Getting a Mortgage in Ireland Ep 2: Preparing For Your Mortgage Application

I’m delighted to be joined by Dave curry of the Irish mortgage corporation once again and today we’re going to be discussing why the next six months are so vital if you’re applying for a mortgage well Dave if I’m looking to apply for a mortgage kwench let’s start to get serious about my application well the best time to start to get serious is at least six months before your application goes in because the bank’s look at least that far back into your finances when assessing the application okay so the banks will only look within six months of my financial history before deciding to give me more original well now that’s a minimum they look at a minimum of six months for your current account credit cards for example and but they look back up to five years for your credit history okay and what did the banks want to see in the last six months of my comings and goings they focus on two things mainly and one is your repayment capacity so they want you to be able to demonstrate through the financial commitments that you’re keeping up at the moment that you’re able to afford the mortgage that you’re proposing with them the other thing is account operations so they want to see that you’re living within your means that you’re handling all your financial commitments and that there are no red flags that would make them worried about giving you a mortgage okay you mentioned red flags there what type of things will device consider red flags well what’s very high up on that list would be missed payments so if you have any direct evidence and new orders etc and you don’t want to have any missed payments because it shows you don’t have enough money in your account at the time to cover at the Miss fair the–and the commitment you have to remember that the thing they’re most nervous about when assessing a mortgage application is that you’re going to miss a mortgage payment so if you miss a electricity payment then that’s a red flag for them okay and anything else will bett say my recreational habits or my use of an ATM for example that might allow the banks yes and you shouldn’t use your credit cards in an ATM at all usually that’s a sign that somebody doesn’t have enough money their current account again the kind of a sign of financial distress and recreational habits people talk about online gambling and I would say certainly that people should avoid excessive online gambling they should anyway but and when they’re thinking about applying for a mortgage but one or two flutters at the weekend isn’t necessarily going to put a bank off okay and if somebody does have some say non-ideal habits in the last six months of the records what you recommend they do to maybe wipe the slate clean a little bit well I’d recommend that they probably talk to an independent advisor first to discuss the severity or otherwise of those red flags and if there are too many of them were there too severe in the last six months then really the only thing that they can do is to wait until they’ve I suppose cleaned those out of there and bank accounts for the six months prior to making the application okay when it comes to rent how much emphasis did the banks place on your rent when they’re actually considering whether or not to give you a mortgage they place a huge emphasis on it because one’s rent payment would form a large part of showing the bank that they can afford the proposed mortgage so it’s essential to be able to clearly show that rent commitment by standing order from your bank account paying rent in cash is no good if you’re paying rent in cash you should immediately change it’s a standing order to the to the person’s their bank account and that way you can show that you can afford that okay so if somebody is say living with their parents but looking to get a mortgage does this make them unlikely to be able to get their mortgage because they haven’t been paying rent it makes it a little bit more difficult if they are paying rent at home because a lot of the banks won’t factor that in as a fully-fledged rent commitment partly because some of that could be going towards household expenditure and but for those people I’d recommend that they prove their repayment capacity to the banks in other ways primarily through savings okay and are there any circumstances in which the banks will look further back than six months when it comes to looking at your spending payment yes if people have had extraordinary expenditures over the past six months for example they might have got married or might have bought a car for cash something like that then the banks will apply some discretion and look at maybe the previous six months or twelve months to see their true and normal spending habits okay let’s look a little bit about deposits Dave does the bank place much emphasis on how you actually raised your deposit when it comes to deciding they do and a lot of people will guess some or maybe all of their deposit from a gift usually from a from a parents the banks increasingly they prefer to see that applicants have saved at least some portion of that deposit themselves because they want to show that or they want to understand that the people can actually afford the commitment of the mortgage that they will be taking on in their own okay and if somebody is able to raise a relatively large deposit much larger than the minimum requirement for example will the bank be able to display some flexibility when it comes to repayment capacity thereafter they’ll display a little bit of flexibility on several of their criteria including repayment capacity but only a very small amount so the larger the deposit the lower the risk for the banks but they still will want the applicants to prove through their habits through their repayment capacity that they can afford the proposed mortgage okay today we’ve covered a lot there if somebody was watching this and deciding that they’re going to start their application process tomorrow what’s the one key piece of advice you’d give them I’d advise them to tidy up their accounts and to show very very clearly all of their repayment capacity through their accounts by having a standing order for the rent every month having a standing order to a savings account so that every single month we can show the bank that they can afford the proposed mortgage they’ve really really helpful and interesting thank you very much for joining us thank you and thank you for watching hope you found that video helpful to watch more videos in our how to get a mortgage in Ireland series just click this link there are seven videos in this series which covers the entire mortgage application process right up until the moment with the keys in the door of your new home

One comment on “Getting a Mortgage in Ireland Ep 2: Preparing For Your Mortgage Application”

  1. Pablo says:

    Awesome info, deserves more likes!!! Thank you!

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