You have finally found ‘the one’ – your dream home, however to make sure this one is a keeper, you need to secure a mortgage. Read on…
Often people tend to approach their own banks for a mortgage, but it makes financial sense to seek advice from an independent broker or mortgage advisor, as they have access to all banks and products and can advise accordingly, alternatively do your own research.
“Shop around and don’t go for the first mortgage you are offered,” said Waqas Babar from Private Wealth Manager. “The market is very competitive right now and there are deals out there to be had.”
Mortgage eligibility criteria varies from one lender to another, ideally you should be employed by your current company for a minimum of six months, and should have the means to repay the money borrowed within 30 years.
Banks analyse how much debt their customers can manage before they fall into difficulty, and use this information to set lending amounts. They consider your Debt-to-income ratio (DTI), which is the percentage of your monthly gross income that goes towards paying debts.
To work out your DTI divide your monthly debt by your monthly income and then multiply this figure by 100. The preferred maximum DTI varies from lender to lender, but the generally accepted figure is around 36 percent.
After an assessment of your financial circumstances is made, the bank or broker will let you know if your application has been successful and how much money they will lend you. Once you find a suitable property and submit the required documents a surveyor undertakes valuation.
The last stage is legal completion with the issue of a title deed indicating legal ownership. You will usually need to provide security cheques for non-payment of instalments as well as the transfer of salary to the bank.
It is mandatory to have life assurance and some companies insist on home insurance. “Get advice from an approved financial advisor to protect you and your family, should the worst happen and your health fails or you lose your life, so that you have enough assets or insurance protection in place to pay your mortgage and debt liabilities in such circumstances,” Babar said. “Rates vary across the board, however, subject to terms and conditions, you can pick up a fixed rate starting in the region of 3.99% for two years, or even 4.99% for five years.”
To apply for a mortgage you will need the following documents:
- The completed application form
- Passport copy with a
- valid visa
- Salary certificate or the last three months pay slips. If you receive commission, provide details from your employer confirming commission earned over the last year
- Original six months of bank statements
- A photocopy of the purchase contract and a photocopy of the down payment receipt
- A completed loan protection insurance proposal form
- Documentation confirming current residential address, such as a tenancy agreement
- Original latest credit
- card statement
Note: if you’re self-employed you’ll also need additional documentation
Catriona Doherty
