Beginners Guide to Mortgage?

HomeBuyer32

Hi guys,

Am hoping to get a mortgage for my first house in 6-12 months and just wondering if there's anything I should know at this stage. Any tips or advice. Maybe something you wish you knew 6-12 months before applying for your mortgage?

Does it matter where my current account is? Does it matter where my savings are?

I see BOI have a mortgage saver account with a potential €2k bonus after 6 months if you go with a BOI mortgage. As a place to store savings it seems like a no brainer?


Thanks

pwurple

Watch what you spend on from your debit and credit cards. I was doing the office lotto syndicate online from my account years ago and it flagged me as having a gambling addiction. So if you are paddy powers person or lotto, cash only.

Direct debits are another one to knock on the head 6 months out. Spotify or prime, small amounts regularly.. those all reduce the amount you can borrow.

Try to get rid of all debt. Car loan, pay off credit cards, any old student loans. Gone.



For your savings, check you actually want that BOI mortgage. That their rate suits you. Otherwise, if you go somewhere else, you get zilch. Not that there is much in savings interest at the moment anyway.

HomeBuyer32

pwurple wrote: »

Watch what you spend on from your debit and credit cards. I was doing the office lotto syndicate online from my account years ago and it flagged me as having a gambling addiction. So if you are paddy powers person or lotto, cash only.

Direct debits are another one to knock on the head 6 months out. Spotify or prime, small amounts regularly.. those all reduce the amount you can borrow.

Try to get rid of all debt. Car loan, pay off credit cards, any old student loans. Gone.

Thanks pwurple.

Credit card will be paid off this week. No loans at all. Not many direct debits.

pwurple wrote: »

For your savings, check you actually want that BOI mortgage. That their rate suits you. Otherwise, if you go somewhere else, you get zilch. Not that there is much in savings interest at the moment anyway.

Yeah that's my thought. It looks like the money is not going to earn much anywhere else so regardless of what mortgage provider I end up with maybe it's a no-brainer to save using the BOI mortgage saver just in case?

Looly8726

Just got approval this week and we only applied off the cuff so well done getting organized!!
Tips as follows:
Regular savings to any saving account really, no dipping... make sure you have proper records of rent paid, that it goes from your account on same date every month and is called “Rent for x address”.
Look up online calculators for how much you want to borrow and check out the repayment amount then make sure your rent and savings are more than the amount of the repayments.
Pay off any loans or debt of at all possible and don’t go too heavy on the credit card.

HomeBuyer32

I'm in a public office on a fixed pay scale. I'm going to be earning €5k more in 5 years. Nearly €10k more in 10 years.

Would any of this be taken into account in their calculations of how much I can borrow?

HomeBuyer32

Looly8726 wrote: »

Just got approval this week and we only applied off the cuff so well done getting organized!!

Congrats Looly. And thanks. Savings should be okay but my salary is a bit lower than I'd prefer but hopefully a bit of early preparation might help.

Black_Knight

HomeBuyer32 wrote: »

I'm in a public office on a fixed pay scale. I'm going to be earning €5k more in 5 years. Nearly €10k more in 10 years.

Would any of this be taken into account in their calculations of how much I can borrow?

No.

Current salary, current savings, current expenses. In a nutshell that's what they're basing their risk on.

Looly8726

HomeBuyer32 wrote: »

Congrats Looly. And thanks. Savings should be okay but my salary is a bit lower than I'd prefer but hopefully a bit of early preparation might help.

We were in a similar boat in that my partners salary is made up of a base salary and various allowances... they would only account for his base salary so it meant we needed more of a deposit in our case. I don’t know much about salary scales though as we are both private sector.

Black_Knight

Being 6-12 months from buying a house, you've very little to do.

- Clear any debt
- Have regular savings
- Don't dip into those savings
- No Paddypower or lotto etc.
- Don't get married , or if you do, get approval in principle before you spend money on the wedding. Chances are you'll get money back as gifts, but banks might look at it as "wreckless spending" :rolleyes:

If it's a new home you might be looking at, check out the help to buy scheme for first time buyers of new builds. Not sure when/if that's planned to expire.

Direct debits are fine. If someone is "hiding" those expenses (spotify etc) for the sake of getting a higher mortgage it sounds like they're not able to afford that high mortgage.

123Vicki

Bank of Ireland very harsh. Declined us as we had credit cards and I have a personal loan. Applied 1 week later with PTSB and they didn't factor in the credit cards or loan and got approved within the week. We will get 2% cashback at drawdown and 2%back off monthly mortgage payments.

