Frequently Asked Questions
- Why should I use The Mortgage Advice Store?
- Which lender offers the best mortgage package?
- What are the steps involved in the mortgage process?
- What are lenders normal lending criteria for a mortgage?
- How long does mortgage approval take?
- How much can I borrow?
- Which rate should I choose?
- Cost associated with a mortgage?
- What documents will I need to support a mortgage application?
- What types of mortgages are available?
- What is a repayment mortgage?
- What is APR?
- What is loan to value?
- Which type of rate is better, fixed or variable?
- Can I borrow more money if I need to?
- Can I alter my repayments when it suits me?
- Can I take a break from my mortgage repayments?
Why should I use The Mortgage Advice Store?
Independence
Our recommendations are based on an independent assessment of the suitability of a mortgage product to meet your unique requirements. Our focus is on the long term value of the mortgage product. We will provide you with latest news and information on the Irish Mortgage market to assist you in making an informed decision on the range of mortgages available.
Experience
All mortgage applications and enquiries are handled by an experienced mortgage consultant.
Service
We pride ourselves in providing an unrivalled professional service to our clients.
- We meet with our clients in person.
- If visiting our offices does not suit you, we will meet you at a location and time of your choosing e.g. evenings or Saturday mornings if required.
- Each application is allocated to an experienced mortgage consultant.
- Your dedicated consultant will deal with your application from start to finish.
- We provide fast decisions and deal promptly with all relevant matters.
- We strive to build long lasting relationships.
Fees
We charge an arrangement fee of €399 and pending on the complexity of the mortgage and this fee may be waivered.
Mortgage Advice Store Ltd is regulated by the Central Bank Of Ireland.
Which lender offers the best mortgage package?
The Irish market is very competitive. No single lender can claim to offer the best package. There is a wide range of mortgage products available and significant differences between lenders in regard to lending criteria. Our role is to advise on a mortgage product that best suits your needs.
Matters to be considered when choosing a lender include:
- Lenders lending criteria
- Current mortgage rates – both new business and existing customer rates
- The lenders history of rates charged compared to the market
- Market experience of lenders – commitment to the Irish market
- Product flexibility
- Service factors including speed of which mortgages can be processed and serviced throughout the life of the mortgage
What are the steps involved in the mortgage process?
1. Make a decision to buy property
- Once decision is made, start saving regularly (as much as you can afford to demonstrate strong repayment capacity) and note you will need 10% of the purchase cost of your home plus the associated fees (the main ones being stamp duty & legal fees)
- Forgo entering into new loan agreements whenever possible
- Do not allow your current account go into an overdrawn situation.
- Keep a close eye on property market
- Establish your property goals and speak with us regarding any house purchase guidance you require
2. Obtain loan approval
- Review our site – lending criteria, borrowing capacity, costs etc
- Call us for any assistance needed
- Complete loan application form
- Quickly assemble all information needed to support your application
- Obtain formal approval in principle
3. Choose a property
- Choose your preferred location and match borrowing capacity with property goals
- Be prepared to negotiate aggressively
- Don’t rush or buy when you are not convinced
- Be prepared to stretch - the property you want is usually just beyond your reach
- Obtain approval in respect of the chosen property
4. Buy property
- Speak to your Solicitor
- Read the contract of purchase and the mortgage loan offer letter and ask any questions. Take your solicitors advice before signing.
- Sign contracts for purchase (once your solicitor has investigated the title deeds and is satisfied for you to so )
- Sign Loan Offer Letter – arrange house and life insurance
- Close sale and draw down mortgage
- Move in
What are lenders normal lending criteria for a mortgage?
- Good Credit History
- Age 21 or over
- Age not greater than 68 at end of mortgage term
- Ability to repay – as a guide repayments on all loans including your mortgage should not exceed 40% your net income
- Being in secure continuous employment
- Maximum mortgage available to Irish residents is 90%
First Time Buyers: Maximum of 90% of the purchase price
Second Time Buyer: The Loan To Value (LTV) limit for second and subsequent buyers (SSB’s )remains at 3.5 times income. The LTV limit for SSBs has changed from 80 per cent to 90 per cent.
The primary focus is on establishing strong repayment capacity (being a combination of income and regular savings).
How long does mortgage approval take?
You can expect formal loan approval in principal within approximately 13 working days which may also depend on mortgage volumes with the lenders. Use our calculator to estimate your borrowing capacity and review the typical lending criteria above. The next step is to give us a call or complete our online contact form. Based on the information we will generally be able to advise you straight away whether you will qualify for a mortgage and we will also provide you with an estimated borrowing limit. Our mortgage advisor will then advise you of the precise information required and make an appointment to meet with you (if you so wish to do so). At that meeting our consultant will explain the various options available and will guide you through the completion of any application forms required. We will then submit the application to the chosen lenders and would expect formal loan approval in principal within two weeks and may also depend on mortgage volumes.
