7 steps to get mortgage ready
Buying your first home is exciting, but the mortgage application process can seem quite daunting. As a first time buyer you’ll need to gather lots of financial information and there’s so many new terms it can seem like learning a new language.
Our seven steps aims to prepare you for your mortgage application 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, you should find out how much equity the property has, and whether you 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.
If you need to save, you could set up a standing order for an affordable amount each month, and 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 showing on your report, you may need to wait until your finances are more stable before taking on a big financial commitment like a mortgage.
Our guide How to get a mortgage if you have bad credit, explains how a poor credit history can affect your mortgage application, and has tips on how to improve your credit rating.
3. Get your finances in order
Whether your credit report is good or bad, there are some dos and don’ts when it comes to applying for a mortgage:
- Pay all your bills on time
- Set a budget to enable you to save
- Save a regular amount each month
- Reduce your credit, including arranged overdrafts
- Avoid dipping into your savings
- Avoid getting new credit e.g. a car loan
- Avoid changing jobs, if possible
- Don’t let gambling show on your account
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
Understanding how much you could borrow can help you work out your budget to buy a property.
The Central Bank mortgage measures, set Loan to Value (LTV) and Loan to Income (LTI) limits for first time buyers, and those who already own a property.
Our how much you could borrow calculator works out the most you might be able to borrow and explains what affects this amount in more detail.
Don’t forget to factor in stamp duty and solicitors fees into your total costs.
5. Research home buying initiatives
If you need an extra helping hand to get on the property ladder, there are some government backed schemes that could help. Different initiatives offer different benefits, such as:
- Reducing the amount you need to borrow
- Considering you if you’ve been declined by other lenders
- 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
There are a several documents you’ll need to apply for a mortgage. What’s required will vary depending on the lender, and whether you’re:
Typically, you’ll need to provide:
- Photo ID, address ID and proof of your PPSN (Personal Public Service Number)
- Six months of bank statements
- Three months of credit card statements
- Three recent payslips
- Stamped employment status report
- Most recent P60 or your employment details summary
7. Shop around for a mortgage
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 the types of mortgages, to help you decide which type is right for you.
You’ll then need to choose either a:
- Fixed rate mortgage: where your interest rate and payments stay the same.
- Variable rate mortgage: where the interest rate can go up and down, and your payments can change.
What happens next?
Once you’ve found a mortgage deal, you can start your 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 a lender will lend to you, but not a guarantee. If you’re approved for an AIP, you’re a step closer to getting full mortgage approval.
The interest rate used for the AIP isn’t necessarily the rate you’ll get for your mortgage.
This is because it may be several months until you find a property and are ready to drawdown your mortgage, by which time, the rate may have changed.
Arrange insurance
Mortgage protection insurance and buildings insurance are compulsory, so you’ll need to shop around for these before you drawdown your mortgage.
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 the best first time buyer and home mover mortgage deals in Ireland using our comparison.
