Wondering where to start to apply for mortgage? Sean Corbett, Sales Director of Mortgage123 was invited again for an interview on Property Matters on Dublin South 93.9 FM.
During the interview, Sean gave listeners some of his expert advice on how to prepare for a mortgage, particularly in a competitive property market.
Some of the key points discussed include:
First Time Buyer Status Issues for Couples
Applicants who qualify for First Time Buyers need to provide only 10% deposit in comparison to 20% deposit for anyone else who does not qualify. If one of the mortgage applicants owns a property already or they have owned a property before, the couple may lose the First Time Buyer status. Sean clarified the rules around this and what options and exceptions may be available.
Apply for Mortgage: Recent Changes to Exceptions
The general rule of thumb is that you can borrow 3.5 times your yearly income. Banks are allowed to make an exception and lend up to 4.5 times yearly income in certain circumstances. Exceptions may be available in relation to the First Time Buyer status as well, but only one type of exception is possible per mortgage application.
Banks are implementing further restrictions to exceptions based on net and disposable income which favour higher income earners in general.
It is also important to note that lenders have a limited amount of these exceptions each year. It is certain that the lenders will run out of exceptions, some may run out sooner than others. A broker is familiar with how banks work and which are more likely to make an exception for certain type of mortgage applications.
Number and Age of Children When You Apply for Mortgage?
Children affect the calculations of net disposable income and banks have different criteria for these calculations. The number and age of children, and child care costs can affect your chances of getting a mortgage significantly. A broker may save you time and disappointment.
How to be More Competitive When House Hunting?
The property market is extremely competitive at the moment and supply of new properties is low. Most auctions will not even consider buyers who do not have an Approval in Principle by a lender. Hence, Sean suggests that it is better to start with securing an Approval in Principle before setting your heart on a property, and this is only valid for 6 months in most cases.
Sean discusses criteria and tips for mortgage application preparation towards getting an approval fast. The key is to prove repayment capacity. He also suggests how to best complete a mortgage application in a situation of living with parents versus renting and paying high rents.
Further competition in the property market is introduced by vulture funds and bulk investment buyers, which will be a topic in a future interview episode on Property Matters.