How much can I borrow?
The key consideration for you is to feel comfortable in being able to afford your repayments. To calculate your borrowing limits please review our …‘how much can you borrow calculator’. Lenders look at two main areas when considering an application.
- Income of applicants
- Established repayment capacity in terms of strong savings
Income
Mortgage assessment is based on ‘income multiples’ for single/joint applicants and minimum net disposable income levels’ after all monthly deduction for living expenditures. Mortgage underwriters focus is on having established repayment capacity being a combination of regular saving; rent repayment which cease and any recent loans that you may have paid off or intend to do so before closing the purchase of your new home. For first time buyers lenders will advance up to 4 times the combined gross incomes for both applicants and 3.5 times for second time buyers.
Exceptions
Only 20% of all mortgages approvals in Ireland (1 in 5) can be approved as an ‘exception’ at 4.5 times your gross income. The Central Bank Of Ireland has set out strict rules governing mortgage lending and all mortgage lenders are bound to adhere to these. The rules are designed to prevent over-lending … “Just because you may qualify for 4.5 times combined joint incomes doesn’t mean it’s the right way to proceed”!
Exceptions of 4.5 times income are more difficult to have ‘signed off’ and are underwritten more stringently by the mortgage lenders. Tighter lending policy applies to exceptions.
Net income repayment capacity
In establishing your net income repayment capacity (all expenses are deducted from your salary to calculate your net disposable income) .Where you earn variable income ( such as commission, bonus, overtime, or shift allowance ) then these additions; plus your basic salary, means that your assessable income for mortgage purposes may vary between lenders. Some ‘overtime’ (up to 50%) may be taken into account...
- An element of ‘bonus’, to the extent, it is guaranteed, may be taken into account
- Consideration is also given to the security and length of your employment history
- For ‘commission’ based income , lenders will take a proportion into account where it can be demonstrated as ongoing over a 2/3 year period.
Which rate should I choose?
One decision which needs to be made is whether to choose a variable or fixed rate mortgage. There are several factors to consider in making your choice. Future interest rates are uncertain and fixing interest rates should be considered in the following circumstances:
- Where mortgage repayments represent a major portion of net income
- Where market indications are that interest rates may rise
- Where rates are historically low
- Where the mortgage applicant is risk averse
Most lenders offer products, which allow you split your mortgage into fixed and variable elements. It is important to bear in mind that breaking a fixed rate contract may involve penalties. Your mortgage advisor will discuss the various options open to you.
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
Costs associated with a mortgage?
The Mortgage Advice Store charge an arrangement fee of €399 .(This may be waivered) . There are several costs associated with the mortgage process as outlined below:
Deposits
Saving is a key-part of the mortgage process and the discipline of ‘regular saving’ cannot be underestimated. As the maximum mortgage facility is 90% of the purchase cost you need to have saved the remaining 10% plus 1% stamp duty (up to residential property at 1 M ) plus legal fees to purchase. A regular and steady savings record over 6 months or more, is all important as it demonstrates you have evidenced ‘repayment capacity’. If you have been paying ‘rent’ , then this too is recognised by the lender as ‘established repayment capacity’. Evidence of your savings/deposit in the form of bank statements for all accounts held is required as part of the loan underwriting process. Gifts from parents may form part of the deposit.
What rate of stamp duty do I need to pay?
As of December 8th 2010, stamp duty has been reduced to a flat rate of 1% on property values up to €1 million and 2% on any amounts over €1 million. There will no longer be a distinction between new versus second hand properties or first time and non-first time buyers.
| Property Value | Rate of Duty |
|---|---|
| First €1,000,000 | 1% |
| Excess over €1,000,000 | 2% |
LEGAL FEES
Use 1% of property value plus vat at 23% as a general guide. In addition outlay for stamp duty on the mortgage document and other miscellaneous costs might add in the region of €400 for a standard mortgage. Should you require a solicitor, contact us and we would be happy to make a recommendation.
SURVEYORS FEES
It is recommended that you employ the services of a qualified surveyor, architect or engineer to check the property for any structural problems or to advise you on any matters that may involve significant outlay e.g. dry-rot, subsidence, dampness etc. Make sure they hold professional indemnity insurance, otherwise it may be best not to use their services should a structural issue arise with the property after purchase. The structural survey is not usually a condition of the loan offer and is a completely different matter to the mortgage valuation, which is carried out on the lenders instructions. Use a reliable firm, agree their fees at the outset and insist on a written report. Budget €400 approx.
VALUATION FEES
Before a lender will issue a formal offer letter in respect of a property, they require an independent valuation from a qualified valuer. The mortgage lender will arrange this and you will be issued with a copy of his report. Budget €150 approx.
LIFE ASSURANCE
Mortgage lenders require mortgage holders to take out a life insurance policy to provide for the repayment of the mortgage in the event of death of one of the mortgage holders. You are not required to take this policy out directly with the mortgage provider.
