For those with home ownership at the top of their 2024 resolutions list, we have prepared this comprehensive guide to getting mortgage-ready in 2024.
As we step into 2024, the dream of homeownership remains a significant goal for many. Whether a first-time buyer or looking to upgrade, getting mortgage-ready is crucial. The mortgage landscape is continually evolving, influenced by economic changes, interest rates, and housing market trends.
Mortgage Navigators has this step-by-step guide to getting mortgage-ready, to help navigate this complex terrain.
The foundation of a successful mortgage application lies in understanding your finances. Begin by reviewing your credit report (www.centralcreditregister.ie). You will need certain IDs to complete the online form. Ensure there are no errors and, if there are missed payments, decide how they can be mitigated or explained?
Then complete a detailed budget to understand your spending habits, borrowing repayment obligations, and savings capacity. This is a worthwhile exercise for anyone, as seeing your income and outgoings in ‘black and white’ means your finances and ability to manage money are firmly fixed in the mind.
All lenders want to see proven ability to pay the monthly mortgage commitment. You need financial documentation showing a proven track record of a minimum six months good money management. This can be shown by regular savings, and consistent payments, like monthly rent. (or a car loan). Remember, this is like a job interview and you are presenting the best version of yourself!
Start saving early! All lenders, again, like to see an individual contribution to the purchase of the house. And, savings contribute to demonstrated repayment ability.
For a First Time Buyer there are purchase incentives, if buying a new home, like the Help to Buy Scheme and the First Home Scheme, to bridge the gap of a 10% deposit. But, also remember the need to pay 1% Stamp Duty on the house purchase price, and also solicitor fees, which are around €2,500, and any surveys or reports needed for the closing process.
Lenders use the debt-to-income ratio to assess ability to manage mortgage payments. Aim to lower your existing debts, ideally by paying some off, and to increase your income to improve this ratio. It may be time to pitch for a pay rise !! he better the ratio, the better the loan eligibility, and the smoother the mortgage process.
Mortgage applications require documentation to be meticulously in order. Gather necessary paperwork including tax returns, two-years of accounts (If self-employed), payslips, bank statements, and proof of assets and any lending, if you have recently returned from abroad we will require a Credit History report and Bank Statements on your accounts from this country.
Having these documents ready in advance expedites the mortgage approval process. Mortgage brokers will provide a handy checklist and, usually, an online application portal.
Most auctioneers now look for this in advance of even a viewing. A pre-approval mortgage offer strengthens the buyer’s position when making an offer on a home. It demonstrates the person is a serious and qualified buyer. Work with a mortgage broker to get pre-approved, which also ensures buyers have a clear understanding of the loan amount they can afford.
Investigate the various mortgage options available in 2024. Fixed-rate mortgages provide stability, while variable-rate mortgages offer flexibility. Compare interest rates, terms, and requirements to find the best fit; again, brokers help evaluate the variations and pros and cons. All lenders are different in their rates, assessment criteria and terms and conditions, but mortgage brokers are well equipped to advise.
And, remember, mortgage providers are not forever; it is possible to switch!
Keep an eye on the property market and mortgage market trends. Understanding market conditions helps with informed decisions about the timing of a home purchase. Changes in interest rates, or housing inventory, will impact an overall mortgage strategy.
Collaborate with a knowledgeable auctioneer who understands the local market and can simplify the home-buying process. Brief them well, as the more they understand about your needs, the better they can help find suitable properties, and negotiate a sale.
Thorough preparation is key to setting the stage for a stable, fulfilling, and affordable homeownership experience. It is not just about securing a loan; it’s a whole new life-stage that merits the time and pre-planning to make sure it’s just right.
Article by Margaret Barrett
Managing Director at Mortgage Navigators,