A mortgage is a long term loan for the purpose of buying a property, and the value of the property is then used as the security for the loan. 

The amount you can borrow will depend on various factors, but mostly depends on your income and deposit you have saved.

The first step in being mortgage ready is to achieve a mortgage in principle which is a statement from a mortgage lender indicating how much you are eligible to borrow.. Once you have a mortgage in principle, you can go house hunting and make an offer on a property.

MortgageOne can help you to prepare your mortgage application, and our mortgage advisors can secure your approval in principle by working with mortgage lenders that suit you and your situation best, as well as getting you the best rates on the market.

Preparing to apply for a mortgage

So, what factors will a lender look at when considering your application? Knowing what mortgage lenders take into account in considering your application can help you to avoid any potential pitfalls or having your application declined.

Lenders will consider your income when you apply for a mortgage, and both partner’s or spouse’s incomes when applying for a joint mortgage. You will need to have an idea of how much you could borrow before you approach a lender.

Central Bank lending rules dictate that you can borrow up to 4 times your gross income as a first time buyer, and up to 3.5 times your gross income as a second or subsequent property purchaser. This is the loan to income limit (LTI).

You will need to have a least 10% of the purchase price of any property that you consider buying as a deposit under Central Bank mortgage lending rules as a first time buyer (30% for investors). 

The Loan to Value limit (LTV) for first time buyers, as well as second and subsequent buyers is 90%, for buy to let or investors the LTV limit is 70%. This means that the loan can be for no more than this percentage of the purchase price.

Applications for credit above €500, such as a mortgage, will mean that your prospective lender will obtain a credit report from the Central Credit Register. 

Any loans and debts that you may previously have had are taken into account as part of your mortgage application. If you have missed repayments, failed to make minimum payments on your credit card, or built up arrears on a loan or debt, this will make it more difficult for you to secure mortgage approval.

It is a good idea to request a copy of your credit report from the Central Credit Register in case there are mistakes, or inaccuracies in the report in order to get these cleared up before applying for a mortgage.

It is also best to try to clear any debts or overdrafts you have with high interest rates before applying for a mortgage.

Mortgage lenders are allowed to make some exceptions to these rules, with a greater loan to income (LTI) multiple or higher loan to value ratio (LTV). 

However, there are annual limits to the amount of exceptions that the lender is allowed to make and it is best not to rely on getting an exception.

It’s not just your income that determines the mortgage amount that you will be offered by your lender. 

Affordability is also a factor, and your outgoings, spending patterns, and ability to save will all also be taken into account. You will need to demonstrate an ability to save regularly to any potential mortgage lender.

Any potential mortgage lender will require evidence of your identification documents, employment, bank statements, and a lease or rental agreement for your current home in order to process your application.

Missing paperwork, or failing to produce the evidence required will slow down your application, or may mean that you will have your mortgage application turned down.

Government schemes

If you are a first time buyer, you will need to familiarise yourself with government schemes intended to support you to buy your home with a mortgage from a commercial lender. There are two main schemes.

The First Home Scheme

This scheme is available to first time buyers and fresh start applicants who wish to buy a new home or build their first home, and to renters who wish to purchase the home they are currently renting as the landlord is selling the home.

The scheme is intended for applicants to buy a home that they intend to live in, not for investors. There are price limits, depending on the location of the home, and your mortgage must be with a participating lender. You must also have a deposit and borrow within LTI limits.

The First Home Scheme is a shared equity scheme, you get funds from the scheme in exchange for an up to 30% ownership share of the property. You can buy back this share at a later date if you wish.

The Help to Buy Scheme

The Help to Buy Scheme is aimed at first time and fresh start home purchasers who either buy a new home, or build their own home up to a price limit of €500,000.

The Help to Buy Scheme gives a rebate of income and DIRT tax paid in the four years prior to buying a home and can help to fund a deposit.

Shop around for the best rate

You can approach the bank or financial institution that you are currently with for a mortgage, but it is best to approach several lenders in order to compare interest rates and types of mortgage on offer.

MortgageOne works with a wide range of mortgage lenders operating on the Irish market and can find you a great deal on your mortgage.

It’s also much easier to complete one application for multiple lenders with the advice and support of our mortgage advisors.

We are part of a family financial services and insurance business operating since 1938, so we have a proven track record in assisting clients to get the best deal.

Use our mortgage calculator to get an idea of how much you could borrow and get the ball rolling.

Contact us

Get the ball rolling by using our calculator and you can also leave your details and you will be contacted by a dedicated mortgage advisor who can help you get the best mortgage deal for you.