Consumer Corner: A first-time buyer’s guide to getting a mortgage

All the usuals, plus some of the more surprising 'red flags' noticed by mortgage brokers

Brokers advise to take applying for mortgage approval as a process, and to break it down into steps

The road to getting a mortgage can seem like a long and painful one. Even that Paddy Power app downloaded in March when Cheltenham was on could go against you — but bear in mind that mortgages are applied for, and approved every day. Knowing how to start can go a long way. Also, remember that getting a mortgage may not be easy and that you have to put in hard work to get there. You could be facing months of cutting out takeaways and trips in order to secure a deposit for a home.

Online gambling, overdrafts and erratic spending patterns could all go against you as you apply for your mortgage. However, all will not be lost and there is always a way to sort things out and get mortgage-ready.

Joey Sheahan, head of credit at the online brokers, mymortgages.ie said that preparation for the mortgage process should begin at least six months prior to approaching the bank. 

“Applying for a mortgage is a big undertaking and one which needs to start months before the application forms are even looked at. You might only get one bite at the cherry with a lender, so it’s crucial you put your best foot forward,” he said.

Sheahan points out that all mortgage hopefuls should be aware of “red flags” that banks will look at initially.

“Before they will give any consideration to a mortgage application, a bank will first look at the applicant’s credit history and their recent banking history. Ultimately, what they are looking for is a capacity to repay any loan tendered and a propensity to do so, as evidenced by past behaviour.” Some ‘red flags’ are overdrafts, online gambling, cash advances on credit cards, an irregular savings pattern, erratic spending patterns and a poor credit rating.

Sheahan said that there are things people can do to boost their chances of getting approved for a mortgage. He said to make sure that rent is paid through a bank account, as the bank will not accept this as proven repayment ability unless it is evidenced on a bank statement. He also advises to try not to use an overdraft, and to clear your credit card bill each month too. Saving regular amounts and refraining from withdrawing money from that account are also indicators to a financial advisor or bank that you are mortgage ready.

Kickstart your mortgage journey by speaking with an advisor or broker. Adopt a methodical approach to avoid getting bogged down by the finer details.

A good starting point for getting a mortgage would be to meet with a mortgage advisor at a bank or mortgage broker. They will outline all you need to do to get over the line. The best way to look at it too is to take it one step at a time.

Trevor Grant, co-founder and Chairman of the Association of Irish Mortgage Advisors says that for most people, saving for a mortgage is not something that just “happens”.

“A planned methodical approach is the best way forward. You need to first set out a realistic timeline. Then you need to work out how much you will need. Considerations will include your income and expenditure, plus the average house prices for the type of house you want, in the type of area.” 

Budgeting is also key in the road to securing a mortgage and often, you will have to cut out the nicer things in life.

“Once you start, be strict with yourself. Try not to deviate from your budget. And unless it’s an emergency, try not to dip into your savings. Every situation is different. But we tell clients that although it may seem they have a mountain to climb, do not be defeated,” said Mr Grant.