If you’re buying your first home in Ireland, chances are you will need to finance it using a mortgage. Getting a mortgage is a very big commitment, and may seem overwhelming, especially considering that if you miss too many payments, the bank may foreclose your home. However, mortgage approval rates for first time buyers are on the rise, and if you’re feeling uneasy, here are 5 tips to make the process a little less scary.
1. Budget and save effectively
You won’t get a mortgage without having a deposit ready, so it is important for prospective homeowners to open a savings account and start budgeting for their deposit. The lender will be looking to determine your ‘repayment capacity’, assessing your current expenses and financial situation. Mainly, they will be looking to see that the amount you save each month is greater than or equal to your mortgage costs. Be sure to limit overdraft fees and excessive spending, particularly gambling-related expenses, on your bank statements, as this will look bad to lenders.
2. Have a good credit rating
It is essential to have good credit for all loans, and this is especially true for mortgages. No lender will approve you for a mortgage without knowing your credit rating, so its essential that you know yours before going into the process. You can request a copy of yours free of charge from the Irish Credit Bureau. To have the best credit score possible, be sure to limit missed payments, outstanding debt, and credit card debt.
3. Shop around
There are many different types of mortgage lenders, all offering different rates and payment plans. Be sure to do your homework before going into the mortgage process, and don’t just go with the first bank you come across. This could end up being a huge mistake as there could be a better offer on the table elsewhere. Don’t be afraid to mention that you’re shopping around, as they may offer you a better rate.
4. Get your documents ready
There is a lot of paperwork involved in applying for a mortgage. Before you apply, take the time to gather essential financial documents, including paperwork such as payslips, bank statements, copies of identification, and proof of loan repayments. Most banks will ask for at least 6 months of financial history to prove that you can pay back their loan.
5. Be sure this is the right decision for you
Getting a mortgage is a very, very, big decision. After reviewing your credit report, financial documents, and finding a property you really want to buy, make sure that a mortgage is suitable for your financial situation. After all, you will probably paying it off for decades! If you’re still feeling unsure, consider protection insurance, just in case you can’t pay it back at some point in the future.