For some, contemplating applying for a mortgage can seem overwhelming but, with the right support and guidance, it doesn’t have to be. In this article, we’ll break down the mortgage process in Ireland, offering insights into what you need to know and be aware of at each stage.
Here are the essential steps involved in the mortgage process, explained in detail to give you guide you through each stage with confidence.
The Mortgage Process in Ireland
Step 1: Establish Your Affordability
The best way to get an indication of your borrowing capacity is to contact a mortgage advisor. They will ask you a series of questions and will be able to give you an initial indication of how much you could currently afford to borrow.
You will need funds to cover your deposit (min 10% of the property purchase price) as well as expenses like stamp duty, legal fees, insurance etc which your mortgage advisor will also take into account and ask you about.
If needed, they will also provide information on government schemes such as the First Home Scheme and the Help to Buy Scheme which can bridge gaps in affordability for eligible candidates.
Step 2: Demonstrate Your Repayment Capacity
Lenders will want to know that if you borrow a large sum of money from them, you can afford to pay it back. In demonstrating your repayment capacity, a combination of your monthly savings, rental payments or existing mortgage repayments and any existing loans will be considered.
Documentation such as payslips and bank statements will be sought to support your mortgage application in this regard.
If you have missed credit card payments or defaulted on loan repayments in the past, it is highly recommended you speak to a mortgage advisor before approaching any lender in Ireland. Your advisor will be able to guide on whether a mortgage application is likely to be approved at this time. If it isn’t, they will help provide information on how to get your finances back on track, how long it might be before a lender will consider you, and which financial institution would be the best fit for you depending on your mortgage needs.
Step 3: Get Approval in Principle
This is an indication from a lender of how much they would be willing to lend you based on a preliminary application. It provides clarity on your borrowing capacity and helps you establish a budget within which to operate.
If you are working with a mortgage broker, they will apply for Approval in Principle (AIP) on your behalf from your preferred lender.
Step 4: Find the Perfect Property
With your AIP in hand, you can begin your property search in earnest, focusing on areas and neighbourhoods within your price range.
When you find a property that meets all your criteria, you might consider placing an offer. In Ireland right now, where demand exceeds supply, you may find that other people will be bidding on the same property as you. Entering a bidding war, where offers from multiple interested parties drive the purchase price higher, can be dangerous territory. It is important to know your budget limit and the price point above which you are not willing to go.
If you are bidding on a property and want to know the impact of making a higher offer on your financial situation, your mortgage advisor can help your decision-making and can clarify the impact of any choice you may have to make.
Once you’ve had an offer on a property accepted, your mortgage advisor can arrange for a valuation to be carried out. A valuation is required by all lenders to confirm that the price you are paying matches the market value of the property.
A property survey may be recommended to identify any structural issues particularly in older properties and this is highly advisable.
At this stage in the process, you can appoint a solicitor who will handle all the legal aspects of the property purchase.
Step 5: Complete the Contract for Sale
This is an agreement mediated between your solicitor and the seller’s solicitor laying out the agreed price and planned completion date.
This is dependent on checks and searches that your solicitor will carry out for you. These might include:
- Title searches
- PRA Folio Searches
- Registry of Deeds Searches
- Judgement Searches
- Company Searches
- Bankruptcy Searches
- Petition Searches
- Planning Searches
- Sheriff Searches
Click here for more information on the purpose of each of the above searches (https://www.corporateaccess.ie/guide-to-closing-searches/)
Once your Loan Offer has issued from your lender and contracts have been received from the seller’s side, you will meet with your solicitor and sign both the contract and the Loan Offer.
Step 6: Put Required Insurance in Place
Before you can draw down your mortgage, you will need adequate home and life insurance cover.
Most mortgage brokers will also have agencies with insurance providers for life and mortgage protection. Your advisor will be able to take you through the various protection policy options on offer from Ireland’s insurers and can complete the application with you and on your behalf.
Step 7: Complete Your Mortgage
Provided any additional information requested in your Loan Offer has been provided, your mortgage funds will be issued to your solicitor and your property purchase completed. You will then receive the keys to your new property.
Mortgage Advisor Support at Every Stage
The benefits of working with a mortgage broker can’t be underestimated. With many brokers offering a no fee client service (brokers receive 1% of the mortgage amount from the lender), it is a win win for property purchasers.
Expert guidance at each stage in the mortgage process can provide peace of mind and make the experience much less stressful.
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