We give an insight into how to go about getting approval for a mortgage loan
If we go back to an age not so long ago, seeking mortgage approval was, for many, quite a smooth process. How times have changed. Given the downturn of the property market and the banking crisis that ensued from it, lenders nowadays have become stricter with whom they approve for a loan. Borrowers must be prepared to undergo having their finances thoroughly examined by a lending institution before any loan being issued.
It is, therefore, vital for anyone to have their finances well prepared before applying for a mortgage. While the number of mortgages being approved has dropped, that does not mean that you should be scared off the application process. So, as experts with over 15 years experience behind us, we have decided to give some tips that we feel are key in order to be successful.
First of all, we suggest compiling all relevant documents that you must furnish to a bank.
Typically needed for an application are the following: bank statements going back 6 months, a recent utilities bill (gas, ESB etc.), your P60 for the last 2 years, 3 most recent wage slips, current statements on any outstanding loans, and proof that you have savings. This may sound like a lot, but all the above will be needed so that the lender can assess you eligibility for approval. If you are having difficulties getting everything together, our advisors will be glad to help you.
Another point to consider is keeping up on your current loan repayments.
If you are seen to be struggling with other debts during assessment, it is very likely you will not be successful. Any potential lender will have concerns about giving out a home loan to someone who has missed repayments on loans that are generally smaller than a mortgage. Bank statements showing overdrafts will also hamper your chances. It is ideal not to have any outstanding loans with a healthy current account. However, if you have a car or personal loan, make sure any repayments are being paid in full on time.
In addition to your current account, you need to demonstrate you can save too!
With the era of the 100% mortgage long gone, people buying a home need to provide clear evidence of being able to save. This requires putting aside a portion of your earnings each month and goes a long way to impressing a lender that you are capable of being able to deal with the added cost involved in servicing repayments. So, how much must you need to save then? Well, considering the most a bank will give to someone is 92% of the purchase price, you will need to have at least savings adding up to the remaining 8 per cent.
Saving is important, but having permanent secure employment is even more so.
Given Ireland’s sluggish employment figures and ever increasing dole queues, lenders need to see that your job is safe and that you have a permanent contract with at least one year’s service (as would be evidenced by your P60) behind you. Not only this, but the type of employment has also come under scrutiny as certain industries that are struggling would be seen as a bigger risk.
If this sounds daunting, don’t worry. Get in touch with Mortgage Advice today to speak with one of our advisors who will be more than glad to help you through how to go about making a successful loan application.