In Tipperary alone, the monthly mortgage repayment for a 3-bed house is €559
Would-be First Time Buyers (FTBs) across the country are getting their affairs in order before year end, to ensure they are primed and ready for action once new bank lending exemptions open again in 2019. This is according to experts at MyMortgages.ie, who say that although November and December usually see a slowdown in the number of mortgages written, these are the months when there is a lot of “behind the scenes activity”, as mortgage seekers begin undertaking the necessary preparation work to get their mortgage applications together. This is on the back of the Central Bank’s announcement last week that there will be no changes to mortgage lending rules in 2019.
MyMortgages.ie say they expect the number of First Time Buyers (FTB) submitting mortgage applications to surge in the new year, as new research reveals that throughout the country, the cost of a mortgage is cheaper than the cost of renting.
Figures from data analytics company The Information Lab show that in Tipperary alone, the monthly mortgage repayment for a 3-bed house* is €559 whereas rent for the same property would be approximately €725 – a cost difference of €166.
Joey Sheahan, Head of Credit at MyMortgages.ie commented,
“In many areas, the cost of a mortgage is significantly lower than renting at the moment, as rents reach all-time highs around the country. More and more people are finding themselves paying through the nose for rental properties that do not meet their requirements, and so are looking to submit mortgage application to secure their own property and be left with much more affordable monthly repayment rates than they would for renting. While the mortgage market too has challenges, not least, getting a deposit together and finding a suitable property, in the main, the cost of mortgage repayments versus monthly rent when broken down make much more financial sense.”
MyMortgages.ie are advising that First-Time-Buyers begin the preparation work at least three, but ideally six, months out.
Mr. Sheahan explained,
“This is an important time for first-time mortgage applicants in advance of lending exemptions opening again in 2019. The latest BFPI mortgage figures reveal that mortgages are increasing in terms of volume and value and that First-time buyers (FTBs) remain the single largest segment by volume (48.3%) and by value (48.7%). As it stands FTBs have two options – comply with the CBI’s general lending regulations (which impose a loan-to income restriction of 3.5 times gross annual income to all new lending for principal dwelling purpose) or aim to be included as part of the bank exemptions allowed by the CBI (whereby a limit of 90% loan-to-value applies on the first €220,000 of the property value). While not all banks are entirely closed to exemptions, and some are still reviewing applications on a case by case basis, most have reached their exemption quota. However, applicants will not have long to wait until exemptions open again in January 2019.
However, given the limits on lending and the lack of supply in many areas it’s a very competitive market, and people are getting ahead and making sure they are doing all they can to increase their chances of approval.”
The experts at Mymortgages.ie say all mortgage hopefuls should be aware of “red flags” that banks will look at initially, and which could prevent them from progressing through the mortgage application process successfully.
Mr. Sheahan advised,
“Applying for a mortgage is a big undertaking - and one which needs to start months before the application forms are even looked at. You might only get one bite at the cherry with a lender so it’s crucial you put your best foot forward.
Before they will give any consideration to a mortgage application, a bank will first look the applicant’s credit history and their recent banking history. Ultimately, what they are looking for is a capacity to repay any loan tendered and a propensity to do so – as evidenced by past behaviour. There are several “red flags” that will put a lender off in part, or perhaps, in full, and applicants must ensure that these are not raised on their application.”
The MyMortgage.ie “Red flags” list include:
Overdrafts - authorised or otherwise
On line gambling referred to on your bank/credit card statements
Cash advances on credit cards, even on holidays
Non-documentation of regular payments such as rent
An irregular savings patterns
Erratic spending patterns
Poor credit rating
Mr. Sheahan advises mortgage seekers of the steps they should take to boost their chances:
Rent – ensure this is paid through your bank account as bank will not accept this as proven repayment ability unless it is evidenced on your bank statement
Overdrafts – even if you have an approved overdraft facility, it is better not to use it on a regular basis
Credit cards – ensure balances are cleared each month. Not only will this portray a better picture of the applicant - it will save interest, with some credit card companies charging up to 18%
Loans – ensure all monthly repayments are fully up to date
Savings – transfer your savings into one account and save a regular amount each month – do not make any withdrawals from this dedicated savings account
Mr. Sheahan went on to outline other factors applicants should consider:
Deposit – you do not need to have all of your deposit before you apply. Once you have confirmation that a gift is available, that will suffice for Approval in Principle
Employment – being in permanent employment is often a plus. But applicants will be reviewed on a case by case basis. If you are self-employed then you must ensure that you have all your accounts fully up to date and all relevant returns filed with Revenue. Contract workers should include a copy of their CV as well as your last three P60s
Overseas buyers will need to request a copy of their credit history from the country in which they currently reside
The MyMortage.ie FTB Checklist
You will need the following to ensure your application is complete
P60 for last year
Pay Slips – six most recent
Certificate of Income – to be completed and stamped by employer
Current Account Statements – last 6 months
Savings Account Statements – last 6 months
Credit Card Statements – last 6 months
Loan / Mortgage Statements – last 12 months