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IF SOMEONE TOLD you a few years ago that you would be contemplating buying a house, you probably would have laughed in their face.
Either you had no money, no job or it looked like the banks were simply closed to mortgages.
Fast forward to today, be it good or bad, the property market is heating up again.
However, during years of recession, you never contemplated getting on the property ladder, but now you’re not so sure.
There’s one problem. You haven’t a clue where to begin.
We asked two of Ireland’s largest banks Allied Irish Banks (AIB) and Bank of Ireland (BOI) some of the most commonly asked questions.
What is expected of someone in terms of a deposit?
Previous to the new rules, applicants to AIB needed a minimum 8% deposit for mortgages up to €400,00.00 and a 15% deposit for mortgages over €400,000.00.
Bank of Ireland customers could borrow up to 90% of the property value which means it was typically at least 10% of the purchase price – for example that’s €17,500 on a €175,000 property.
However, new mortgage lending rules are soon to come into effect, so best take a look at these. Here’s what you can get for €220,000.
What about job stability, do I have to be in a job for a certain time period?
AIB: Employment status has evolved over recent years and our criteria reflects this changing environment:
BOI: There are a number of factors that can influence the amount you can borrow, but each application is given careful consideration taking all of the applicants’ circumstances into consideration. Factors taken into consideration include:
How long do you have to have lived in Ireland?
AIB: There is no limit as to how long an applicant is resident in Ireland before they can apply for a mortgage.
BOI: In general applicants should be resident in Ireland but we will also consider applications from expatriates who have definite plans to move back to Ireland.
What about if you have just returned from abroad, do you have to wait until you apply?
Both banks said that there is no limit as to how long an applicant must be back in Ireland, but generally applicants should be resident in Ireland. The key issue is your employment and the requirements that are set out in the above answers.
Applications from expatriates who have definite plans to move back to Ireland may also be considered.
What’s the story with my credit score and how does that impact on getting a mortgage. Can I improve on it if it is low?
AIB Bank explains that a credit history is a reflection of an applicant’s previous repayment record and ability to manage their repayments. In a situation of a previous poor credit history AIB said it would need to review the reasons and their recent track record.
If their circumstances haven’t changed it would suggest there may be difficulty in taking on further commitments, said the bank, adding if the issue is historic or an applicant’s circumstances have improved the bank may consider an application.
Bank of Ireland said it is keen to see that mortgage applicants can afford to take on a mortgage and still have enough money left each month to enjoy their new home – even if rates increase.
They advised people to do their sums.
Do your calculations and have a good understanding of what you can afford, how much you can put into the sale and how you will repay your mortgage. Mortgage calculators can help you work out how much you can borrow and how much you can afford to repay.
You should be able to demonstrate through your bank account that you can take on your mortgage repayments.Make sure any rent you pay goes through your bank account rather than pay your landlord or flatmate in cash.
If you are living at home and making a contribution to the household, set this payment up as a standing order.
Do I need to have savings?
This is pretty important. Bank of Ireland said it’s really important to show that you have saved regularly over 9 to 12 months – it demonstrates that you are serious about getting a mortgage and also shows (along with any rent you’re paying) what you can afford in mortgage repayments
I have a loan already, will this matter?
It’s a good idea to pay down credit cards and personal loans as much as possible as additional borrowing could affect the amount you can borrow for your mortgage.
You will need to show how you can cover additional costs such as stamp duty, legal fees and any additional expenses that might be required to make your new property habitable.
How closely do I have to watch your spending – Paddy Power accounts, shopping sprees etc. Is it time to give up
The assessment of an application is based on repayment capacity and an applicant’s personal spending is not an issue once there is sufficient disposable income to fund the proposed mortgage repayments, said AIB.
The bank will look for evidence that a customer has proven their ability to live on the disposable income that will be available. This is done by requesting evidence that an applicant has being saving, paying rent or a mix of both to the tune of the proposed repayments for a minimum of six months.
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Perhaps this article should have been updated to reflect the new Central Bank rules, no?
Seems a bit of a miss alright!
Headline is incorrect. Should read – applying for a mortgage from a bank that hasn’t got a clue?
Hi Sinead,
We have a whole separate article done on what deposits are now required and there is a link included in this article in the first question. Here is the link anyway to the new mortgage rules: http://businessetc.thejournal.ie/mortgage-regulations-1906185-Jan2015/
And here is another link on what €220,000 will get you as a first-home buyer across the country: http://www.thejournal.ie/first-home-mortgage-rules-ireland-1906790-Jan2015/
Hope this helps and thanks for reading.
I really don’t understand the focus on first time buyers in the mortgage market to the exclusion of all others. Sure new people need to buy houses. But buying a house when you already have one, releasing equity for deposit, being in a chain, negative equity, affordability, trading down, etc are all far more complicated for those with houses.
We talk of a property ladder but rarely get advice or political incentives beyond getting on the first rung!
Brokers don’t always go for the best deal for the client- some will favour the bank the get the best commission from which may not always be the best or cheapest deal for the client
Steer clear of Pmtsb with them over 30
Years direct debit was returned last week for 16 cent then they charged me €10.69 for in sufficient funds and transaction I asked for a 10 euro over draft no was the ans dish it out to ter friends tgh no prob is that sad
I think every bank is same. Unpaid DD fee is always about 10 eur – even when you were to pay 5 cents DD. Just make list of your DD in a month and make sure you have enough funds on the day (or if you always come very close, but then are able to pay it up, then apply for overdraft – watch out though – there are some fees for it too…).
Plenty bankers on here this morn
Mortgage Brokers are always your best option. They deal with the bank on your behalf and help prepare the application from the outset. Log on to brm.ie to see how it works.
You manage with bit of cheeky advertising there, hence red thumbs, but I agree – unless you are very good with financial matters then brokers are way to go, there will be some fee probably in the end, but it may still be very worth it, they know the business inside out so will save you some bad decision making and lot of time.
SOme lenders don’t deal with brokers – so you might get a better deal doing the legwork yourself.
Banks do not want to speak with self employed dudes. Just for the laugh, I did an online application stating I had 90% deposit of a 400k home (looking to borrow just 40k)…And not a single phone call back!!
The article doesn’t tell me the steps on getting a mortgage at all. Were do i start!
8% deposit for a €400,000 house. That’s madness if you couldn’t afford it. I suppose you were given a credit card to splash out on after the stress of buying the house as well.
PP online again! argghh!
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