6 TIPS TO HELP YOU GET MORTGAGE APPROVAL

Before you go house hunting, it’s advisable to get your mortgage sorted, since many schemes won’t take a deposit unless you can show your funding is in place.

Michael Dowling, managing director of Dowling Financial, and Sinead Ryan share their tips:

1 Establish your repayment

capacity — make sure you have saved, or paid rent, equal to the mortgage repayments plus 2pc. A bank will stress-test the mortgage repayments at 5.5pc on average, even though you will be paying at 3.5pc. You need to be able to show six months of established repayment capacity (bank statements) in advance of submitting your application.

2 Manage your current

account — you need to supply the bank with six months of current account statements. Make sure you have no unpaid items, not more than one referral item, no regular online gambling and rent paid by direct debit rather than cash. Show that you manage your current account.

3 Permanent and stable

employment — banks look to lend to people who are in permanent employment for a minimum of 12 months and working in a company for this length of time. You will not get a mortgage if you are on probation. If you are on a contract, you need to show you have worked for a minimum of three years — preferably with the same employer — and that you have had no gaps in employment. If you are self-employed, have all your accounts fully up to date. If you are a contract worker, include a copy of your CV as well as your last three P60s.

4

Income — the Central Bank has imposed lending limits based on income (3.5 times your salary) and value — 90pc of purchase price is the maximum loan to a first-time buyer, 80pc for a second-time buyer. Banks will calculate from 100pc of basic salary and 100pc of guaranteed overtime, but will only take up to 25pc of bonus or commission. If you can show three years of consistent overtime and bonuses, they may consider 50pc of this figure in calculating the income multiple.

5

Deposit — you do not need to have all of your deposit before you apply. Once you have confirmation that a gift is available, ie, from the bank of mum and dad, that will suffice for approval in principle.

6

Use a mortgage broker — there are nine lenders in the market, excluding the local authority option. The cheapest variable rate mortgage for 90pc lending is 3.15pc, the dearest is 4.5pc. Use a regulated and authorised broker to shop around and research the market for you; it will save you money and heartache in the long run.