The mortgage process will always be a relatively complicated one, with banks going to every length to ensure you can pay back the loan in full.
With housing prices rising and supply unable to meet the current demand, there are sometimes hundreds of people up against one another for one property.
Getting approval for your mortgage can be a lengthy process but it can be sped up by avoiding some common mistakes made by first-time buyers.
We have compiled recent advice for those thinking of beginning the process from Mortgage advisor Alison Fearon, as well as tips from RTE’s Financial expert Eoin McGee for once you have landed onto the property ladder.
READ MORE: The foolproof mortgage checklist for first time buyers as Irish house prices soar by €100 a day
Among the most common mistakes people make, here are the highest ranking:
The bank will want to see how you can afford your monthly repayments over the 30-year period.
You may earn €70,000 between the two of you, but will you have that €1,000 extra every month that will be used to pay the mortgage.
The main things they will look at are:
- Rent – “If you’re already paying €1,200 rent a month between the two of you then you have already completely ticked that box because going forward you’re not going to have to pay that rent and so that is your proven repayment capacity,” according to mortgage advisor Alison Fearon.
- Savings – “If you’re living at home and are not paying anything, then you really need to show proof that you can save that entire €1,200 each month for at least six months because that is the time frame they will be looking at when you go to apply.”
- Overdrawn accounts – “Keep your account clean, don’t go overdrawn – make it really easy for the banks to see that you’re on top of your finances.”
A couple of things that can impact the bank’s decision on what you can actually afford, according to Ms. Fearon is:
Any personal or car loans – “Alongside your mortgage payment which may be €1,000, if you already have a €350 car loan that obviously reduces the amount you’re going to be able to pay back, so that will impact what you can borrow,” she explained.
Childcare costs – “The more children you have, the more you’ll be paying to have them looked after by a childminder or at a creche, so this can come into your affordability as well.”
Once you have been accepted, and are settled into your new home, RTE’s Eoin McGee has one piece of solid advice to help you save thousands, and that is to switch providers each year.
According to RTE’s Eoin McGee, by simply switching providers each year to ensure you have the best mortgage rates, you could save a fortune.
“Between the dearest and cheapest mortgage – for a person on an average mortgage – you can save €2,700 in year one.”
Mr. McGee went on to say that this proves “if you just simply always take the first offer it may be the most expensive offer that you’re going to get.
“So you need to look at what’s available to you and the reality is those most expensive offers whether it’s gas or electricity or mortgages, there are customers out there who take them, and if you are one of them these are the types of savings you’re missing out on.”
With a total saving of €2,713 in year one, “that’s €54,000 on their particular mortgage between the most expensive rate and the cheapest rate.
“We all know that mortgages are not very easy to move, they do take six or eight weeks, you do need to go through the underwriting process but for €54,000 for the next twenty years it’s worthwhile.”
Get breaking news to your inbox by signing up to our newsletter .