You may think you’re an ideal mortgage candidate, but you could be absolutely incorrect.
STELLAR Ed Vicki Notaro learned the hard way when her landlord gave her notice, and a mortgage application loomed just before her wedding. Even with good jobs and a heap of savings, she and her now husband still found it really tough to get the loan.
You may think you’re an ideal candidate, but you could be absolutely incorrect. Here’s what to do to make sure you’re in the best position possible when hitting up the bank…
1. Have six months of perfect bank accounts.
Curb your ASOS habit, don’t you dare tap for every coffee you buy, steer clear of online gambling in any way, shape or form (yes, even a flutter on the big match)and take out cash wherever possible. The banks are going to comb through your accounts almost forensically, and every transaction is up for debate. I wished I’d never had a feckin’ debit card when my application rolled around.
2. Be consistent.
Try and save the same amount every single month, and don’t dip in to it when funds are low in your current account. The banks want proof that you have what they call “repayment capacity” for the loan, even if you clearly have a high enough salary to pay your mortgage every month. They want to see clearly that their money is golden, no matter what.
3. Be prepared to explain yourself.
The banks are going to want to know about every large transaction, so if you’ve been spending be prepared to explain why. And no, “I needed the Gucci handbag” isn’t really a good enough explanation.
4. Renting is good.
It shows you have the repayment capacity, the ability to pay a large lump sum every month on time. Living with your folks, but coughing up to them? Unsound brokers and underwriters won’t see that as proof of repayment capacity, because they could just be taking it out of their account and handing it right back to you. ’Tis a tricky business.
5. You actually need more than 10 per cent saved as a first time buyer.
That will just cover your deposit, but not your solicitors fees, stamp duty, house and life insurance and paying the valuer. It can actually be another €5-10k 6on top of your deposit, which I did NOT know when applying.
6. Go for the best interest rate for you.
Nobody has a crystal ball, and there is wiggle room, but if you can go fixed for a couple of years while rates are good, why not? I didn’t know a thing about them before we applied – you can bet your bottom dollar I do now.
7. Be prepared for what comes after mortgage approval.
Bidding wars, deals falling through, heartbreaking near-misses. It can absolutely take its toll on you mentally and emotionally. At the end of it all, it will most likely be worth it. But it’s not a pleasant or easy process, so arm yourself before you get in deep.
This article first appeared in the November issue of STELLAR Magazine. Our December issue is on shelves now.
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