With interest rates on the decline and competition heating up in Ireland’s lending market, now is an opportune moment to secure a mortgage, according to Margaret Barrett, Managing Director at Mortgage Navigators.
For many small business owners, the COVID-19 pandemic necessitated significant financial reinvestment into their enterprises. However, with the economy now on firmer ground, homeownership is back on the agenda. But before embarking on the house-hunting journey, securing mortgage approval is essential.
Getting mortgage-ready
Lenders seek applicants with strong banking habits and financial discipline. Barrett outlines key steps to enhance mortgage eligibility:
Check your credit report – Visit www.centralcreditregister.ie to ensure there are no outstanding debt arrears in the past 12-24 months.
Reduce overall debt – Clearing or consolidating debt, such as credit cards, can improve the debt-to-income ratio and enhance borrowing potential.
Avoid new financial commitments – Taking on fresh liabilities, like car loans, can negatively impact your application.
Maintain clean bank statements – Avoid overdrafts, over-limit fees, late payments, or transactions linked to gambling websites or luxury subscriptions.
Reduce discretionary spending – Cutting back on non-essential expenses like retail therapy and holidays will boost financial stability in the eyes of lenders.
Understanding the costs of homeownership
Beyond the property price, prospective buyers must account for additional expenses. A minimum 10 per cent deposit is required, along with solicitor fees (approximately €2,500 ), stamp duty (1 per cent of the property price, e.g., €4,000 on a €400,000 home ), property survey fees (around €1,000 ), and potential furnishing costs. In total, buyers should budget for at least €10,000 in extra expenses.
Lenders also prefer to see buyers contributing their own savings toward the deposit, even if parents are gifting funds.
Employment and income stability
A stable income is a crucial factor in mortgage approval. Applicants should demonstrate full-time employment with at least 12 months of service and a secure job outlook. Self-employed individuals and contractors must provide two years’ worth of certified accounts and tax returns to verify income consistency.
Mortgage application essentials
Applicants should prepare essential documentation, including tax returns, payslips, bank statements, and proof of assets and liabilities.
Choosing the right mortgage
Selecting the best mortgage requires careful research. Fixed-rate mortgages offer stability, while variable rates provide flexibility. Buyers should compare rates, terms, and lender requirements to find the best fit.
Barrett advises against rushing into the first mortgage offer. “Shopping around can save substantial amounts over time. Even a 1 per cent difference in interest rates can mean significant savings over the life of a mortgage,” she says.
Margaret Barrett is the managing director at Mortgage Navigators, a brokerage specialising in lending for professionals, self-employed contractors, and business owners. A Qualified Financial Advisor (QFA ), she previously worked with Bank of Ireland.
