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Will existing loans affect my borrowing capacity?

Your borrowing capacity is based on your ability to service the repayments. The more loans and in turn repayments you have the less you will have available to service a mortgage.

In this regard if you are contemplating buying your home in the near future, think carefully before committing yourself to debt repayments that may effect your morgtage borrowing capacity.

In general lenders get a little uneasy when repayments exceed 35% of net income. Lenders also stress test all applications to calculate the impact of a mortgage rates rise on this ratio

For high income earners lenders may be happy with a 40% net service ratio.

It is also worth noting that lenders place very significant emphasis on credit history and your pattern of meeting any existing loan commitments.

Lenders don’t like unpaid direct debits!

In considering an application is is likely that lenders will have access to your credit history via their membership of The Irish Credit Bureau

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Variable rate warning: The cost of your monthly repayments may increase - If you do not keep up your repayments you may lose your home. The payment rates on this housing loan may be adjusted by the lender from time to time.

Warning: Your home is at risk if you do not keep up payments on a mortgage or any other loan secured on it

Fixed rate warning: You may have to pay charges if you pay off your fixed-rate loan early

Interest only warning: The entire amount that you have borrowed will still be outstanding at the end of the interest-only period

Debt consolidation warning: This new loan may take longer to pay off than your previous loans. This means you may pay more than if you paid over a shorter term

Endowment loan warning: There is no guarantee that the proceeds of the [Insurance Policy / Pension Policy] will be sufficient to repay the loan in full when it becomes due for repayment