Saving/Applying for a mortgage 2020-22 Edition

Sorry if this has been asked before, for a self build mortgage, when you draw down money from the bank, do they pay it directly to you, your solicitor or the builder? Thanks

Wouldn't think 2022 will come into it if applying now. Also, are Avant not at 6 or 7% fixed these days?

If the mortgage repayments go over the affordability threshold you could either extend the term or borrow less to bring down the repayments. If there's no actual leeway the bank will just offer you less than the full 4x amount.

Ah yes OK, I see their interest rates are a lot less. I had incorrectly lumped them in with Finance Ireland, when Avant have an actual bank behind them.

So, we’ve just gotten our A.I.P and have looked at a few houses, planning on bidding on one on Monday. Going back to my original post, I had nothing to worry about. No matter how much previous debt you had or held simultaneously, if paid off correctly or staying within limits is fine. A few learnings from my mortgage journey that might help other PAYE workers on here.

I happened to meet a financial advisor randomly through friends and they told me the lender is primarily concerned with three things leading up to the mortgage application which thankfully I had sorted. If you can show these, you are well on your way.

Affordability – Affordability is an obvious one, but can your rent and savings combined cover the cost of the mortgage + a 2% interest rate stress test? A lot of people fall into this trap where they think if they can show 2k savings and rent a month that will cover a 2k a month mortgage. You need to be saving the stress test on top to guarantee yourself approval from affordability. A 30 year €350k mortgage with 10% deposit saved (a €315k loan) at 3.8% as an example will cost you €1470 a month. Ideally you want to be showing from savings and rent that you can cover a 5.8% rate, which is a monthly repayment of €1850. If you can do that for six months on your statements, you will pass the affordability test easily. Having the 10% deposit saved/available also falls within the affordability pass/fail.

Job Security and Guaranteed income – Make sure the applicants are at least 6 months employment with the same place, ideally a year. Lenders are hesitant to loan to anyone with under this. Do not apply if you are in a probationary period. Gross income or joint incomes combined should not be over 4 times the loan amount you are looking for. He also said even though you can now get 4 times your income, in the eyes of the lender, 3.5 is better to aim for – if you can save a little longer to make it 3.5, it is worth doing.

Credit history – Again an obvious one but there is no need to freak out over small things like a few overlimit fees on a credit card, an explainable missed payment on a loan or always being in your overdraft (if it is an arranged overdraft an you get your account into credit once a month) . You shouldn’t have a missed payment, go over-limit on anything or apply for any other credit in the 6 months leading up to applying for your mortgage though. If you have had more serious credit issues, it is best to get a mortgage broker to advise you. Outside of these three, just try and avoid regular gambling, regular cash withdrawals and don’t have any unexplained large transactions in or out of your account within the last six months (year would be better). Additionally, have a separate account for your monthly savings and DO NOT touch that account for six months. I had a friend dip into theirs for a small amount and the lender told them come back in six months!

In applying for the mortgage itself we decided to go with a broker just in case I had missed anything and to have them give my documents a once over before applying. Honestly, if you have your documents ready, have some knowledge of interest rates and how much you can afford I really don’t think you need one. I’d probably only recommend getting a mortgage broker if you’re not great with organisation, paperwork or have had credit history problems in the past. Finally, www.mortgages.ie is a fantastic little site for a simple mortgage calculator, how much it will cost you with each lender and for you to get an idea who to go with when applying. The “Lively” app is excellent for getting you mortgage ready too and will protect you from any affordability surprises that you may not have considered.

Anyway, best of luck to anyone going through the process!

It's not fit for purpose in Dublin....so frustrating!

Anyone know the chances of getting more than 4X your salary as a single person on 71K