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How To Get Approved For A Mortgage
Purchasing a first home is a moment many individuals, couples and families dream about, and it can be realised by understanding one very important process: how to get approved for a mortgage.
For first-time buyers, understanding the criteria needed to secure a mortgage is crucial for a smooth and successful journey into homeownership. To help with each step along the way, we’ve created a detailed guide on how to get approved for a mortgage and get your feet on that first rung of the property ladder.
Are you a first-time buyer?
In Ireland, a “first-time buyer” (FTB) is someone obtaining a mortgage for the first time. This definition applies even if you already own a home that was acquired without a mortgage, for instance, through inheritance or cash purchase. Additionally, if two or more people apply for a joint mortgage, all applicants must meet the FTB criteria to qualify.
There are also exceptions for those who have experienced life-changing events. Borrowers who are divorced, separated or have undergone bankruptcy may still be considered first-time buyers if they no longer have an interest in a previous property.
How much do you need for a deposit?
For both first-time and second-time buyers, the minimum deposit required is 10% of the property’s value. However, it is advisable to contribute more than the minimum deposit if possible. By doing so, you reduce the size of the mortgage you need, shorten the repayment term, and lower your total interest payments over time.
How much are you entitled to borrow under new lending rules?
As of January 2023, the Central Bank of Ireland implemented updated mortgage measures for first-time buyers, enabling them to borrow up to four times their income, a significant increase from the previous rule
Second and subsequent buyers are entitled to borrow up to 3.5 times their gross income.
Are there any government schemes and grants for first-time buyers?
To help first-time buyers get on the property ladder, several government schemes are available. These include:
Help to Buy Scheme
Active since 2017 and extended until 31st December 2025, the Help to Buy Scheme offers financial support to first-time buyers purchasing or building a new home. The scheme provides tax relief of up to €30,000, depending on the purchase price, with a cap of €500,000 on the property value.
First Home Scheme
Launched in 2022, the First Home Scheme helps bridge the gap between mortgage and deposit by providing up to 30% of the property’s value in exchange for a stake in the home. This scheme only applies to newly built houses or apartments and is intended for properties that will serve as the buyer’s primary residence.
Preparing for your application: Get approved for a mortgage with these top tips for success
The mortgage application process is one of the most crucial stages of buying a home. Following the tips below will ensure you’re well-prepared and increase your chances of approval.
Get organised early
Lenders require thorough documentation to assess your financial situation. You should start gathering key documents (bank statements, payslips, tax returns, salary certificates) at least six months before you apply for a mortgage. This ensures you have everything ready when the time comes to apply.
Maintain stable employment
Changing jobs can raise red flags with lenders, as many require you to have been employed in your current position for at least six months. For the best chance of approval, avoid changing your job until your mortgage is finalised.
Control your spending
Lenders will scrutinise your spending habits to ensure you’re financially stable. It’s advisable to reduce unnecessary expenditures and avoid any transactions that may seem questionable on your bank statements. Consistent and responsible spending habits can boost your credibility as a borrower.
Reduce or eliminate debt
If you have outstanding loans or debts, try to pay them off or reduce them as much as possible. High levels of debt can negatively impact your mortgage application by reducing the amount you’re able to borrow. Keep in mind though that this should be based on advice from a mortgage advisor, as taking away from your balance of funds to clear debt that may not be required could damage your borrowing position.
Set aside extra funds for additional costs
Beyond your deposit, remember that buying a home involves several hidden costs, such as solicitors’ fees, stamp duty, surveyor costs and mortgage protection. Ensure you have enough saved to cover these expenses.
Formalise your rent payments
Any rent being paid must be evidenced and documented. Payments to a landlord should be done via cash and, if living at home, it is advisable to set up a rent agreement evidenced by monthly bank transfers. Lenders use rental payments plus savings as evidence of your mortgage availability.
Automate your savings
Lenders will want to see evidence of monthly savings for at least 6 months before applying for a mortgage, so set up a recurring direct debit and automate this process so you don’t have to even think about it.
Make sure to download our free infographic for more tips on getting mortgage-ready!
Understand the importance of expert mortgage advice
Buying a home is not just a financial investment – it’s a major life decision. Given the complexities of the mortgage process, seeking expert advice is vital to ensure you get the best deal possible.
Financial institutions often have their specific lending policies, so professional mortgage advisors can provide valuable insights into which lender is most likely to approve your application and offer favourable terms. An experienced mortgage broker can also simplify the application process and help you avoid common pitfalls, ensuring that your transition from first-time buyer to homeowner is as seamless as possible.
Get approved for a mortgage with advice from Symmetry Financial Management
Securing a mortgage may seem like a daunting process, but with the right preparation, knowledge and professional advice, it can be achieved smoothly.
At Symmetry Financial Management, our mortgage brokers are on hand to help you get mortgage approval at the best rate possible, whether you are a first-time buyer, home-mover or investor. We will guide you every step of the way on the decisions you need to make, based on your personal and financial circumstances, so you won’t have to second guess yourself.
Contact us today to request a consultation. With a clear plan and our expert guidance, you’ll be well on your way to securing your dream home.
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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The Mortgage Process Explained