How to prepare for a mortgage application
The right preparation can improve your chances of mortgage approval. Here’s 8 steps to get mortgage ready, from getting your finances in order to checking your credit record.
As a first time buyer, the mortgage application process can seem daunting. You’ll need to gather lots of financial information, and there are so many new terms it can seem like learning a new language.
Get prepped for your mortgage application with these 7 steps, and increase your chance of success.
1. Save for a deposit
If you’re a first time buyer, you’ll need to start saving for a deposit. If you own a home already, find out how much equity the property has and whether you’ll have enough deposit for the house you want to move to.
Our guide: How do mortgage deposits in Ireland work? includes how much deposit you’ll need and tips to reduce your spending.
Set up a standing order to save an affordable amount each month. Keep the money in a separate account so you’re not tempted to spend it.
2. Check your credit record
Your credit record affects what you can borrow, so you should check your report before the lender does. Here’s how to check your credit record for free and what it means.
If you’ve got arrears on your report, you may need to wait until your finances are more stable before taking on a financial commitment like a mortgage.
Remember that lenders also look unfavourably on things like referral fees, or unpaid item fees. This is when you can’t afford bank charges, and your account goes into an unauthorised overdraft or negative balance.
Our guide How to get a mortgage if you have bad credit, explains how a poor credit history can affect your mortgage application, with tips on how to improve your credit rating.
3. Get your finances in order
As well as reviewing your credit record, there are some financial dos and dont’s when it comes to applying for a mortgage:
Do
Don’t
If you’re self employed, chase any outstanding invoices and keep your accounts up to date. Here’s how to get a mortgage if you’re self-employed.
You’ll be required to produce bank statements and credit card statements for review. Keeping your general spending to a minimum will help increase your borrowing potential.
4. Find out how much you can borrow
The Central Bank set Loan to Value (LTV) and Loan to Income (LTI) limits for first time buyers, and those who already own a property.
This helps lenders work out what properties are affordable to you and how much they can lend you.
Our how much you could borrow calculator works out the most you might be able to borrow based on your circumstances.
Additional costs: Don’t forget to also factor in costs like a surveyors report, stamp duty, and valuation and solicitors fees, which, altogether, can cost up to €6,000 or more.
5. Research home-buying initiatives
If you need support getting on the property ladder there are government schemes that can help, like the First Home Scheme and the Help to Buy Initiative, among more. Each one offers different benefits, such as:
- Reducing the amount you need to borrow
- Considering you if other lenders have declined you
- Offering the same interest rate throughout your mortgage term
The Citizens Information website includes details of the current schemes available to first time buyers. You’ll need to meet the eligibility criteria of a scheme to qualify.
6. Get your documents together
The documents you need may vary depending on the lender and whether you’re a first time buyer, self employed or building your own home.
Typically, you’ll need to provide:
7. Look for a mortgage exemption
Each year, mortgage providers can lend a certain amount above the limits. This is known as a mortgage exemption.
As of January 2023, 15% of lending for first time buyers and second time buyers qualifies for exemption. This exemption also applies to 10% of buy-to-let lending.
To boost your chances:
- Apply early in the year: applying earlier in the year means it’s less likely the lender will have filled their 15% quota.
- Prove you can afford it: show you can comfortably afford to repay your mortgage. Lenders will look at things like repayment capacity, net disposable income, and your ability to pay should interest rates rise.
- Check your credit record: ensure you have a clean spending history, manage borrowing well, and show you have been saving regularly.
8. Compare mortgage deals
Once you have most of your deposit saved, it’s time to find a mortgage deal. You can do this yourself, using our mortgage search, or with the help of a mortgage broker (mortgage credit intermediary).
Our Complete Guide to Mortgages looks at different types of mortgages, to help you decide which is right for you.
You’ll then need to choose either a:
What happens next?
Once you’ve found a mortgage deal, you can start the mortgage application with your chosen lender.
Start your mortgage application
The first stage of your application is often to get a mortgage Approval in Principle (AIP) which is an indication of what the lender will give you, but not a guarantee. If you get AIP, you’re a step closer to full mortgage approval.
The interest rate used for the AIP isn’t necessarily the final rate you’ll get, as the property price may change by the time you drawdown the mortgage.
Arrange insurance
Mortgage protection insurance and buildings insurance are compulsory, so you’ll need to shop around for these before you drawdown your mortgage.
It can be a good idea to apply for mortgage protection as soon as possible, in case it delays the purchasing of your home.
There are also other insurances that are worth considering with a mortgage. Our complete guide to mortgages walks you through the mortgage process in full.
Compare mortgage rates & deals
Find a range of first time buyer and home mover mortgage deals in Ireland using our comparison.
