Mortgage approval

I am MAN

Hey,

What are the typical things one would need to get approved for a mortgage?, Ideally how much should you have saved in the bank before attempting to ask?

Im talking about a first time buyer property 220k-300k?

I am aware this may not be the correct forum so feel free to move if this is the case.

Mark.

samo

You world normally need to supply P60, 3 wage slips and letter from your employer confirming employment details, eg you are in permanent employment, salary inc bonus/overtime etc - its a standard form form issued by the bank.

On top of this, may require 6 months bank statements and utitliy bill etc as ID. In terms of what they would lend you - have a look at the mortgage calculators on the Permanent TSB/BOI websites etc. If you go through a broker they may lend you a little more and also things such as indemnity bonds etc may not have to be taken out.

Most banks will lend 90-92% of the purchase price but again sometimes a broker might get more for you (did in my case 1st time round!) and then legal fee's are other major expense, it varies from place to place really, I think about 3K is avergage but someone may be able to correct me on that or have more info on the reduced deals doing the rounds.

Have a look at the mortgage forum on www.askaboutmoney.com, loads of info there!

I've just been looking into re-mortgaging and apparently the PTSB have issued guidelines now of 5 x yearly salary as figure they would be lending.

I am MAN

Hey,

Thanks for the information.

Mark.

sector

also generally speaking any money lender will want to see you saving for a decent period, for example 6 months of saving more that they mortage would be, so just for an example say

income 1=2500
income 2=2000
total = 4500

estimated mortage of 300K is say 1500 per month

They will want to see you save that 1500 every month & still be able to pay normal bills etc.

Very general numbers above just to help explain.

Anything that increases their perception of income is good, for example any other income you have that is not going through your bank a/c put it through it now and going forward.

I know people that even withdraw money, add something to do & deposit it again just to make it appear like they had more! (not recommened but sometimes we all need to get at that little bit extra, after all a mortgage is the cheapest money you can borrow)

jd

sector wrote:

also generally speaking any money lender will want to see you saving for a decent period, for example 6 months of saving more that they mortage would be, so just for an example say

income 1=2500
income 2=2000
total = 4500

estimated mortage of 300K is say 1500 per month

They will want to see you save that 1500 every month & still be able to pay normal bills etc.

if you are already paying that amount in rent they won't. Of course ,if you are a 30 year old living at home it would make sense for them to want evidence of your capacity to put aside that amount of money.

sector

jd wrote:

if you are already paying that amount in rent they won't. Of course ,if you are a 30 year old living at home it would make sense for them to want evidence of your capacity to put aside that amount of money.

Rent of course, forgot to mention that so receipts for that or if it's leaving your a/c directly.

nlgbbbblth

The old system of salary multiples (borrowing two and a half times/three times one's salary) is effectively dead. Banks now look at it from the point of DSR (Debt Service Ratio). This should not exceed 40% - i.e. your total commitments (commitments means mortgage and other loans) should not exceed 40% of your total net monthly income. In other words if your net monthly income is €3,000 then you would be considered good for a mortage costing €1,200 p.m. However the bank will "stress-test" this i.e. see what your DSR would be if interest rates went up by 2%. If the DSR comes in around 45% after this you should be ok.

Get rid of any loans you have beforehand. Otherwise they will impact on the amount you can borrow. Ideally your only commitment should be your mortgage.

You'll need to have savings/or else generous parents. Banks generally will only lend up to 92% of the purchase price. Some professionals may get up to 100% mortgages. Or bank staff

Remember the term can be up to 40 years in some cases depending on age. There is no obligation on you to borrow over an "even" or "round" term. A 27 year mortgage is not uncommon.

In terms of rates I would recommend you start on a variable tracker. You can change at any time if you want to fix whereas if you fix now and want to switch to a variable before the fixed period expires you will be charged a break cost.

Remember the ECB rate is currently 2%
A tracker mortgage basically states that the rate will always be ECB+the Bank's margin. An example would be a flexible tracker mortgage which is 3.15% i.e. the rate will always be ECB+1.15%.

Not all brokers are good. A lot of them are paid on a commission basis by the banks so you may not necessarily get the best deal. In some cases it may be worth approaching the bank directly. It is worthwhile remembering that the cheapest rate may not always be the best option.

Get approval in principle if possible first - then you can revert for formal approval when you identify a property you like.

There will be costs - solicitors fees vary but anywhere between €1,000 - €2,000 for standard conveyancing. Some banks will pay for the valuation, others won't. Always get a structural survey done. Then furniture etc.

Life Assurance is naturally mandatory. It is worthwhile getting an element of critical illness cover rather than going for the standard decreasing and cheap option. You do not have to take the critical illness cover from the same company as the regular cover.

Know your limit and stick to it - although it's very easy get sucked into a bidding war with another party. Consider going up in €2,000s or even more if you wish to kill off the competition.

If you want a decent sized place that's not going to cripple you financially then you might have to consider moving out of Dublin.

Best of luck.