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What to Consider Before Applying for a Mortgage in Ireland
It can be trickier than you think to get approved for an Irish mortgage. It’s not as easy as having a secure job, a down payment, and being able to show that you pay your bills on time. Here are some of the things you should consider before applying for a mortgage in Ireland.
How Long You’ve Been in Ireland
If you’re someone that just moved to Ireland, you’re going to have a lot of trouble when applying for a mortgage. Or maybe you won’t. While banks in Ireland are centrally regulated, different banks can have different requirements about how long you need to have been a resident in Ireland before getting a mortgage. It’s not so much a requirement for some banks as it is just their personal preference. Don’t be discouraged just because one bank says now. Do a little shopping around.
Another potential hurdle when applying for an Irish mortgage, particularly for new arrivals, is how long they have been employed at their current job. Again, this requirement isn’t necessarily set in stone, but there are many banks that will require you to have been working for the past 12 months at the very least – and that your job is a permanent position – before they will consider lending you money. This shouldn’t be as much of an issue for people that transferred to Ireland for work. They will consider how long you have been employed overall.
Lending Terms and Criteria
Make sure you shop around as mortgage interest rates can vary heavily between banks. Given that banks in Ireland are predominantly state-owned, and because all of them are regulated by the same authority, one could be forgiven for thinking every bank has the same lending criteria. That’s not how things work at all. As we mentioned before, some banks will turn you down for being new to the country while others won’t see it as an issue. Different banks can also have different lending terms and interest rates. Some banks will even consider how much rent they could get from the property if you were to default on the loan, while someone consider this at all.
It is vital that you have all of your records from any previous bank you are with before applying for an Irish mortgage. These documents will help you improve your repayment ability, and that your money come from legitimate sources. You should consider a six month history to be the minimum requirement.
A bank determines your repayment capacity based on several factors. They want to see that the rent you pay or the money you save – or a combination of these – is the equivalent of how much your mortgage would cost you. If you are unable to prove that you will be able to cover the cost of the mortgage, then you will never get one. You will need a savings account for this. The money in your current account may not be enough. Keep hold of your rent receipts – and rental agreement – and consistently pay rent and save money on the same date.
Banks may have disposable income requirements. This can vary between banks, but they shouldn’t be too much of a difference. For example, married couples will need approximately €2000 of disposable income: that is to say €2000 left over each month after paying off their mortgage. Add another €250 for each child. These numbers are not definitive though, and you may have different requirements. It’s important to note that your disposable income will be calculated against the current variable interest rate +2%. This means if a bank has a current variable interest rate of 4.5% then they will push this up to 6.5%, calculate mortgage payments, add-on financial responsibilities – such as credit loans and alimony payments – and subtract it from your income. Anything left over is disposable income.
All the Paperwork
There’s a good chance you’ll be applying for several mortgages to several banks. Each bank is going to need all of those bank statements, bills, pay statements, and more. This adds up to a wealth of paperwork. If you don’t use a mortgage broker and the banks will expect you to provide all of these documents. If you going to print everything up, then we recommend asking banks to make their own copies and return the original to you.
The Nameless Rubber-Stampers
One thing you are sure to notice about Irish mortgage advisers is that they are all very knowledgeable, polite, and professional. They are happy to answer any questions you might have. What’s frustrating about them is that they have little to no say at all and whether you get approved for the mortgage or not. It can be surprising to get rejected after feeling everything went well and that you really got on with the mortgage adviser. I loan manager saying your application looks good doesn’t mean you will be approved. Applications are sent to a head office in Dublin with someone you don’t even know will approve or disapprove the loan. It would be good to be able to sit down with the person that has the final say. Sadly, this just isn’t the case in Ireland.
Other Mortgage Options
Irish banks offer a range of mortgage options including by-to-let home mortgages. This essentially allows you to buy a home, even while abroad, and take advantage of an Irish mortgage. This would be great for Irish emigrants who want to have a home in Ireland ready for when they want to move back. They also have options for home movers, people with negative equity, people are tracker mortgages, people wanting to extend their current home, and much more.
There are lots of things to consider when applying for a mortgage in Ireland; especially if you’re moving to the country. Irish nationals will have less trouble in applying for a mortgage but should still keep the requirements in mind. Do some research, prepare your documents, and shop around, to improve your chances of receiving a mortgage in Ireland.