In the wake of news that PermanentTSB have increased their mortgage lending fund to €450m in 2013, recently released figures from Bank of Ireland also provide some grounds for optimism.
Bank of Ireland lent over €1bn in mortgages last year with a surging 65% increase on lending in last half of the year compared to the first half. Another €2bn will be available in 2013 which double that of 2012. They also said;
- the average first time buyer mortgage was €153,000
- the average first time buyer was aged 32
- average mortgage value was €153,000
But one statistic stands out and is most telling
“The average LTV on a first time buyer mortgage in 2012 was 77%, meaning the average first time buyer contributed a deposit of 23%.”
Gone are the days of 100%+ mortgages for sure! From their figures one can deduce that, in many cases, a deposit sum (got from parents, one’s own savings or elsewhere) of up to €50,000 was required to obtain a mortgage on a modest house in Dublin.
It remains to be seen whether this loan to value ratio will be relaxed a little in 2013 but are here five key issues for you to be aware of when applying for a mortgage:
Affordability – is the key
It might sound obvious but proven affordability is what the banks are looking for. The days of just putting incomes in calculators and picking a lending figure are well gone. Now if you want a loan you must be able to show in your bank accounts that you have the proposed mortgage repayment amount available every month either through savings or rent or a combination of both. If you are paying rent make sure the payment can be seen through bank statements
Again this may sound obvious but the lenders want to see regular savings as opposed to a lump sum savings. 6-12 months statements will be required.
Employment needs to be permanent
Contract work will not be accepted except in the exceptional circumstances i.e. consultant doctors. Also if you have started a new job and a probationary period is in place, this will need to be completed before your application will be considered. In fact some lenders like you to be with the same employer for at least a year or two. Bank statements – 6 months clear current account banks statements will be required. This means no missed payments or unauthorized overdraft facilities will be considered. Any large lump sums either credits or debits will be queried so answers will be required.
The most recent accounts will be required and in some cases you will be requested to provide draft accounts right up to date. Confirmation that tax affairs are up to date will also be required.