Which comes first?....

RubyXI

When applying for a mortgage, which comes first:
Finding, viewing and making an offer on the desired property
or
Going to the bank to find out if they'll give a mortgage?

Sorry if it's a stupid question. I'm totally clueless about all this mortgage thing.

TwoShedsJackson

Go to the bank first and find out what they'll give you. This gives you an idea of what sort of house you could look for, and where. No point making offers on houses if you have no clue what mortgage you may have available.

RubyXI

Thanks. I was looking at fairly cheap houses that i figure i should be able to afford but the bank still mightn't want to give me a loan. All very confusing. I only just found out i need things like solicitors and things too!

RubyXI

Sorry, another question... Are your savings taken into account when applying for a mortgage or is it simple based on your income

Danbo!

phi3 wrote: »

Sorry, another question... Are your savings taken into account when applying for a mortgage or is it simple based on your income

Savings will be taken into account, especially since you will need at least 8% of the purchase price saved as a deposit, plus solicitors fees.

phi3 wrote: »

I was looking at fairly cheap houses

No such thing yet

RubyXI

Stee wrote: »

Savings will be taken into account, especially since you will need at least 8% of the purchase price saved as a deposit, plus solicitors fees.



No such thing yet

Well.... Cheaper.... Everything i look up on the net says it is basically 3-4 times your salary you're allowed borrow. Which isn't very much. But working it out myself, i have the 8% deposit, i have enough for the legal fees and the repayments shouldn't be much more than the rent. But i'm not sure the bank will agree with me.

the_syco

phi3 wrote: »

the repayments shouldn't be much more than the rent

Eh? What rent do you speak of?

RubyXI

the_syco wrote: »

Eh? What rent do you speak of?

The rent i pay. I did the mortgage calculator thing on the aib website and the monthly repayments are similar to the monthly rent i pay.

D3PO

phi3 wrote: »

The rent i pay. I did the mortgage calculator thing on the aib website and the monthly repayments are similar to the monthly rent i pay.

you need to realise interest rates are at an historically low level and your monthly repayments are likely to increae from what your seeing by a significant portion.

you need to calculate with rates of 6, 7 or even 8% to really stress test how afforable a mortgage is for you.

Zamboni

phi3 wrote: »

The rent i pay. I did the mortgage calculator thing on the aib website and the monthly repayments are similar to the monthly rent i pay.

Hey Phi,

Just remember to also add in the variety of charges that comes with ownership in comparison to renting when you are doing your math.
Council charges, water (future), waste etc./Management fees
Insurances
Repairs - Paintwork etc
Boiler/Heating servicing
Upkeep equipment - Lawnmowers etc

When you add all that in it may seem more appealing to stay renting to a bit longer

RubyXI

Doesn't a fixed rate mean the rates won't increase? Or am i totally wrong... I'm not too well up on all this stuff as ye can probably see!
Ya i know there will be extra charges, I have taken some into account like house insurance, life assurance and waste charges. But i'm sure there's stuff i'm forgetting.
Sometimes i think i am better off renting but i do really want my own place.
Have a feeling the banks will turn me down though. But we'll see.

D3PO

your correct a fixed rate wont incres for the term of the rate. i.e 3 year fixed is fixed for 3 years then in the 37th month there could be a significant change you your montly repayments. just be sure your looking at this in the long term and not the short term.

and zamboni is right about additional costs ensure you have calculated these in.

Seany

OP some banks arent really open for mortgage business at the moment.

You say you have 8% deposit saved which pretty much means that you require a 92% mortgage...so you are largely talking about one of two lenders who offer this.

The bank will make their decision based on:

Evidence of your ability to repay (E.g monthly rent you have been paying, combined with any regular savings). They stress test every application. Although interest rates are around the 3% mark now...they wont always be so the bank will assess what your repayment would be at 5/6/7% and see if you still meet their criteria.

Your employment sector.
The lender is unlikely to approve an application if you work in an industry which is particularly volitile at the moment (which isnt? )

Income multiples and net affordability
Most lenders will apply one or the other (or sometimes both) when calculating what you can afford. Income multiple is usually 3-4 times your salary and net affordability is a percentage of your take home pay (e.g the lender will allow 30% - 40% of your take home pay to be used as monthly mortgage payment.

Track record
If you have had any loans in the past (or missed payments) this will be taken into consideration.

With regard to your question about fixed rate...yes, if you opt for a fixed rate for 3 years, your rate will not change for 3 years. At the end of the 3 years the bank will give you the option of fixing again or taking their variable rate.


My advice...take your time out there. Its a buyers market and once you have loan approval, use it to your advantage. Make a cheeky offer on property with the promise that as a first time buyer you can move quickly (and not caught up in a chain of selling a property yourself).

I am a financial adviser and work with lenders on a daily basis. If you have any further questions...I'll do my best to answer.

Best of luck,
Sean

testicle

D3PO wrote: »

you need to realise interest rates are at an historically low level

No they're not. They were lower a few months ago. A few months isn't historic by any stretch!

D3PO

testicle wrote: »

No they're not. They were lower a few months ago. A few months isn't historic by any stretch!

OK let me rephrase. The ECB baserate is at an historically low level. Jeez could you be any more pedantic ?? :rolleyes::rolleyes: