First Time Buyers

Are you a first time buyer?

Since the credit crunch began in 2008 mortgages have been more difficult to come by, but figures from the Irish Banking Federation show that first time buyers are making up a higher proportion of overall mortgage demand.

So like 2009, 2010 is going to be a very challenging year but there are excellent buying opportunities for first time buyers now.

This coupled with increased mortgage tax relief and reduced interest rates will offer the first time buyer who qualifies for a mortgage unbelievable value.

With builders strapped for cash they will be anxious to shift houses built in 2008 and many will be selling at below cost.

There are many different options to consider when choosing a mortgage so you should contact your mortgage broker who can offer you independent advice, shop around for the best rate and terms for you, and explain all the options and time scale involved.

With the banks cautious in lending money and the days of the 100% mortgage long gone, it is important to have a deposit of at least 8% of the market value of the house saved, preferably more if you have it.

It is equally important to find out how much of a mortgage you will qualify for so that you can be secure in grabbing that bargain. Contact your broker in order to arrange a 'loan approval in principle'

How to get mortgage approval 

Shop around for the best deal. It is important that you or your broker shop around for the best deal as some lenders will lend up to 92%, while others will only lend 80%. There is also a huge difference in the rates offered between lenders.

Create a good savings profile. The bank will be looking for regular savings built up over the previous 6 to 12 months, so start saving early.

Keep a good credit rating. If you have a car or personal loan ensure that you make your repayments on time.  

Hold on to your bank statements. You will have to provide your lender with six months of your most recent current account bank statements. If you have to order these you will be charged per statement and it will take some time to get them. 

Try and clear any outstanding loans. Try and clear all short-term loans you have before applying for a mortgage as having other loans to repay will seriously impact on the amount you can borrow.

Pay by direct debit. If you are renting, pay by direct debit so that the lender has evidence of the payments. 

There are excellent rates available now for first time buyers. 

1 year fixed rate as low as 2.40% (2.43% APR) and 2 year fixed rate as low as 2.80% (2.84% APR).

Here are some of the options that are available to first time buyers:

• Up to 40 year term available.
• Up to 92% mortgages available. 
• Interest only options available.
• Mortgage payment breaks available.
• Room rental of up to €10,000 per annum may be taken into consideration to assist in qualifying for a higher mortgage.
• Competitive variable and fixed rates.
• Split packages available for example €100,000 fixed for 3 years over a 35 year term and €100,000 on a variable rate over a 25 year term.

Tip: Don't forget to budget for additional costs such as auctioneers/estate agency fees, legal fees for buying, valuation fees and furniture removal. Auctioneers fees are usually 1.5% of the selling price plus VAT, while solicitor’s fees for the purchase of a new home will cost a little less than €2,000, including VAT. Valuation fees: €127.00

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Information correct as of 1 December 2009