Before applying for your mortgage, in order to have the best chance of approval it’s important (not to mention useful) to be aware of all of the factors that go into a mortgage assessment. The following is a handy list of common factors you should keep in mind:
Remember, when applying for a mortgage, your lender will look at:
Your income - lenders will look at your annual income and some may take bonuses or overtime into account. Some lenders may factor in rental income if you plan to rent out spare rooms.
Your age and number of years left until you retire.
Outstanding loans - if you have other loans, this may reduce the amount of money you can borrow or you may find it difficult to get a mortgage.
Outgoings - in addition to any loan repayments, lenders will look at any financial commitments you have, such as childcare costs.
Savings - this shows you have an ability to save and have built up enough money to pay for your deposit and other expenses.
Credit record - this shows the repayments you have made on any loans you have. If you have missed repayments in the past, it may make it more difficult for you to get a mortgage.
The value of your house - this is the market value, or purchase price of your house.
The amount you need to borrow - this is the difference between the amount you have saved to put towards the house (your deposit), and the purchase price of the house.
Whether anyone will act as guarantor by agreeing to repay the loan if you are not able to.
Whether you are borrowing on your own or with someone else.
As discussed above, your lender will check your credit history before they decide to give you a loan. Most lenders use the ICB (Irish Credit Bureau), which keeps files on individual borrowers. If you are turned down for a mortgage and you have never had problems repaying your loans, you may want to check your credit record.
You may be refused a mortgage if:
Your income is not sufficient to repay the amount you want to borrow.
You have a bad credit history. This may cause a lender to turn down your mortgage. application, even if you can currently afford to repay a mortgage.
You have too many outstanding loans or other commitments.
Your job is not permanent, is at risk or you have only recently started employment.
Your bank statements do not show that you can save or manage your money.
The house you want to buy has not been approved by a valuer. This could happen because the valuer thinks it is overpriced.
Preparing to apply for your mortgage? Make sure to check out our other mortgage guides to make sure you are totally in the know throughout the process. For instance; find out about The Central Bank’s lending rules here or find out about the Help to Buy incentive here.