Mortgages – What do I Need?

Mortgage lenders are keen to lend at the moment. However, the level of examination of every applicant’s financial affairs has never been more intense. Stricter policies, procedures and requirements were put in place to ensure that there isn’t a repeat of the 2009 property crash, which was the result of reckless lending.

If you are looking for a mortgage it is essential that you have all your ducks in a row before submitting an application.

1. Deposit

During the property boom in the early noughties, it was common to borrow over 100% of the purchase price with little, or no personal financial input.

Today, strict Loan to Value (LTV) policies requires applicants to contribute to the purchase themselves:

• First-time buyers, 10% deposit
• Next-time buyers 20%
• Buy-to-let mortgage 30%
• FX Loans 35% (e.g. ex-pat buying in Ireland –requirement can vary)

e.g. A first-time buyer paying €300,000 will need to have a €30,000 deposit, plus legal costs and stamp duty.

NOTE: All of the deposit need not come from savings. It can be gifted, and in the case of self-builds, if the site is already owned by the applicant, the value of the site can go towards the deposit.

2. Bank Accounts:

6 months’ statements for all loan, savings and current accounts (incl. Revolut, DeGiro etc), are required. Lenders like to see: wages, rent and regular savings going through your bank account. Rent and regular savings will show that you have the ability to repay the mortgage.

Things lenders don’t like to see include:

• unpaid debits
• missed loan payments
• overdrawn account balances
• regular betting patterns
• large unexplained lodgements

Therefore, get your statements in order and make sure you have at least 6 months well-managed statements, to give yourself the best chance of approval.

3. Income Documents:

PAYE

3 months’ payslips required for each applicant, along with a salary cert completed by your employer, detailing your earnings. Lenders work off the GROSS salary cert figure but your payslips must correspond.

If you work in a job where you get overtime, allowances etc. lenders will look at your previous 3 years’ EDS (P60) figures and work out the average extra income based on these. They will allow up to 50% of the extra income and up to 100% of guaranteed allowances.

Generally, lenders will only approve applicants in permanent employment, with any probation periods completed.

Self Employed

Up to 3 years’ accounts are required and lenders use the average NET profit figure. Providing 3 years’ accounts makes it difficult for start-ups but does not rule them out.

NOTE: Generally, lenders will lend 3.5 times your gross salary/net profit. Factors which may affect the maximum available to you include dependants or existing loans.

Rental income, maintenance payments or social welfare payments are not considered income for mortgage purposes.

4.    Other Criteria

• Clear credit rating. It is wise to order a credit report from icb.ie to ensure that any previous loans are correctly recorded on your file. If there are any issues, get them resolved before applying.
• If you lived abroad within 3 years of applying, you will need a credit check from that country.

Mortgage brokers know exactly what lenders are looking for. Once they have the above information they can help package an application and relieve the client the stress of dealing with the lender directly.

At McGuire Liston, we will be delighted to assist you on your mortgage journey. Please contact our Killarney or Tralee office if you have any queries.