a max mortgage of 21 years.. On other people’s experience, does that cause problems ?
The reason why it took us until now to buy was so that we could get our deposit together comfortably..
I know they stress test your income, ability to pay mortgage now and in the future, so how much is taken into consideration? Per adult, per child?
And are they strict on that?
Any other pointers?
Many thanks

The_Honeybadger

When you say 5 dependants do you mean you have 5 kids?

We got approved in a somewhat similar scenario a few years ago. The bank at the time took our net monthly combined take home income, subtracted €2000 for living expenses, €250 per child and then took off the monthly childcare bill as well which was about €1000 at the time.

Whatever was left was deemed to be what we could afford as a monthly mortgage payment against the max term we could qualify for based on our age. I hope that makes sense. All the banks have ‘what can I borrow’ calculators on their websites that will act as a rough guide to what you can borrow.

Needless to say our kids had a massive bearing on what we could borrow. It reduced the sum enormously and we only just about got the house we wanted. If you have 5 kids it could make things difficult unless you have a whopping deposit and low LTV requirement.

I’m not sure there is anything you can do to better your chances as it seemed to be very formula driven to me. Showing you can save regularly and manage your money well will help of course.

NearlyForty

The_Honeybadger wrote: »

When you say 5 dependants do you mean you have 5 kids?

We got approved in a somewhat similar scenario a few years ago. The bank at the time took our net monthly combined take home income, subtracted €2000 for living expenses, €250 per child and then took off the monthly childcare bill as well which was about €1000 at the time.

Whatever was left was deemed to be what we could afford as a monthly mortgage payment against the max term we could qualify for based on our age. I hope that makes sense. All the banks have ‘what can I borrow’ calculators on their websites that will act as a rough guide to what you can borrow.

Needless to say our kids had a massive bearing on what we could borrow. It reduced the sum enormously and we only just about got the house we wanted. If you have 5 kids it could make things difficult unless you have a whopping deposit and low LTV requirement.

I’m not sure there is anything you can do to better your chances as it seemed to be very formula driven to me. Showing you can save regularly and manage your money well will help of course.

Hi, thanks for your reply.. Yeah I guess that’s what I meant really about improving our chances of getting approval ie.. showing regular savings, clearing any debts we have (to improve the amount we get) watching our spending habits etc etc
Yes, our 5 dependants would be our kids.. So basically, they take out e250 per child per month, plus any outgoings we have ?
So based on your experience it is possible to get a mortgage with so much going on! That’s good to know

The_Honeybadger

NearlyForty wrote: »

Hi, thanks for your reply.. Yeah I guess that’s what I meant really about improving our chances of getting approval ie.. showing regular savings, clearing any debts we have (to improve the amount we get) watching our spending habits etc etc
Yes, our 5 dependants would be our kids.. So basically, they take out e250 per child per month, plus any outgoings we have ?
So based on your experience it is possible to get a mortgage with so much going on! That’s good to know

That was AIB yes they took €250 off per child plus childcare costs, plus €2k living expenses. Policies from bank to bank probably vary. I don’t think any will consider child benefit or any other welfare payment as income either. We were totally deflated after the initial meeting we had with them but in the end a nice house came up just about within what we could afford so it worked out ok. We were very lucky.

It’s impossible to answer your question regarding whether you can get a suitable mortgage without knowing your net income, savings etc. Any of the banks or a good broker should be able to give you a good indication fairly quickly though.

myshirt

Most banks will take the child benefit for the purposes of the loan to income multiple, but not for the affordability.

Op, what you are looking at is roughly your income from employment less 3,500. So say you have 5,500 in monthly income from employment and negligibe childcare costs, then the bank would say you can afford a mortgage of 2k under a stress test scenario (5,500 less 3,500) or roughly 1,500 a month in a normal scenario. Those type of numbers would get you 290k of a mortgage. Add your deposit and that's your budget.

It doesn't matter if your family of 7 survives on less than 3,500 after paying your mortgage, or even spends more. Years and years of experience within the actuarial profession drives these numbers.

Grumpypants

The banks have an equation that works out how much they will give over what term. 21 years is still a longish term and will save you a fortune rather than paying bavk over 30 years. But there isn't much a broker can do. Deal with the banks. You either fit in their equation or you dont.

If your combined income is good then they will offer the loan.

Best tips.
Clear any small loans, have no car or personal loans, no credit cards etc. and avoid overdrafts.

Show you have good control of your income and expenditure and have been saving/paying rent regularly.

No online betting at all!

NearlyForty

Thanks for all the replies!
I’m a bit deflated at how much they take out for ‘living expenses’.. Factoring all those amounts in, would only leave us with e1,450 for the Mortgage.. (at their stress test level.. I know well we could afford the mortgage)
Anyhow, I’ll know more when I approach our bank..
And yes, I’m currently paying off any loans, overdrafts etc to improve our chances..