Making Cents: The step-by-step guide to securing a mortgage

Making Cents: The step-by-step guide to securing a mortgage

I was recently contacted by a reader who wanted advice on how a possible move to contract work would affect their chances of buying their first home The reader is considering a move to a ‘full-time maternity leave contract’ due to restrictions in the hours at their current role.

The reader works for and will continue to work for a Government body, where they are on a salary scale as a senior professional. They have a strong track record of consistent work and steady savings but wondered would a move mean they could not get a mortgage. For an answer and some advice, I turned to Joey Sheahan, who is Head of Credit with MyMortgages.ie.

“Permanency in employment is certainly a pretty significant deciding factor when applying for a mortgage,” Mr Sheahan said.

However, it is not prescriptive, and banks will take other factors into account. The good news is that is sounds like you are in a pretty good position – having a proven track record of income and earnings.

Other readers in similar positions should also take heart, a lack of permanency isn’t a dealbreaker. Mr Sheahan says consistency of salary or income is what the lenders need to see.

“In general, mortgage applicants who are not permanent can still be considered for a mortgage once they can show continuous employment at similar income levels for a period of time,” he explained.

Each case is assessed on its own merits and each individual bank will choose who they will lend based on their own criteria. But certainly, I would be hopeful of securing approval in these circumstances.

He also offered some general advice that readers might find of use in advance of submitting an application.

  • Steps you should take to boost chances of approval:

  • Rent – ensure this is paid through your bank account as a bank will not accept this as proven repayment ability unless it is evidenced on your bank statement.
  • Overdrafts – even if you have an approved overdraft facility, it is better not to use it on a regular basis.
  • Credit cards – ensure balances are cleared each month. Aside from their portraying a better picture of the applicant, this will save interest as some credit card companies charge up to 18%.
  • Loans – ensure all monthly repayments are fully up to date.
  • Savings – transfer your savings into one account and save a regular amount each month – do not make any withdrawals from this dedicated savings account.

Mr Sheahan said any first-time buyers (FTB) should also refer to this checklist of items, which will be needed to complete an application. It gives a clear idea of how far in advance a FTB should start putting their finances in order when looking for a mortgage. You can expect to be asked for: Photo Identification; P60 for last year; Pay Slips - six most recent; Certificate of Income - to be completed and stamped by employer; Current Account Statements – last six months; Savings Account Statements – last six months; Credit Card Statements – last six months; Loan/Mortgage Statements – last 12 months.

Another factor that could make a big difference for FTBs would be a loosening of the CBI mortgage lending limits to allow house hunters borrow up to four times their income.

“The growth of new mortgage volumes has slowed – there are many people on good incomes that can’t buy at present because of a lack of houses at the right price and restrictive Central Bank lending rules,” Mr Sheahan says.

“While we don’t want to go back to the crazy days when drawdowns topped €40bn, the current volume (at €9bn) seems too low to satisfy demand. €15bn would seem about right, but the cost of building houses is such that many developers are struggling to deliver homes for less than €300,000.

"The affordability sweet spot is between €250,000 and €300,000, but too many developments start above that and while the home buyers are on good incomes, the current Central Bank rules prevent many from qualifying, which is why they need this additional Government support.”

“Some flexibility in the rules would certainly be welcomed.”

Deal of the Week

Supervalu are offering a deal for first-time online shoppers who try their service. The Irish retailer is encouraging anyone who has never tried it to shop online securely using their phone or tablet.

Customers can place their orders on Supervalu’s free online shopping app, available on both Apple and Android. With the app customers can place a new order or change an existing one, shop from “My Usuals” - which stores all their in-store favourites - and view all special offers.

They can also search for products by scanning a barcode from packaging at home to add to their trolley. Customers can then get their groceries at a time that suits them with either the Home Delivery or Click & Collect services.

To sweeten the deal, Supervalu is currently offering €15 off your first order when you spend €75 or more. You can register to get started at supervalu.ie or via the app.


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