One of the most essential steps in the house-buying process is applying for a mortgage. In this comprehensive free guide from market-leading property developer Axis Construction, we will delve into all the do’s and donts of mortgage financing.
Applying for a mortgage for most people is the most extensive line of credit they will ever have to apply for. Because of this, mortgage companies have become increasingly adept in ensuring that their use of acronyms, industry terms and small prints make it as difficult as possible for applicants to understand precisely what they will be paying.
In this section, we will map out the steps for mortgage application in their optimum order.
The first stage is to select and contact a mortgage specialist through your bank or an independent advisor. Your advisor will be able to advise you on what you can afford and are more likely to be accepted for.
Most mortgage providers require an upfront payment to serve a deposit; this shows your ability to be financially prudent and reduces the mortgage lenders' liability and risk. Your mortgage advisor will discuss what you should save as a deposit based on your circumstances.
Once you have your mortgage advisor and deposit, it's our favourite step—house hunting. Don't just view any property; list must-haves and only view properties that satisfy your criteria.
Now you have found your ideal home and advisor and saved your deposit - It's time to start the mortgage application process.
Invariably, as part of a mortgage application, you must show that you can afford and will pay the mortgage. One of the methods your provider will use is affordability checks; you may be required to provide pay slips and bank statements.
Depending on your circumstances, you may need to submit additional documentation; this being the case, your mortgage company will contact you.
Your mortgage company will want to verify your proposed property's value to ensure the money they are lending equals the asset the loan is backed by.
If your mortgage provider has accepted, your application and the property has had a confirmed valuation. Then the next step is for your chosen lender to make you an offer of equity and their proposed rates and repayment terms.
Presuming that you find the terms of the offer acceptable, it's time to exchange the contract. Once contracts are exchanged, you will need to arrange the relevant insurance before being able to draw down your mortgage.
Now that all the steps above have been completed and the mortgage lender has everything they require, your mortgage loan can be sent to your solicitor.
When this is sent, it's known as your “completion day.”
At this stage, you should have received your mortgage approval, and the other parties solicitor should have received the funds. Once you reach this point, you can set a day to pickup/swap keys and move in.
And that is it! You're now the proud owner of your first or new home!
As with any line of credit, the better the credit referencing agencies view your data, the better the rates you will likely be offered.
So before you jump into the application process, check all the relevant resources to improve your credit.
As a property developer, unfortunately, we cannot provide financial advice on improving credit. But luckily, Ireland has a wealth of online services that can provide information on exactly this subject.
We believe it's always worth contacting credit reference agencies to see what helpful tips they can offer to bolster your credit score.
Traditionally, the route to market for mortgages would be via a high street bank. However, with the technological evolution, customers can now benefit from online comparison engines. This allows would-be homeowners access to mortgage providers and the click of a few buttons.
When selecting a mortgage provider, conduct as much research as possible to ensure you receive the best possible mortgage that suits your circumstances.
Unfortunately, the mortgage industry has become increasingly overpopulated and bloated, which has led to the creation of multiple mortgage types. It can be a metaphorical landmine to determine which mortgage type suits you best.
The best course of action when deciding on what type of mortgage you desire is to conduct your research and, of course, ask the advice of your chosen specialist.
Although one of the first things your mortgage specialist will discuss is affordability, there are some checks you can do independently to get a preliminary understanding of what you can afford.
Many mortgage lenders now offer an online mortgage affordability calculator; these online tools will give you a better understanding of what properties you can look at before applying.
But there are a few caveats that most mortgage lenders follow, such as
Invariably, mortgage lenders will only allow first-time buyers to borrow a maximum of 4 times your gross annual income.
Lenders will also cap your mortgage at 90% of the purchase price.
A Second or more-time home buyer will be capped at 3.5 times their annual salary.
Lenders will also offer only 90% of the mortgage price to experienced buyers.
Lenders will also offer only 90% of the mortgage price to experienced buyers.
Most mortgage lenders will conduct extreme due diligence to process your application, but this will differ from applicant to applicant.
The documents every provider will require are
Applying for a mortgage is probably one of your most important decisions. Please read through our list of common mistakes to ensure you take every precaution to get the best possible deal.
Don't just jump into the first offer; do as much due diligence as possible and consult your chosen specialist.
One of the biggest metrics banks use to decide on interest rates is financial stability. So before making an application try to ensure that you don't use unauthorised overdrafts, as banks may interpret this as poor financial management.
Closing on a property is always a tenuous process; unfortunately, in the house-buying process, there are so many moving parts that it's easy for something to go wrong and the sale to fall through.
But at Axis we firmly believe that if you follow the expert advice in this article, you will give yourself the most substantial possible chance of closing the sale and receiving the keys to your new home.
Axis is one of Ireland's leading property developers, who specialise in their developments but act as a contractor for other large property investors.
If you're considering buying a property, please contact one of our experienced team so we can give you a tour of one of our existing developments.
Axis aims to provide quality housing to every need, want and budget.
Contact us today to see if we can help.
Axis Living Limited,
Willow House, Millennium Park, Osberstown, Naas, Co. Kildare, W91 C6KT
Email: info@axis.construction
