There are many things to keep in mind before securing a mortgage. You don’t want to make any mistakes during this process, so it is important to be aware of what you are getting into. I am going to speak on important things to keep in mind before securing a mortgage loan.
Knowledge of Central Bank rules
There are things you must think about if you’re buying your first home, or if you are looking into trading up. The Central Bank governs banks in Ireland, it has control over how much these banks can lend and how much people are able to borrow. The rules right now give borrowers the ability to borrow 3.5 times their income. If you have a family, it combines you and your spouse’s income together to get this rate. First-time buyers must deposit 10 percent and trader-uppers 20 percent. So, if your average salary is 38,000 euros, you will be able to secure a mortgage for around 2 to 3 times that. If you wanted to buy a house that is worth 400,000 Euros, you would have to have an income around 100,000 euros (this option is for first-time buyers). If you are trading up, it would be around 91,000 euros because the deposit required is larger.
The Current Account plays a factor
One specific item Irish banks look at are their client’s current account. It is important to get your current account in shape before going to the bank. Referral charges, overdrafts, car loans, unnecessary credit card chargers, direct debits to gambling accounts; all of these things can mitigate your chances of getting either approval, or approval for the amount you desire. If you have a personal loan, such as for a car or college fees, it will impact the amount you can borrow. It is best to reduce these factors before applying at the bank.
The old fashion Mortgage requirements still hold
Lenders for mortgages still use an old-fashioned approach for the borrowing of money. Based on the rules for loans all over the world, banks usually need you to have a permanent job for over a year. This is not just for housing, but it is important for banks to know if you have the financial ability to satisfy a loan. If you have a steady career job, it should be easy for you to check this box and be ready for a loan. In Ireland entrepreneurs and self-employed citizens have a harder time with this.
These are just a few things to keep in mind during the process of getting a mortgage. There are many other things as well, and it is important to be informed.