Borrowing money is almost obligatory to realize a real estate purchase dream. But everyone cannot get a mortgage in Ireland. Also, it is essential to treat his case and put the odds on your side to get the money you need to buy your good.
Work your image when you get a mortgage in Ireland
In order to get a mortgage in Ireland (or home loan), you must approach a bank or a mortgage broker. They do not know you personally and you will ask them to lend you a significant amount of money on a term often long.
Thus, it is important to prepare your case and image, as early as possible. This means to accumulate savings in the long run, manage their money by avoiding overdrafts and limit impulsive or unnecessary expenses. In short, having the right profile of the person who will repay smoothly the loan.
Start preparing your image as early as possible, accumulate savings and limit unnecessary expenses.
Contact banks and brokers
Before searching for a property to buy, it is recommended to get an agreement in principle from the bank. This will let you know how much you can borrow and what range of property fits your budget.
Two ways are available to you to get a loan. Through a bank or broker.
In the case of a broker, he will deal directly with the lender on your behalf. A list of licensed broker is available on the Central Bank website.
Get an agreement in principle from the bank before searching for a property to buy.
Prepare the good documents
To build your case, you will be asked a number of documents:
- Proof of address (electricity bills, internet etc.).
- Last P60.
- Last 3 pay slips (minimum).
- Bank account statements (at least the last three months).
- Documents of possible outstanding borrowings.
Preparing properly all documents will send a positive image of you.
The criteria taken into consideration by the bank
When you want to get a mortgage in Ireland, it is not a due or a gift. Never forget that the bank offers money in exchange for the guarantee to be repaid with interest. Also, certain criteria will count more than others for it:
- Your annual income including any bonuses, overtime, rental income etc.
- Your age and number of years before retirement.
- Loans / credits you currently have.
- Your financial commitments: child support, dependents, etc.
- Your savings: it shows your ability to put aside money. This is a useful amount for the deposit and other costs related to the acquisition of your property.
- The value of your current home, if you already own one.
- The amount you want to borrow.
The different types of loans
There are different types of loans that you can claim to get a mortgage in Ireland. You must then choose, with your banker, the one that best suits your needs:
- The annuity loan, the most common. You pay a monthly amount consisting of interest and repayment of part of the capital. You can choose between a fixed rate and a variable rate or a mixt of both.
- The loan interest, usually offered to people with a very good financial situation. There are two kinds, the pension loan and the loan allocation. You pay some interest monthly and at the end of a period of 20 years, you start to repay the loan. In both cases, the borrowed amount is the same for the duration of the loan. The goal is to create a background during the time you pay only the interest, to be able to pay the final sum. You can also opt for the resale of the property you have purchased, to repay the loan. But beware, this strategy is only interesting if real estate prices do not fall.
It is not possible to subscribe to the pension loan if you have a personal pension plan or a PRSA (retirement savings account) or if you are an exclusive administrator with an occupational pension scheme. With the loan allocation, your goal will be more investment.
- The offset loan. Very few lenders offer this type of product. Specifically, your salary is paid into your current account and you can deposit and withdraw money as you decide. You repay your loan every month according to the amount set initially with your banker. If you still have money at the end of the month on your account, you can pay it off more, as desired. This allows you to reduce the amount of interest due, pay off your loan faster and save money because you can pay the interest earlier.
Talk to your bank to decide what mortgage suits you best.
There are different payment options for a mortgage:
- The deferred payment allows you to delay the start of your loan repayment for a number of months. Useful for first time buyers who may need to unlock the money for repairment. Beware, the interests will continue to accrue during that period.
- The “holiday” repayment. Some lenders may allow you to pay off your loan in 10 or 11 months rather than 12. This allows you to have more money some months of the year, as December or for the summer holidays. Of course, to cover one or two months without refund, the refund amount other months will be higher.
Manage the negotiation
Asking for money from a bank is not always simple. In any case, do not panic during the negotiations and wait for a first proposal. In all cases, you can still see other lenders, compare their offers and choose the one that is best suited to you.
Do not hesitate to negotiate some terms.
Once your application is approved
Many lenders will give you an “agreement in principle”. It is essential to have this deal so you can target the property related to your budget and complete the transaction as quickly as possible. This agreement is based on the items you provided. It is valid for a short time, usually 3 to 6 months. If your circumstances change, the agreement may also change. Similarly, interest rates may have changed.
The last step to get a mortgage in Ireland, when your loan is approved, is to complete a direct debit form so the bank collect the repayments from your bank account.
Must appoint a guarantor?
If you choose to appoint a guarantor for your loan, he must be well aware of his responsibilities. Indeed, if you are in default, he will be responsible for paying off your debt.
And you, have you ever obtain a mortgage in Ireland? Tell us your experience in a comment!
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