Applying for a mortgage is much more difficult than it was in the past. With new Central Bank Of Ireland Guidelines, there are a number of criteria you must satisfy before a lender will approve your mortgage application.
Banks are allowed up to 15% of their overall loan book to exceed some of these criteria and therefore the later in the year you apply, the less exceptions which will be provided. Some of the Central Bank criteria are as follows:
Loan To Income Multiple:
Banks are allowed 3.5 times income multiple with only a % of non-guaranteed income being taken in to account based on an average over the last 3 years.
Loan To Value:
Maximum of 90% loan to value for First Time Buyers and maximum of 80% laon to value for second time buyers.
Underwriters want to see that you have the capacity to meet the stressed monthly repayments. This rate is usually 2% over the variable rate but differs between lenders. They will look at your current account to make sure there is no irregular spending patterns and you are living within your means. Repayment capacity can be satisfied in a number of ways:
Existing mortgage repayments
Discontinuing other loans or outgoings
Net Disposable Income:
After the stressed monthly repayment is paid, you have to have a minimum disposable net income to live on. Again, this varies so the following is just an example:
Single Applicant €1,300 per month
Joint Applicants €2,050 per month
Additional for each child €250 per month
The gathering of documentation can take a while but it is all required before you can submit your mortgage application. The main documents are as follows:
- P60, last 6 months payslips & Salary Certificate
- If self-employed, 2/3 years audited accounts and Notice of Assessment as well as business current account statements
- 6 months credit card statements
- 6 months savings statements
- 6 months current account statements
- 12 months mortgage/loan repayment schedules
- Photo ID and proof of address