Ideally you should think about taking a 6 month period to look as good as you can for the banks. However, there will be a further 6-12 months where you will need to maintain this image! (AIP and possible renewal of Approval In Principle)
T-7 months:
Figure out how much you might get approved for. You're on €57,500 so minimum 3.5 x €57,500 = €201,250
You need to account for say €7,500 for legal fees and stamp duty - take that out of your deposit = €32,500
Minimum approved to buy €233,750 (ballpark figure)
Figure out how much you'll need. Look at this website:
https://www.drcalculator.com/mortgage/
This allows you to figure out the
key figure - what will the bank stress test you to?
It's not enough to show you can make repayments on your mortgage at current interest rates. My experience is they will add another 2% on in calculations to make sure you can pay it back if interest rates go up.
So, say your interest rate is 4% (€880 pm) but they want you to show ability to repay €1,150 (stress test to 6%).
Clean up your current account. No gambling. No overdraft. No missed direct debits.
T-6 months:
You start to save the difference between rent and mortgage stress repayment. You will need to save approx €400
consistently
Keep a clean current account. No missed debits. No gambling. No overdraft.
Don't. Touch. This. Money.
No withdrawals.
The statement should show 6 clean lodgements, nothing else.
T (mortgage application time):
First, get your accounts together. Get 6 months. Credit union, bank, revolut. All together.
Get 3 months payslips.
Go to the bank or broker. Show them the rental agreement and repayment savings. Show them the accounts including deposit.
Wait for Approval in Principle... (approx 2-4 weeks depending on how ready you are with documents)
Here's the miserable part. AIP is useless apart from allowing you to bid on properties.
You need to
maintain the same savings, clean account, etc for the entire time until you set a drawdown date with your solicitor.
The bank will ask for all of the documents again (or most of them) once your AIP expires (usually every 6-12 months).
They will also ask for payslips plus possibly a current account statement right before they agree to let you drawdown the money (after you sign contracts).
The only time you can take your foot off the pedal is once the bank tell you
in writing they are giving your solicitor the mortgage money on X date. Then you can let loose...
(Source: 3x house purchases in ROI using mortgage)
