Today’s post is brought to you buy Keith Sheeran, it is a clients story on the mortgage process, sometimes in industry we spend so much time on one side of the table that we forget what it is like to be on the other, this post is a good reminder (for brokers) of what it is like for our clients when they deal with us….
I was a little dubious about applying for a mortgage, but my father has just retired and he said that he would give me some money as a deposit to help buy a house.
When I heard this I must admit that I was delighted. I was half tempted to go to the nearest VW garage and buy that convertible I have always wanted. However, sense prevailed, and I was quickly reminded by my Dad that the money was for a deposit only
. Whilst everyone is giving out about the property market, I understand there is really good value out there and I would be getting in at 2003 prices. I am also paying € 850 in rent to my landlord every month and frankly getting a little tired of paying “someone else’s mortgage.”
I work in pharmaceuticals, and whilst I know all there is to now about aspirin, I didn’t know that mortgage lending rates were at an “all time low” and that there has never been a better time to get cheap money. So where do I start?
I didn’t really know where to start to be honest. My friend and colleague Dave sits across from me has a lovely apartment which he reluctantly adores, but only ‘cos he bought at the height of the property boom, and feels he paid over the odds for it, he doesn’t complaint that he has ceased paying rent of € 1,000 per month though! Anyway, he told me to “explore my options” and commented that it is difficult to get a mortgage these days, but banks are still lending. He also commented that it is a really great time to buy as his type of apartment is on sale for € 150,000 less than what he paid for it. I thought I should get my behind in gear so I took his advice and contacted my bank plus the mortgage broker he recommended.
My bank were helpful to me and explained to me the different types of rates they had on offer. They also detailed me how much a discount variable rate mortgage was going to cost me on a monthly basis. This did give me a good insight into the cost of mortgages.
I left armed with a lot of information and some shiny brochures with cute guys on the front with paintbrushes standing in what looked like their newly decorated living room. I was sent off to gather my p60, payslips, bank account statements, etc. I couldn’t help feeling a little helpless in so far as I wasn’t sure what an approval in principle meant, do I give this to an estate agent? when do I need to get a solicitor? and do I give my deposit to the estate agent up front?
I do have blonde hair, and I’m relatively smart, but didn’t want to show my naivety in asking such silly questions. Anyway, I met my friend’s broker who explained to me why I need to shop around to ensure that I am getting the best deal. Shopping around entails him taking all my details, and advising which bank / building society might suit me best. Basically, I told him that I could afford to pay around € 1,600 per month and be able to lodge my yearly bonus of € 6,000 in reduction of the amount outstanding.
He then showed me all the lenders that he can get my mortgage approved with and how long that would take. I also explained that my salary will rise over the years, and that I wanted to spread the loan over as long a period as possible. I didn’t realise that I wanted, I could get a 40 year mortgage that allows me to mortgage over a term of 40 years initially with the view to shortening the term when I start earning a little more.
My broker also explained the general process in buying my first home; in plain english. He recalled that he went through the exact same procedure when he was my age, and wasn’t initially aware what a booking deposit was, was it refundable if I didn’t go ahead? I thought TRS was a disease and wondered why my bank had said that it would make my repayment cheaper but I later understood, as explained by my mortgage broker. TRS is a governmental scheme devised to help me pay my mortgage. Basically the Government have a scheme that makes a fairly decent contribution towards my mortgage repayments every month for 7 years…. and here was me thinking that Mr. Cowen was Mr. Scrooge. TRS means tax relief at source.
During the consultation, I was also told approximately how much I would be able to borrow, and again how much that costs per month. I was quite reassured as at least I know potentially how much I can borrow and how the banks arrive at that figure. I was also informed that when I dropped my details into him, he would apply with the banks, and would be back to me with a handful of approvals a week later; It’s nice to have some choices. After all, I will always shop around for the best bargain when I buy a new pair of shoes, so if If I am spending a couple of hundred thousand Euro why should the process be any different? The process was relatively simple, and I got my approval after a week.
Applying for a mortgage is the easy bit, the harder part is paying for it! If you want to apply for a loan of any type there are different documents you’ll need but you shouldn’t be worried or concerned once you have a good financial adviser (this can be a broker, your accountant, a relative etc. who is qualified to give advice).
Keith can be reached on 01 633 9248 or on keith dot sheeran at mortgagebrokers dot ie