This is the starting point. By filling in the required information below in full, you can determine your borrowing capacity quickly and understand how much you would need to repay on a monthly basis for the mortgage term. We will be happy to follow up with you directly on this.
Can I get a mortgage offer before I find my property?
Yes, you can obtain approval in principle even if you have not found a property yet.
Should I go for a fixed or a variable rate?
That depends on you and the market conditions. Fixed rate means that the amount of interest you pay is set for a predetermined period of time, typically three, five or ten years. This offers the benefit of certainty – you know exactly how much the repayments will be. It gives you peace of mind, especially in the early years of the mortgage when your budget may be tight, childcare costs may be high and you have considerable outlays setting up your home in terms of fitting it out and furnishings. For some, this certainty is a valuable benefit. This may not be as important to other mortgage holders. Variable rates can rise or fall in accordance with a number of factors, including the European Central Bank rate. The most common type of variable rate is the standard variable rate (SVR). You think you might be able to increase your monthly payments or pay a lump sum off your mortgage over the next ten years, thereby reducing your mortgage term, but there may be a penalty for this if you go for a fixed rate mortgage. Can’t decide? Here are some questions to ask yourself:
- Do I prefer certainty? – Do I have enough margin at month’s end to allow for a rise in rate?
- Do I want the flexibility to pay extra off my mortgage when I have it?
- Do I think it’s worth paying a little extra for certainty?
- Is it likely that my monthly income will vary?
- Am I good at budgeting?
Note: If you enter a long-term fixed rate mortgage you will have to grin and bear it if interest rates fall and stay low for a time. However, even if you choose a shorter term, one to three years, it can be difficult to predict what the rates will be when the time is up. This is fine when markets are low but if they rise your repayments could become unmanageable. Of course, one big advantage of being on a variable rate is that there’s generally no penalty should you decide to switch or repay early.
Help! I’m on a fixed term contract, but I’m not permanent. Am I eligible to apply for a mortgage?
The short answer is yes. However, there is a ‘but’. As the working world moves towards a flexible model, more and more of us are in positions that don’t fit the traditional permanent pensionable mould. Lenders will look at the usual criteria: your financial management, savings record, credit history and ability to pay. The role and industry you work in will have a bearing too. Lenders tend to prefer areas such as pharmaceuticals and technology. Keep records of previous contracts and documentation that demonstrate future opportunities in your field. Get supporting documents in place. Lenders’ requirements may vary, but generally, you will need:
- Two years of financial accounts.
- Six months of bank statements.
- Two years of tax returns.
- A tax clearance certificate.
Are rent payments taken into account? I’ve been renting privately for over a decade and paying premium prices to live within a commutable distance to work. But because of this, I haven’t saved a lot. However, if I’m approved for a mortgage for a house in the same area, my repayments will be considerably lower than what I’ve been paying in rent. Will lenders take this into account when assessing my capacity to pay?
Yes. If you have written records of rental payments going back over the last few years, this will certainly work in your favour. Along with income levels, credit history and deposit, lenders look at your ability to pay. They work this out using a stress-test model. Your rent payments plus your savings (these should be regular and not sporadic) should match or exceed the stresstested payment. This is typically the monthly payment you would pay if your application was approved, with a few percentages added to allow for rises in interest rates. If you’re not already doing this, open a savings account and start making regular payments into it. The bank will prefer regular small deposits rather than larger ad-hoc amounts. Make sure your rent payments come out of your bank account and are clearly outlined in your statements.
Do I need to know what house I want to buy before applying for a mortgage?
No. You can talk to us today, or use our mortgage calculator, to see what kind of loan you can get. Once you have that, you know what price bracket you need to start shopping in.
How does mortgage interest relief work? First-time buyers used to be able to get mortgage interest relief, also known as Tax Relief at Source (TRS), for the first seven years. It is calculated by your lender and paid into your account, so if you owe €100 interest and you are on a TRS rate of 25%, you will only pay €75. The rates are usually 25% in the first two years, then 22.5% in years three to five and 20% in years six and seven. This scheme is not currently available for new borrowers, however. Log on to www.revenue.ie, contact the Revenue Commissioners or call 1890 463 626 for more information.