A mortgage is a loan required to finance the purchase of a property. It allows individuals to buy a property now and pay for it over a number of years.
When you get a mortgage you will need to put down a deposit. The amount of this deposit will depend on whether you are a first time buyer or non-first time buyer. Lender’s also have criteria for the amount they will lend compared to the value of the property.
The mortgage amount will be the purchase price of the home, less the amount of your deposit (which can be made up of savings and any financial gifts from parents or family).
Mortgages must be repaid by the borrower with interest and your interest rate can be fixed or variable. Regular payments, usually monthly are made over the term of the mortgage and are made up of two parts – the principal amount borrowed (also called capital), and the interest.
Interest is the fee the lender charges for borrowing the money.
The larger the deposit that you can put down, the less money you will have to borrow, hence the less interest you will have to pay over the term of the mortgage.
Mortgage applications require a large amount of documentation. Make an appointment with a Financial Broker who will advise what documents you need to bring with you, such as the last six months’ bank statements, loan statements and payslips.
Before applying for a mortgage you can also run your own credit check by logging on to http://www.icb.ie/ and paying a small fee.
To obtain a mortgage you must be in permanent full-time employment for at least twelve months, or be self-employed and have audited accounts and supporting documentation for the previous three years.
You must have your deposit saved or gifted and you must be able to show that you have the ability to repay a loan. Most lenders like to see a high proportion of the deposit saved by the client.
First time buyers (FTBs) can borrow 90% of the value of the property.