Will I qualify for a mortgage?

M

Mortgage2023

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Hi all,

I am a 37 year old single male with no dependents living in Dublin.

I have a basic salary of 52,000 and a contractually guaranteed minimum bonus of 5,000 per annum (bonus can be a bit more).

I save 1,500 most months and pay 500 in rent. I currently have 94,000 in savings and no loans or other major expenses.

I hope to apply for a mortgage in January 2023. I am aware that I would be limited in what I can buy to a property of around 300k.

However with interest rate increases and stress testing I am worried that I may not qualify at all? Any advice would be greatly appreciated.
 
Assuming that you're a first time buyer, the maximum that you will be able to borrow (without an exemption from the Central Bank mortgage lending rules) will be a bit over €200k as far as I can see. You can use one of the many lenders' or brokers' calculators to check this. You might want to start contacting lenders/brokers to see what you might get in practice and maybe get approval on readiness for shopping around for a property in the new year/spring. You should stress test the repayment on the basis of a few percent rate increases to see if you can afford it. Especially if you are going for a non fixed rate at the start. But even if you are going for a fixed rate. Don't forget to account for other costs such as solicitor/conveyancing, surveyor, stamp duty, mortgage protection life insurance, home insurance etc.
 
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Many thanks for your reply. Yes I am a first time buyer and am aware of associated costs such as stamp duty and legal.

I have been recommended a mortgage broker who I was planning on contacting in the new year. I was just asking in general terms if people here thought I would qualify after seeing my details before wasting my time contacting a broker and being rejected?
 
Mortgage2023 said:
However with interest rate increases and stress testing I am worried that I may not qualify at all? Any advice would be greatly appreciated.
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As rates currently stand, yes you will qualify to borrow 4 times income.

At 5% rate, over 28 years (assuming 65 year age limit, but there are circumstances you can borrow longer), repaying 208000 would cost 1,151 per month. So you should have just over 2k per month left out of net income.
 
Mortgage2023 said:
I have been recommended a mortgage broker who I was planning on contacting in the new year.
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You should probably only use a broker who deals with Avant (as well as other lenders). You should be aware that AIB have some good rates, but they don't work with brokers, so you would have to apply to AIB directly if you want them as an option. (It is very important that you and/or your broker apply to more than one lender.)

Make sure that you read this thread if you haven't already:

Key Post - First Time Buyer mortgage guide

Some tips and Frequently Asked Questions when applying for a mortgage as a first-time buyer (FTB)... Start by getting mortgage approval from the lender you bank with If you have your current account with Bank of Ireland, then apply directly to them for a mortgage. Assuming you have a good...
www.askaboutmoney.com

And also this one because it gives Bank of Ireland's rates, which are currently very good.
 
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One friend got a mortgage through them and another started the process last month.

Also will some banks assess my contractually guaranteed bonus as part of my income?
 
Mortgage2023 said:
One friend got a mortgage through them and another started the process last month.
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Go with a personal recommendation over what you read on the Internet.

Just remember NO broker deals directly with AIB, so apply directly to them yourself. Brokers deal with Haven, which is part of EBS and they have different rates and underwriting criteria to AIB. Brokers might try to tell you they are the same, but they're not.

Mortgage2023 said:
Also will some banks assess my contractually guaranteed bonus as part of my income?
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Yes, but criteria varies.
They are allowed to include it when looking at the CBI limit of 4 times income which I think is the important criteria in your case.
 
Many thanks for the feedback Red Onion.

My friends are a doctor and an engineer respectively while I work in product design so we are not experts on finance, this is why I wished to ask here.

May I ask further about your statement "allowed to include it when looking at the CBI limit of 4 times income which I think is the important criteria in your case" ?
 
RedOnion said:
Just remember NO broker deals directly with AIB, so apply directly to them yourself. Brokers deal with Haven, which is part of EBS and they have different rates and underwriting criteria to AIB. Brokers might try to tell you they are the same, but they're not.
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@Mortgage2023 You can see in this table that some of Haven's rates are a lot lower than AIB's. But Haven have been really slow for almost a year (at least for people switching their existing mortgage to Haven). If you are considering Haven, ask your broker if they are also slow for first-time buyers.

Make sure that your broker applies to more than one lender at the same time. Ask them about this upfront, and strongly consider finding another broker if they don't.

Consider applying to AIB as well. As @RedOnion says, you'll have to do this yourself. Check upfront if you would be liable for brokers' fees if you ended up going with AIB instead of one of the lenders that the broker works with.

Mortgage2023 said:
May I ask further about your statement "allowed to include it when looking at the CBI limit of 4 times income which I think is the important criteria in your case" ?
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Go ahead – you don't need permission to ask questions here :)
 
Many thanks Paul F.

Yes I will ensure they are applying to many lenders and my friends have confirmed the broker does not charge initial fees. However I will also check this point point regarding AIB and make a sperate application to them/
 
Mortgage2023 said:
Yes I will ensure they are applying to many lenders and my friends have confirmed the broker does not charge initial fees.
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It's best to read their Ts&Cs and terms of business and look for mentions of fees before you sign anything or enter into a contract with them.
 
I arranged my mortgage with a broker, however I knew in advance that I wanted to get mortgage with Avant. They did look at other lenders and we discussed options, but only applied to Avant.
In my case it was a straightforward 3.5 times my salary, and LTV was less than 60%.
I had initially made calls to multiple lenders myself as well as going through online tools.
You can certainly phone for general guidance to lenders, without going through application process.
Dealing with one broker has its benefits, however make sure they are not charging you a fee. They should get paid on drawdown but some also charge fees to applicants which i would avoid.
Not sure if i can name the broker that I dealt with. I would recommend them highly, as very efficient but not sure if its ok to name in public post.
 
Many thanks.

May I ask if Red Onion or anybody else can provide information on how my bonus may be assessed at the 4 times CBI limit?
 
Mortgage2023 said:
Many thanks.

May I ask if Red Onion or anybody else can provide information on how my bonus may be assessed at the 4 times CBI limit?
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Apologies, my poor wording. I should have said 'will' rather than 'can'.

Look at your total annual income on your December payslip. Under CBI rules, the lender can lend 4 times that amount, as it's based on 'gross income'. The legislation doesn't separate between base salary and any other components.
 
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