Mortgages

A quick step-by-step guide to the mortgage process

If you are a first time buyer, the mortgage process can seem daunting once you research your options, but it helps if you have a good solicitor and an independent mortgage broker.

Of course, you don’t have to use a mortgage broker but one big advantage of using one is that you only need to complete a single application. This is because your broker will have contacts and access to all the major lenders, and will also be up to date with the ever changing credit policy and criteria.

Step 1

The first step is to establish how much you can borrow. You may find that some lenders will lend your more, or less, than others as they all have different criteria and terms and conditions. Some lenders only lend up to 80% for first time buyers whilst others will lend up to 92%.

100% mortgages were available not so long ago but thanks to the credit crunch banks no longer offer them to new customers – and rightly so.

Mortgages are more difficult to come by these days, but first time buyers now make up a greater proportion of those who taking out mortgages in 2009.

Contact a broker with details of your earnings, any short term borrowings you have and details of your savings. Your broker will shop around to find the maximum mortgage available to you. Once you have established how much you can borrow then ask your broker for quotations over different terms and variable and fixed rates as this will help you to see if you are comfortable with the repayments.

The main documents you need to process your mortgage:

Three recent payslips.
Most recent P60.
Most recent bank statements for the last six months.
Copy of drivers licence or passport.
12-month statement on any short term loans you have.
Evidence of savings.
Evidence of address - recent utility bill or bank or visa statement.
If you are self employed you will require at least two years accounts and a letter from your accountant confirming that your tax affairs are up to date.

Step 2

When you have all the documents to hand and have found a suitable property, your broker will help you fill out the application form and copy all your documents. This is also the opportunity to discuss whether you want a variable or fixed rate mortgage (possible link to other section here?)

Once the application is submitted to a lender, you should have a decision with three to five working days. If you get a positive response your broker will be issued with a 'loan approval in principle'.

Step 3

Contact a solicitor and ask them for a quotation that includes their professional fee, VAT and outlay. The fee should be around €1,750 including VAT and outlay. Make sure you get this quote in writing.

You need to notify your vendor/estate agent of your solicitor’s name and address so that the seller’s solicitor can issue the contract to your solicitor.

Step 4

Your mortgage broker will arrange a valuation on the property and send the report to the lender. This will cost you approximately €127. Once the valuation is sent to the lender they will issue a loan offer within three to five working days. A copy of the loan offer is sent to you, your broker and your solicitor.

The solicitor and broker will check the conditions on the offer to ensure that everything can be complied with. Once you have received your loan offer, you are now in a position to sign contracts and mortgage documents.

Your solicitor will contact you to make an appointment to sign, explain the terms of your loan offer and go through any queries you may have. You will also at this stage agree a closing date, which will be the date that your cheque will issue and you can move into your new home.

Step 5

It will be a condition on your loan offer that you arrange a mortgage protection insurance policy to cover the amount and term of your mortgage, and also that the property be insured for the sum recommended by the valuer.

Your broker can shop around and get you the most competitive quotes or you can shop around and arrange these policies yourself. Both policies will be required before your cheque is issued, so it's important if you are arranging them yourself to have the policy documents to hand at least a week before your cheque arrives.

If you have any medical problems, the mortgage protection policy could take about two or three weeks to sort out. Your broker will submit these policies to the lender and liaise with the solicitor so that all conditions of loan offer are complied with in order to get the loan cheque issued on time.

Your solicitor will return all the signed legal documents to the lender and request your loan cheque. Once your solicitor receives the funds from the lender it may take five days to clear if a cheque is received. But if the funds are transferred to the solicitors client account they will be available the same day. Your solicitor will then pay the vendor then you can pick up your keys.

Information correct as of 1 December 2009

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