Mortgages

How are mortgage applications assessed?

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Daragh Cassidy
Head Writer

Buying a house is likely to be the biggest purchase we make in our lives so it makes sense that a lot of detail goes into a mortgage application assessment. Knowing what to expect before you apply will be a great help to you.

Welcome to the fifth guide in our mortgage Quickstart series which aims to assist you on your mortgage application journey. 

In this guide, we examine how mortgage applications are assessed by lenders, so you are aware of what exactly your lender is looking for in a mortgage applicant and can prepare accordingly.

Here are the main things your lender will be assessing you on when you apply for a mortgage:

1. Your income

The obvious one, but when applying for a mortgage lenders will first look at your annual income.

Under the Central Bank's mortgage lending rules, you're allowed borrow up to four times your income as a first-time buyer and 3.5 times your income as a second time or subsequent buyer.  

Some lenders may take bonuses, commission or overtime into account when determining your overall income.

Previously, if you planned to rent out a spare room, lenders would also factor in the rental income, though since the financial crash this is now exceedingly rare. 

2. Your savings 

Next to income, a mortgage lender will want to see a clear and consistent track record of savings being made over several months. This demonstrates to a lender that you have an ability to save, are responsible with your money, and have built up enough savings to cover your deposit as well as the other expenses that come with buying a home.

As a general rule, if your mortgage is going to be €1,500 a month for example, you have to demonstrate that you have either been saving this amount, or paying it in rent, or a combination of the two, over the past six months to a year.

If you’re thinking about opening a savings account to start building up money for your deposit, you can use our savings account comparison tool to easily compare interest rates and account features from Ireland’s main providers

3. Your age

A lender will also look at how many years you have left until you retire.

Most lenders will only offer a mortgage up to the age of 66 or 67, meaning if you want to take out a mortgage over 30 years, for example, you'll have to apply well before you hit 40. 

4. Your job

Your lender will also want to know the type of work you do. Those who are in full-time, continuous employment in stable sectors will find it easier to get loan approval than part-time workers in unsecure jobs.  

You will also need to have passed your probationary period before a bank will consider your application, which is six months for most jobs.

5. Any 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 as you’ll be seen as higher risk, for example.

6. Your outgoings 

In addition to any loan repayments, lenders will look at any financial commitments you have, such as ongoing childcare costs, monthly bills, and so on.

7. Your 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.

Mortgage lenders will also look for other potential red flags in your finances such as recurring payments made to online gambling platforms, for example.

8. The value of your house

This is the market value, or purchase price of your house.

9. 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. The amount of your home that you own is also referred to as your equity. In general, the bigger the deposit you have, the better. And Central Bank rules require most first-time buyers have a minimum deposit of 10% saved.  

10. The Guarantor

A guarantor is someone who agrees to repay a loan if you are not able to. If you are using a guarantor in any way, then their financial situation will also be assessed. 

11. Anything else?

Banks will also be interested in whether you are borrowing on your own or with someone else. If you're borrowing with someone else, then their savings record and outstanding loans etc as outlined above will also be reviewed. 

What are the chances of my application getting approved?

As discussed above, your lender will check your credit history before they decide to give you a loan. Most lenders use the new Central Bank CCR (Central Credit Register), 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 could be refused a mortgage due to:

  • Your income
  • Your credit history
  • Your existing loans 
  • Your job status 
  • Your financial history 
  • Your house not receiving clearance from the valuer

To discover reasons you could be denied a mortgage in more depth check out our guide on the topic here.

    Looking for more information?

    If you found this guide helpful, take a look at the articles in our mortgage Quickstart Guide series. 

    You can stay up to date with all the latest mortgage news and tips with our blogs and guides.

    Start your mortgage journey with bonkers.ie

    Whether you’re a first-time buyer, home mover or switcher, you can easily compare interest rates, offers and cashback incentives from all of Ireland's lenders using our mortgage calculator

    And when it’s time to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started.

    Don’t forget that you’ll also need mortgage protection insurance and home insurance to secure a mortgage. We can also help there!

    Need assistance?

    If you require any help or have any mortgage-related questions, we have an in-house team of qualified financial advisors who would be happy to help. 

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