How do I buy a home?
Go from applicant to homeowner with this step-by-step guide to a KBC mortgage
Conor McGowan from KBC talks us through going from applicant to homeowner with this step-by-step guide to a KBC mortgage
STEP ONE: Book your appointment right now!
If you’re serious about buying a house, then you should already have your mortgage appointment booked. If not, get on the phone, the website or just walk right in to one of KBC’s 16 hubs and get your future started.
“The first thing people want to know is ‘how much can I borrow?’” says Conor McGowan, Head of Mortgages at KBC Bank Ireland. “The second thing is ‘how much will it cost me every month?’. Our online calculators, which can be found on (www. kbc.ie), are a great starting point to answer both of those questions.”
As the first step, Conor advises people to make an appointment to meet one of the KBC mortgage team. This is to discuss what you are looking for in terms of your new home, understand the documentation you are required to provide and go through your financial status to establish your affordability and readiness to get mortgage approval.
“Our online booking platform offers you the facility to meet with one of our mortgage experts in any of our 16 hubs across the country that have flexible opening hours. These include late opening on Thursday evenings, Saturday opening and our Blanchardstown hub also opens on Sundays. In addition to this, our contact centre is open 24 hours a day, seven days a week.”
STEP TWO: The (not-so) scary part – the paperwork
Don’t fret about what you need to submit. There probably isn’t a valid reason to bring your 4th Class report card or a reference from your first job 15 years ago to the bank! There is a handy checklist on the KBC website (www.kbc.ie) which outlines the application requirements in detail. Typically, you will need:
A completed mortgage application form Proof of identity – One form of photographic ID such as a passport or driver’s licence
Proof of address – One utility bill or bank statement sent to your address dated within the past six months
Proof of employment – This needs to be completed and stamped by your employer within the last six months. It must be accompanied by two recent payslips and an original P60
Bank statements – Six months of continuous current account bank statements or e-statements; six months of continuous savings account statements; most recent personal loan statements; two months of continuous original credit card statements or e-statements (the latest dated within the last three months) Self-employed applicants require some additional documentation along with the above: Financial/audited accounts – These should be from two of the most recent financial years signed by your accountant Tax returns – Two most recent years’ tax returns (P21 or Notice of Assessment or Chapter 4 Revenue Certificate with full completed Form 11) along with a Tax Clearance Certificate (If the mortgage is a joint application with a partner you will both need to submit the required documents above)
STEP THREE: Assessment
After going through your documentation and your own personal circumstances, all the information is sent to the bank’s credit department, where it is assessed. Conor says that affordability is the main thing when assessing a customer for mortgage approval.
“It’s important that you have a life as well as paying your mortgage, so we look at employment status and income, savings and borrowings and outgoings like rent or childcare when assessing an application. So, if you are saving €500 per month and paying €1,000 per month in rent, you are already showing you can afford €1,500 a month in a mortgage repayment.”
KBC offer mortgage terms up to 35 years depending on your age, so there is something to suit everyone.
Once assessed and you are successful, you will then be given an Approval in Principle (AIP) based on that.
“The AIP allows you to go out and get shopping for the home of your dreams,” says Conor. “Having an AIP shows that you are able to buy a home and are in a better position than a buyer who has yet to start the mortgage process.”
Even if you don’t have a house already lined up, you can still apply for a mortgage and get an AIP.
STEP FOUR: The approval you always wanted
This is it! You have your AIP and can now find the home of your dreams.
KBC’s AIP lasts 6 months, and it tells you how much money you can borrow at that time, whilst you’re busy looking for a home.
Once you find the house, the next steps are easy.
Conor says, “At KBC, we will arrange a valuation on the property through one of our valuers to show that it’s worth what you’re paying for it and the mortgage is appropriate for that property. We can then progress to a formal loan offer. This is the contract between you and the bank, so you and your solicitor will be required to review this before you draw down the funds.”
STEP FIVE: What type of rate do you want?
There are two different types of mortgage rates available to choose from – variable or fixed. Variable-rate mortgages mean that the rates can change at any time and so can your monthly repayments. A fixed-rate mortgage means your monthly repayments will remain the same for a period of time of your choosing. It’s important to consider what best suits you when choosing a rate.
“Variable-rate mortgages are good if rates are going down, but obviously if rates go up, so does your monthly repayments. A major thing to take into consideration is your employment status. Lots of people are working in industries where they receive a regular bonus or commission payments. A variable rate allows you to make additional lump sum payments and so reduce the length of time to repay your mortgage.
“A fixed rate gives you the comfort of having the same rate to pay day-in and day-out. Mortgage rates are quite low at the moment and as a result, fixed-rate products are proving very popular with first-time buyers, giving that certainty of repayment for anything from one to 10 years depending on your preference.
“If you like both options, it is also possible to split your mortgage between variable and fixed rates, giving you the best of both worlds.”
STEP SIX: All the other stuff
You have your mortgage and your house, so that’s it right? Not quite yet, there are just a few more steps to go. Conor says that when you have your mortgage and house, you will need insurance on both your life and your home. Mortgage Protection Insurance means that your mortgage will be paid off if something terrible were to happen and either party to the mortgage was to die before the mortgage term was complete.
“It’s also good to consider income protection insurance. KBC offer a range of products through our insurance providers, Irish Life. Home Insurance is also required before drawdown, and again we can help customers with this should they require assistance, KBC can arrange this through Zurich Insurance with discounts* available.
What advice does Conor have for people getting ready to go through the mortgage process?
“Get prepared early. If you are considering a house purchase, make sure you are managing your finances well. Show you can keep your current account in order and remember to show some savings history.
“Also, stay in touch with your mortgage specialist. He or she will help you through each stage and point out any additional requirements and next steps along the way. It’s an exciting time but can seem daunting, so let the experts do the work.”