Applying for a Mortgage
With your mortgage deposit secured, it can be tempting to start viewing properties straight away in search of your dream home, but unless you are a cash buyer, you should apply for a mortgage before you start looking around.
Buying a new home, particularly if you are a first-time buyer, is a lengthy process, and if you start looking at homes before you have secured your mortgage, you could end up disappointed. Being approved for a mortgage could take months, or even years, and delays in the process could see your dream home being snapped up under your nose.
The Benefits of Using a Mortgage Broker
One of the easiest ways to apply for a mortgage that you can afford is by using the services of a mortgage broker. You may think that you could save a few euros by going it alone, but the fact is, reputable mortgage brokers negotiate wholesale deals with mortgage lenders which gives them access to discounted rates. If you are looking for the best mortgage deal in Ireland, your broker is far more likely to secure that deal than if you were to apply for it as an individual.
Working with an experienced mortgage broker can take the stress out of securing a mortgage too. They do all the leg-work, so you don’t have to, and they can help steer you away from mortgage lenders with unfavourable repayment terms or bad reputations. When you are making what is likely to be the biggest investment in your life, it’s good to know that you’ve got a professional looking out for your best interests, and a well-respected broker will take care of all the paperwork, and they may even be able to get you a discount on application and appraisal fees.
If you are looking to get a mortgage fast, a mortgage broker will save you time, and potentially money, and with someone taking care of all of the details, you can spend less time filling out application forms and more time browsing real estate apps.
Types of Mortgages Available in Ireland
A mortgage is a mortgage right? Wrong! There are many different types of mortgages available in Ireland, and in 2015, the Central Bank set limits on the size of mortgage loans. This is where a mortgage broker will play a vital role in securing the best deal for you.
There are 4 main mortgage types in Ireland, these are:
- Annuity Mortgages otherwise referred to as Repayment Mortgages
- Interest Only Mortgages
- Deferred Start Mortgages
- Offset Mortgages
Annuity Repayment Mortgage
This is the most common type of mortgage in Ireland, and it is perhaps the easiest for first-time buyers to secure. With this type of mortgage, your lender will calculate how much you need to pay each month to clear your mortgage within the agreed term (25 years, 30 years etc). The total monthly repayment will be made up of a percentage of the capital borrowed and interest accumulated on the loan, however, during the early years, most of your repayments will go towards paying off the interest amount and not the loan amount.
Interest Only Mortgage
Interest only mortgages are more complex loans and they are not available to everyone. With this type of mortgage, your monthly repayments only cover the interest on the amount you have borrowed, and you will have a balance to pay once you reach the end of your mortgage term. Homebuyers opting for this type of mortgage are required to take out a pension or endowment policy to cover any shortfall at the end of the term, and so it’s usually only recommended for people in good financial standing.
Deferred Start Mortgage
As the name would suggest, a deferred start mortgage allows you to delay the start of your mortgage repayments, but you will still be charged interest on these months, so essentially, your mortgage balance will raise before you begin paying off your loan. Again, this is not ideal for everyone, but if you have to pay out for repairs or upgrades on your new home, it might be an option. Discuss the pros and cons with your mortgage broker.
Offset mortgages, also referred to as Current Account Mortgages, are complex loans, but they have the advantage of allowing you to pay of your mortgage quicker and saving interest. Basically, these mortgages combine variable interest rates with the funds in your current account and allow you to pay extra lump sums as you wish. Only a few mortgage lenders in Ireland offer this type of mortgage, so again, speak to your broker if you think this might be the best mortgage for you.
Once you have decided to apply for a mortgage, your mortgage broker will get a statement from potential lenders called ‘Approval in Principle’. This is not a mortgage guarantee, but rather a guideline on what potential lenders would be prepared to lend you. With this statement, you’ll have a good idea of exactly how much you can borrow, and you can start looking at properties within that price range.
Next Step: Finding and Viewing Your Perfect Home.