What do I need to do to get mortgage approval?

J

JackBlack

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It is likely that I will be looking for a mortgage within the next year.

I am in a permanent & full time position for the past 8 years.
I have had various car loans over the years but have been loan free for about 2 years now.
I have a credit card, which I clear fully every month.
I pay my rent directly to landlord (cash) so have no 'trail' as such for this, as I withdraw from the ATM.
I don't have a direct debit for savings, but transfer money regularly into a savings account and have 10,000+ in one account. I have a credit union account where money is deducted from my wages and have about 10,000 in this also.
I have transferred the odd €10 into Paddy Power for a flutter on the Grand National!

That's a fair bit of personal info, but I'm wondering what I will need to show to a bank for mortgage approval, and if there is something I need to start doing now.

Thanks.
 
I'm not a financial expert, but I have put in a few mortgage applications over the past few years. My advise would be:
1- The banks will want to see 6 months current account statements, so start doing this now.
2 - start paying your rent by direct debit so that your statements show that you pay rent and you pay it regularly
3 - try to start saving regularly by DD - even a small amount. If your statements show that your monthly rent DD + your regular savings DD is greater than what your mortgage repayments will be it will be a great advantage.
4 - dont dip in to your savings - show the bank that your savings account is constantly growning.
5 - dont go in to overdraft on your current account. Pay off your credit card every month.
6 - close your Paddy Power account. Bookie accounts are a no, no for mortgage applications.
7 - book an informal chat with a mortgage specialist with one of the banks - Ive done this recently with UB and AIB, both were very helpful.

If your landlord doesnt like the idea of Direct Debits - you could always open an online current account from somewhere like Number26. Then direct-debit your rent in to this once a month, then withdraw the cash from here and pay it to the Landlord.
 
The key issue for you is ability to repay.

You have to show the bank that you can afford to make the repayments if interest rates go up by 2%. For you, rent and regular savings will be that proof. If you pay your landlord cash, the bank will not allow this as proof. You need to get your rent on direct debit.

Start saving on a regular basis. Put it into a separate account and don't touch it. Banks love to see money going into a savings account on a regular basis with no debits. It makes it easier for them to calculate the ability to repay.

Steven
www.bluewaterfp.ie
 
Thanks all.
My partner is my current 'landlord' and I pay the rent directly to him. He doesn't want it direct debit. Is there another solution?

Have set up a direct debit for savings - €300 monthly, and I already save €440 a month with the credit union (comes out of wages) so that's ~ €740 I'm saving, and I pay €300 on rent.

Finally, in case it makes any difference, because there are no current account charges for me I use my debit card a fair bit. Should I use my credit card & make my monthly payment on that or what?

Thanks again.
 
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Number26 is an on-line German bank that has a mastercard debit card. Details here http://www.askaboutmoney.com/threads/new-bank-in-irish-market-number26.196859/

You could show on your bank statements that you withdraw €300 cash on the same day every month to pay your rent, but if its a day or 2 late it mightnt look very good. The banks like to see that you are reliable at paying your rent.

Showing that you are saving 740 and 300 rent regularly every month should put you in a good position with the banks.

I use my Debit Card all the time and it has never caused me any problems. The danger of using your credit card is that you might be tempted not to pay it for a month or 2 and it wont look good on your application
 
Thanks all. I will have to look into setting up a direct debit I think. He was relying on part time and erratic work for the past 2/3 years and so didn't want 'rent' going into his account each month in case this would affect his social welfare.. He has a job now so maybe that is irrelevant now!
 
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