Regular savings and any transactions over approx 100 looked at but not in great detail. Best of luck.

Black_Knight

HomeBuyer32 wrote: »

Congrats Looly. And thanks. Savings should be okay but my salary is a bit lower than I'd prefer but hopefully a bit of early preparation might help.

Prepare for the worst case scenario. 3.5 times your combined salary as the max they'll offer you (assuming no dependants). Whatever extra you think you'll end up needing to fund a house, you'll have to make do with your deposit. It's tough to do, but at least you've 6-12 months to go savings crazy.

Make sure you're not overpaying on utilities, or your phone. TV and broadband providers typically give you deals if you threaten to leave them, and even better deals if you follow through and actually do proceed to cancel.

Looly8726

Also found BOI very harsh... wouldn’t worry too much about direct debits either.. we have Netflix, audible and Spotify accounts.. as long as you’re saving, paying rent, have your deposit and the repayments are within your affordability then you should be ok.
One other piece of advice would be to get your full approval in principle before you go looking at houses at all. Don’t wait until you find something you think you can afford to go looking for the mortgage! We went in to the bank and got AIP on the spot... it wasn’t worth the paper it was written on but naively we thought we were out of the woods at that!

nutjobb

123Vicki wrote: »

Bank of Ireland very harsh. Declined us as we had credit cards and I have a personal loan. Applied 1 week later with PTSB and they didn't factor in the credit cards or loan and got approved within the week. We will get 2% cashback at drawdown and 2%back off monthly mortgage payments.

Regular savings and any transactions over approx 100 looked at but not in great detail. Best of luck.

Agreed about boi, I work as a contractor for the last 1.5 years with good savings and salary. She is permanent with hse. Wouldn't entertain us as I am a contractor.

Went to end and had no issues.

mortgage69

Hello, great thread. We are a couple with a combined income of 115k so i believe that amounts to roughly 400k.

Living in the west of Ireland so thats an advantage from the get go i suppose being a bit cheaper than Dublin. We are hoping to buy in 12 months time and have just started the savings now really! My question is im looking to get a loan for 20k in August for a car and if approved(whick i think it will be) will the banks frown on this when it comes to the mortgage?

I have read ptsb and the like are fine with it just AIB that might be a problem. I assume people get approved for mortgages all the time while still having loans right? I know it depends on how much etc but just wondered in general. We have no credit cards or outstanding loans.

jlm29

mortgage69 wrote: »

Hello, great thread. We are a couple with a combined income of 115k so i believe that amounts to roughly 400k.

Living in the west of Ireland so thats an advantage from the get go i suppose being a bit cheaper than Dublin. We are hoping to buy in 12 months time and have just started the savings now really! My question is im looking to get a loan for 20k in August for a car and if approved(whick i think it will be) will the banks frown on this when it comes to the mortgage?

I have read ptsb and the like are fine with it just AIB that might be a problem. I assume people get approved for mortgages all the time while still having loans right? I know it depends on how much etc but just wondered in general. We have no credit cards or outstanding loans.

They’ll look at your repayments on the loan, and knock it off how much you can afford to pay back every month. Unless it’s changed recently, AIB calculate affordability by adding both monthly salaries together. The subtracting any loan repayments or commitments like childcare. There needs to be (I think) €1050 and €275 (again, not 100% on the figure, but it’s not too far away from that) per child to live on, after the mortgage is paid.

mortgage69

jlm29 wrote: »

They’ll look at your repayments on the loan, and knock it off how much you can afford to pay back every month. Unless it’s changed recently, AIB calculate affordability by adding both monthly salaries together. The subtracting any loan repayments or commitments like childcare. There needs to be (I think) €1050 and €275 (again, not 100% on the figure, but it’s not too far away from that) per child to live on, after the mortgage is paid.

Ok thanks, is 20k a hugh amount do you think to have? I must add we are 35 and 40 when going for this mortgage do you think our age will go against us in terms of borrowing?

Antares35

We are in a similar position but will be closer to 12 months when we are ready! I heard that if you have a credit card, you can use it to improve your credit rating by using e.g. one third of your limit and repaying in full each month. Is this a useful exercise or are we better to just cup up the card?

voluntary

mortgage69 wrote: »

Ok thanks, is 20k a hugh amount do you think to have? I must add we are 35 and 40 when going for this mortgage do you think our age will go against us in terms of borrowing?