HOME INSURANCE
The lender will also require that you take out comprehensive building insurance on your house and that the interest of the lender be noted on the policy.
ARRANGEMENT FEE
We charge an arrangement fee of €399 and only if the loan approval is granted (can be waived)
What documents will I need to support a mortgage application?
- Signed Application form
- Latest Employment Detailed Summary /EDS
- Most recent 4 payslips
- Employee Salary Certificate (completed by employer)
- Original ID – Driver licence or passport
- Recent utility bill
- Most recent statement of ALL loans outstanding including mortgage statement
- Most recent 6 months statements on all accounts to evidence the savings / balance of funds to complete the purchase
If you are Self-Employed:
- 3 years accounts ( 2 years may suffice )
- 12 Months business bank statements
- Copy of your Form 11 and Chapter 4 for the past 3 years
If you are building your own house:
- Copy of House Plans, Site Map & Planning Permission
- Architect’s detailed costings letter and his letter of supervision (we will provide templates)
- Copy of Architects Professional Indemnity Insurance
NOTE: We will provide you with the application form for your signature together with Salary Certificates for your Employer to sign .
What types of mortgages are available?
1. Annuity Mortgages:
- Majority of mortgages in Ireland are Annuity Mortgages.
- Interest and capital are repaid over term of mortgage.
2. Pension Mortgages:
- Repay interest only over mortgage term
- May be suitable for Self-Employed
- Pension fund builds up over life of mortgage
- Pension lump sum on retirement then used to clear mortgage
- Tax efficient
- Professional advice essential – taxation, pensions etc.
- No guarantee that there will be sufficient funds in the pension fund to clear the loan capital balance as the fund is subject to stock market fluctuations
What is a repayment mortgage?
With this type of mortgage your repayments are made up partly of interest and a partly of capital. In the early years your repayments are mostly interest, but over time the capital balance reduces. As you near the end of your loan your mortgage repayments are mostly capital reducing.
What is APR?
People often have difficulty comparing interest rates from lenders. The Consumer Credit Act 1995 has attempted to rectify this situation. APR stands for Annual Percentage Rate. It must be included in advertising to make it simpler for consumers to compare offers of credit from different sources.
APR calculates the total amount of interest which will be paid on a loan, and adds to this any other charges which the borrower has to meet. This total cost is then divided by the number of years in the loan term to find out what the borrower will be paying per year. This amount is then expressed as a percentage of the loan, i.e. as the APR.
Finally, when choosing a mortgage, don't always be swayed by an attractive rate alone. While it is certainly important, you should also consider the flexibility of the mortgage on offer and whether it is suitable for your particular needs as you move through your mortgage term. Some lenders may be more exposed than others to market movement in interest rates when inflationary pressures become an issue.
What is loan to value?
Loan to value shows your mortgage as a percentage of the value of your property.
Which type of rate is better, fixed or variable?
One decision which needs to be made is whether to choose a variable or fixed rate mortgage. There are several factors to consider in making your choice. Future interest rates are uncertain and fixing interest rates should be considered in the following circumstances:
- Where mortgage repayments represent a major portion of net income
- Where market indications are that interest rates may rise
- Where rates are historically low
- Where the mortgage applicant is risk averse
Most lenders offer products, which allow you split your mortgage into fixed and variable elements. It is important to bear in mind that breaking a fixed rate contract may involve penalties. Your mortgage advisor will discuss the various options open to you.
Variable rates will rise and fall as general market rates rise and fall. However, a fixed rate will always stay the same for as long as the fixed rate period is in effect. This makes monthly budgeting easier. Contact us now to talk to a mortgage consultant.
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
Future interest rates are uncertain and fixing your interest rate may be considered in the following circumstances:
- If your budget is tight and you're finding it difficult to keep up with your monthly payments.
- If your financial circumstances have changed and you have less income coming into the household.
- Fixed rate mortgage may make it easier to budget and plan your finances.
- As your repayments remain the same each month, you can budget expenses and plan ahead.
Alternatively, you may not want to tie into a fixed rate for a number of years if markets are indicating that interest rates may be close to the top of an ‘interest rate cycle’.
Can I borrow more money if I need to?
Yes. Additional funds are available for a range of purposes, from home improvements to educational or medical fees.
You can top up your loan provided it does not exceed 90% of the value of the property. Additional funds are issued as a separate loan, so that you can choose a different term of repayment, interest rate etc. as required.
If you require additional funds, or would like further information, Contact us now and we can guide you.
Can I alter my repayments when it suits me?
Yes. As your life changes so will your mortgage needs. What suits you this year may not suit next year. You can have a wide range of useful options that let you change your mortgage to suit your needs. At different times these options allow you to pay more by accelerating your repayments to reduce the loan term in years, or to reduce repayments if needs arise. Check out our Flexible Options package for more information.
