First time buyer mortgage questions

[Aodhán]

I'm on slightly over €45,000 per annum gross. My net pay is €1110 per fortnight/€555 per week/€28,860 per year. My rent is €500 per month/€6000 per annum. I have no debts whatsoever and I've never applied for a mortgage before. I am almost 41 years old, a full-time teacher being paid directly by the Department of Education, and I'm in possession of a Contract of Indefinite Duration/CID. I have several questions.

1) If I apply for a mortgage and am refused, will a record be kept of this application and could/would the rejection go against me in the event of my reapplying to a different financial institution? (Is there a central database to which all financial institutions have access?)

2) On the Mortgage Calculator on mortgages.ie it states "Civil servants may increase their salary by three grade points" First, do teachers (public servants) fall under what that website terms "civil servants"? Second, by "three grade points" do they mean my salary after the next three years of salary increments, or what precisely do they mean?

3) Given my above details, and that loan terms have changed since 2006, how much of a mortgage could I be offered in 2014?

 

[Aodhán]

Also, is there any tax relief on your mortgage repayment these days? I thought the government abolished that some time ago, but mortgages.ie has an "After tax relief, a typical monthly payment for this loan amount is..." when you use their calculators.

 

[ontour]

If I apply for a mortgage and am refused, will a record be kept of this application and could/would the rejection go against me in the event of my reapplying to a different financial institution? (Is there a central database to which all financial institutions have access?)

The financial institution you applied to would retain a copy of your application but there is no central database of applications across institutions. On the application form you should look at the terms and conditions with regards to sharing that information.

The credit bureau score in the ICB factors in the number of applications for credit in the previous 12 months. Lots of applications may impact the score but as far as I am aware, the institutions do not report to ICB whether an application was approved or rejected.

With regards to how much you can borrow, work backwards from how much you can afford to pay monthly. Factor in the costs you do not cover now such as property tax, maintenance, insurance etc.

 

[spud26]

Hi, I am a teacher with similar earnings, and I have recently applied for a mortgage. The key thing that the bank are interested in is your deposit. Once they have established your income, debts etc, the deposit is crucial. I have been told that I am short about €4000 for the type of house that I want to buy. They have told me the best thing is to go away, put the head down and save and come back in couple of months (or to get a gift/loan from family but this is not an option for me at the moment!)

You need to have not only 10% per cent of the house asking price, the bank also require you to have about €5000 on top of that to cover solicitor fees/moving in furnishing costs etc.

Given your salary you would probably get a mortgage of approx €200,000 but you would need €25,000 saved.