24-25 years is likely the longest term you're looking for. It's unlikely bank gives you a loan with last repayment going over 65 years old.

voluntary

Antares35 wrote: »

We are in a similar position but will be closer to 12 months when we are ready! I heard that if you have a credit card, you can use it to improve your credit rating by using e.g. one third of your limit and repaying in full each month. Is this a useful exercise or are we better to just cup up the card?

This is a myth. Just make sure you have as little outstanding debt as possible when you apply for a mortgage. It's the regular savings + current rent what banks are looking for.

Creamy Goodness

Antares35 wrote: »

We are in a similar position but will be closer to 12 months when we are ready! I heard that if you have a credit card, you can use it to improve your credit rating by using e.g. one third of your limit and repaying in full each month. Is this a useful exercise or are we better to just cup up the card?

not really, Ireland isn't huge into credit scores. Just make sure you've never missed a payment on any credit you've been given and you'll be fine. If you've ever paid a cent interest on a credit card, cut it up as it's not doing any favours.

Sarn

voluntary wrote: »

24-25 years is likely the longest term you're looking for. It's unlikely bank gives you a loan with last repayment going over 65 years old.

Some banks give up to age 70, although I wouldn’t like to be paying a mortgage at that age.

mortgage69

voluntary wrote: »

24-25 years is likely the longest term you're looking for. It's unlikely bank gives you a loan with last repayment going over 65 years old.

ok thanks, would it be unlikely for us to be approved for say a 320k mortgage based on 25 years then?

voluntary

mortgage69 wrote: »

ok thanks, would it be unlikely for us to be approved for say a 320k mortgage based on 25 years then?

I think you should be able to easily get it. Assuming you can prove you can afford montly repayments about 1500 Euros (bank will test you against 30% more than that).

using mortgage calc:
house worth 360,000
loan 320,000
term 25 years
2.60%

repayments: €1,451.74

jlm29

mortgage69 wrote: »

Ok thanks, is 20k a hugh amount do you think to have? I must add we are 35 and 40 when going for this mortgage do you think our age will go against us in terms of borrowing?

My OH was 46 when we took out our mortgage, so we were given a 19 year term.
The fact that it’s 20k doesn’t matter, it’s how much monthly you’ll be repaying that’s the issue in terms of affordability. I think it’s BOI have a good (quick) calculator on their website that lets you put in a few figures and see what you’re at. You can put in the 2 salaries, other monthly commitments like loans, how much you’re thinking of spending, and see what you can borrow firstly, and how much your repayments will be.

Buy a banger and drive it for a year instead of borrowing 20k.
Once settled into your new house go for the new car.
20k might make a difference when buying or finishing a house.

Creamy Goodness

this is the second time in the last few weeks that someone has looked to getting a largish loan for a depreciating asset whilst trying to get a mortgage... it's absolutely baffling.

mortgage69

Deleted User wrote: »

Buy a banger and drive it for a year instead of borrowing 20k.
Once settled into your new house go for the new car.
20k might make a difference when buying or finishing a house.

yeah i did consider this (and really should) suck it up for the year and go for it after.

mortgage69

Creamy Goodness wrote: »

this is the second time in the last few weeks that someone has looked to getting a largish loan for a depreciating asset whilst trying to get a mortgage... it's absolutely baffling.

sorry this aimed at me? Do explain please im new to all this.

mortgage69

voluntary wrote: »

I think you should be able to easily get it. Assuming you can prove you can afford montly repayments about 1500 Euros (bank will test you against 30% more than that).

using mortgage calc:
house worth 360,000
loan 320,000
term 25 years
2.60%

repayments: €1,451.74

Based on this would we need 40k deposit?

Creamy Goodness

mortgage69 wrote: »

sorry this aimed at me? Do explain please im new to all this.

Yes, a mortgage is one of the biggest loans you'll ever get. you're getting the guts of 1/3rd of a million euro over x amount of years. the trade off is you get a lovely home to live in, however you're willing to jeopardise getting this loan for the sake of a comfier car as banks do not like risk. Whilst depending on the circumstances a 20k loan might be a small risk, it's a risk in the banks eyes.

The advice above is good; buy a small get-around car for 2-3k to do you until you get your house, then use it as trade-in/scrappage to get a 20k car.

jlm29

Creamy Goodness wrote: »

this is the second time in the last few weeks that someone has looked to getting a largish loan for a depreciating asset whilst trying to get a mortgage... it's absolutely baffling.

It’s about context really. If they have salaries of 115k between them, and want to buy a house for 200k, so can easily afford it, there’s nothing wrong with buying a decent car. If they’re on the cusp of what they can afford, and looking at houses for 400k, then it might be a bit more reckless.