Apply for mortgage now or wait?

[Olivia2013]

Hi all,

I had been planning to buy a property in late 2013, but my dream house has just come on the market. I’m not sure if I can afford this property, or am in a position to apply for a mortgage just yet.

I had intended to just apply everywhere and see what happens, but any guidance, or insight, or suggested next steps would be much appreciated!


Is this a single or joint application: Single
Type of Property. 2 (plus box room) bedroom house
Value of Property €240k (asking price)
Amount of Mortgage €215k
Term of Mortgage. 30 years
Amount of savings and over how many years – €20k over approx. 3 years
Is there a lump sum from any other source? If so give full details. – €10k from parents (I’d prefer not to have to take this money – parents are due to retire in the next few years)
Age of Applicants. - 28
Employment situation. - Private sector, permanent, same company for past 5 years


Salary: €53,000 plus 5-10% annual bonus
Rent: €800 per month
Savings: €1,000 per month (for last 4 months only)

No children, court orders or judgements, or other debt. Credit card is paid in full each month. No overdraft facility or missed/late payments.
Rent is paid by standing order each month. Savings were somewhat haphazard up to 4/5 months ago, but have been clearly visible since then.

I have not yet applied for a mortgage.

My queries are as follows:
- I implemented my personal “austerity budget” in Jan 2013, but my savings record was somewhat haphazard before then. How far back will the bank look?
- Also, I had to withdraw €2k from my savings in February due to some surprise dental & medical expenses. Would that impact an application if I applied now?
- My VHI and pension contributions are paid by salary deduction. Would my application look better if these deductions weren’t impacting the net figure on my payslip?
- Will applying for a mortgage (and being refused) now impact future applications?
- A family member may move in with me (and make some financial contribution) – will declaring that impact an application? I wouldn’t want to be relying on anyone but myself to pay to mortgage!!

 

[monsoon1]

Savings being under 10% is a problem. Legal fees and stamp duty would be another 2% or so, so you'll need 12% upfront really, (10% savings and an extra 2% from anywhere). You may need to explain how you plan on paying for furniture, legal costs etc etc - this is where the promise of a parental gift would help. Affordability-wise no real issue that I can see - you'd have well over the lending criteria of €1000pm net left over after stressed mortgage payments. Savings record of 4 months with an explanation should be sufficient. In practice by the time you view the house, submit mortgage applications, start the bidding process, get a solicitor etc etc you'll have your 10% deposit and 6 months of proven savings. So even if they do come back (several weeks later) and refuse the mortgage at the first attempt - you merely change the term to 35 years and give them updated bank statements showing the 10% deposit and 6 months of savings....