You can apply for a mortgage by:
- applying directly to a lender and looking after the application process yourself.
- using a mortgage broker who will deal with lenders on your behalf and advise you during the process. You should ask a broker for their ‘Terms of Business’, which shows what they charge and how many lenders they represent.
You will need certain documents when you apply for a mortgage, these may include:
- proof of ID, proof of address and proof of your Personal Public Service Number (PPSN)
- proof of income: latest employee detail summary from Revenue, payslips, certified accounts if self-employed
- evidence of how you manage your money such as current account and credit card statements
You should apply to multiple lenders and compare their rates and offers carefully. Don’t be tempted by introductory offers, like cashback or free legal expenses. These can be rewarding in the short-term, but that mortgage could end up costing you more if it has a higher interest rate.
Each lender has their own criteria for assessing mortgage applications. Some things they might look at include:
- income – lenders look at your annual income and some may take bonuses and overtime into account. Some may also factor in rental income if you plan to rent out a room
- age – what age you are now, what age you will be when you retire and/or when the mortgage ends
- outstanding loans – if you have other loans or a high credit card balance this may reduce the amount you can borrow or may affect your ability to get a mortgage
- employment status – are you in permanent employment, a short term contract or on probation
- outgoings – your other financial commitments, such as childcare, are taken into consideration
- money management – lenders look at your bank statements and assess things like your ability to meet direct debits and standing orders, if you are using an overdraft facility on a regular basis, if there is evidence of excessive use of online gambling etc.
- savings – have you saved enough for your deposit
- credit history – this shows your track record of paying other loans in the past
- amount you wish to borrow – the amount you want to borrow and the deposit you have saved
Lenders give ‘approval in principal’ which is a statement of how much they are prepared to lend you. A ‘letter of offer’ is what you will receive when your mortgage has been fully approved, and you only get this after your offer on a property has been accepted.
Mortgage approval is only valid for a certain period, typically from six to 12 months, depending on your lender. You must draw the mortgage down before the expiry date. If you don’t, you usually need to apply again. The interest rate on the mortgage is set on the day the money is drawn down, so it could be different to the rate shown on your mortgage approval.
Shop around for your mortgage protection and home insurance when you are applying for a mortgage. Remember that you don’t have to buy these from your mortgage provider even though they may offer them.
