Expert View
Wednesday, 8th August 2012
Can I still get a home loan?
Mortgages are still available to suitable applicants, but lending criteria has tightened up considerably. In general you should have savings of approximately 10-12% of the purchase price; be in secure permanent employment or if self-employed, be well established, with at least two complete years trading. You should have a good credit history and be able to clearly demonstrate, through previous savings/rental payments, that you can comfortably afford the intended repayments on your new mortgage. Maximum funds available are typically between 4.25 and 5 times gross salary.
Lenders will examine your application from a number of angles. Have you got well managed current accounts; a steady regular record of savings; a record of regular rent payments; prudent spending habits; few personal loans? If applicable, does your overdraft facility move to a regular credit balance?
Is employment full time and permanent? Employees in certain sectors are experiencing difficulty in securing mortgages (e.g. construction). The focus is now on basic income as opposed to bonus, overtime, or commission. Contract employees will not currently obtain mortgage approval unless it can be demonstrated that it is a contract with a State body considered to be a contract of indefinite duration.
Credit history is important and unnecessary or large credit card balances will work against you. Personal loan repayments severely limit your borrowing capacity and it's very important to have a good credit history with no payment arrears. Lenders will not consider applications where there are unpaid direct debits.
Considerable emphasis is now placed on savings and while parental gifts towards a deposit are acceptable by some lenders, they should not account for the full deposit.
Lenders look closely at your current account statements and it is no harm to live frugally prior to a mortgage application. Avoid on-line gambling at all costs and keep your accounts in credit to display your money management ability. Your accounts must be able to demonstrate that they can take a mortgage payment (replacing savings or rent).
Each application is judged on its own merits but if you need help in making the application, give us a call.
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