In this day and age, buying your first home isn’t easy. Therefore, knowledge of the mortgage application process is imperative. By contacting one of our experienced mortgage advisers we can take the hassle out of the process, offering you leading advice and helping you get the deal that best suits you.
As a first time buyer, the first thing you need to do is find out the amount of money that you can borrow to purchase your first home. The Central Bank of Ireland have rules for lending, allowing an individual to borrow a maximum of three and a half times their gross income. Some lenders can make exceptions to these rules under certain circumstances.
Once you establish how much you can borrow, add this together with your own personal resources minus any costs and you have a fair idea of how much you have at your disposal to get you on the property ladder. Costs associated with buying a property are things like solicitors fees and moving costs. Examples of purchase costs include furnishing and decorating your property. Note that you need to have sufficient resources to ensure that the “loan to value” of your mortgage does not exceed a certain percentage, which is 90% for first time buyers entering the property market.
As a first time buyer, buying your first home is a big deal and can be daunting. Dealing with GMC Mortgages can help make the process quite straightforward. The first thing you should do is find out how much you can borrow by calling one of our mortgage brokers at 1890 462 462. Based on your salary, deposit and monthly loan commitments we will be able to give you an idea of how much you would be able to borrow with us.
Next, find a property that you are interested in buying. Once you’ve got an approval in principle, you’ll know the maximum price you can afford to pay for your new home.
Now you can make an offer. Contact the seller’s estate agent, find out if anyone else is interested in it and decide how much you would like to offer for the property. If your offer is accepted for private treaty sales it will be ‘subject to contract’. This means that you and the seller have agreed in principle to go ahead but neither of you are legally bound. You may be asked to put down a deposit, which you should confirm is fully refundable in case you decide you do not want to proceed. At this stage, you should ideally have contacted your solicitor and asked for a quote for dealing with your purchase.
You will then need to make a full mortgage application for the property concerned. This will contain much of the same information that we already looked for, but will require you to gather supporting documentation (e.g. pay slips, bank statements) to back up what you have stated. The financial institution will also typically send out a valuer to check that the property is worth the amount you are paying for it. However, this valuer is only looking after the lender’s interests and you should consider having a full structural survey of the building done.
Once you’ve applied and all the relevant checks have been made, which will include confirming that you can afford to repay the loan applied for, your lender should send the loan offer to you. You will also need to apply for other products, such as mortgage protection insurance and buildings insurance at this stage.
Your solicitor will check the legal documents relating to the ownership and use of the property. He or she will also make local authority and other searches to check whether there are any matters which may affect the value of the property.
Once your solicitor has completed all of the checks, you and your seller are ready to exchange contracts. This means signing your identical copies of the contract for sale, before the solicitors exchange them. This is when you pay your deposit through your solicitor. At this point, both you and the seller are legally bound to proceed with the transaction. If you pull out after exchanging contracts, the seller can keep your deposit.
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The majority of financial institutions in Ireland will offer a variety of interest rate options. These options are generally classified into fixed and variable rates. Fixed rates remain the same for the assigned period, no matter what happens in the financial markets throughout the period. Fixed rates on mortgages are usually quoted for between periods 1 and 5 years. Once the fixed rate period ends, your mortgage will normally change to the lender’s standard variable rate, unless you agree another option.
A variable rate mortgage is a mortgage loan with an interest rate which normally moves with money market rates. The loan may be offered at the lender’s standard variable rate/base rate and may increase or decrease from time to time.
Banks generally offer first time buyers a standard repayment mortgage, where you pay interest on the mortgage and repay capital over a period of time, usually between 20 to 30 years.
As a first-time buyer, you are usually required to pay a deposit of at least 10% of the property value. For example if you are looking to buy a property worth €300,000, you will need to pay a deposit of €30,000.
When offering a mortgage, banks generally look at the borrower’s gross income and will also take into account existing loans. If you have a reasonable amount of personal debt, for specific purposes such as car finance, then this may not cause a problem. If possible, you should seek to be debt-free before you apply for your first mortgage.
Tax relief is available on owner-occupied residential mortgages, and this is generally deducted straight from your mortgage repayment so that your net repayment every month is lower than otherwise. Once you drawdown your loan, you should inform the Revenue Commissioners and your lender should soon afterwards take account of the tax relief. The amount of the relief depends on your own individual circumstances, but it can be significant and is set at a higher amount for first time buyers. See www.revenue.ie for further information.
You can rent out rooms in your owner occupied property up to a certain annual amount without affecting your income tax or capital gains liability. This is called “rent a room relief” and is a great way to subsidise your mortgage repayment without tax consequences. See www.revenue.ie for further information.
Examples of extra costs that you may need to budget for are as follows: stamp duty, solicitor’s fees, surveyor’s fee, decoration and furnishings, carpets and flooring, alarm installation. Examples of extra costs that may be payable throughout your ownership of your property include: property service charge, mortgage protection insurance, buildings and home contents insurance, utilities (gas, electricity, telephone).
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Our mortgage team will thoroughly assess your application and any supporting documents to build up an overall picture of how you manage your finances. We want you to take out a mortgage with us but need to make sure you don’t overstretch yourself financially, so this is an important part of the mortgage application process.
Apply
Online
Our mortgage team will thoroughly assess your application and any supporting documents to build up an overall picture of how you manage your finances. We want you to take out a mortgage with us but need to make sure you don’t overstretch yourself financially, so this is an important part of the mortgage application process.