Preparation for Mortgage Application

C

cinderayla

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We are currently in the very early stages of getting ready to start saving for our deposit for a mortgage. I have a couple of questions if you guys wouldn't mind helping me with.
I have been with my husband 16 years, recently married & we have 3 young kids. We have been renting for 13-14 years, i know dead money etc.

In order to save for a deposit, would we be better off having a joint current account, have all our income come into & then showing our savings from this account going into a specific savings account for the house deposit buildup.

We are currently only paying cash for our monthly Rent, so its not accountable according to the bank as we are taking money out here and there etc to make up the rent when its due.

Again cash goes into a regular saving post office account for each child for savings ( education, college etc )

I read that banks like to see a copy of your current account statements. When you look at mine you can see my weekly income coming in, however we are living pay check to pay check, therefore you would see a lot of atm withdrawals, bills been paid etc, that our balance would not be great on the current accounts. What exactly do they look for when looking at the statements.

Which goes back to my original question about having the one account & seeing ok even though there balance isn't high on the current account, i see they pay all there bills, i can see that they can afford to both pay rent and save for a deposit & have savings for there kids etc etc....

Help, suggestions and tips would be greatly appreciated.

Thanks a mill,
M
 
Here's my recent experience for what its worth. I recently went through the mortgage approval process with AIB, BOI and KBC.
Myself and wife were applying. We discussed our application with each bank before formally applying to get guidance on the application - maximum liky approval etc. We are both permanently employed, one private sector one public sector. Reasonable salaries. C. 10 months (post wedding) savings history with standing orders from our current accounts to regular savings accounts. Rent paid by standing order. We were looking for a mortgage of c. 3.5 times joint salary.

The first bank we approached was PTSB - they said we would not be approved for any mortgage because we each had 3 referral charges on our current accounts - we were pretty gobsmacked at this - they arose due to sloppy account management (a day late transferring to meet standing orders etc.) rather than an excess of expenditure over income.

We then approached BOI, KBC and AIB - in each case we flagged the referral charges but they were relaxed about these in the overall context. Approved by each bank for the requested amount (c. 3.5 times salary). Decision based on:
- secure job.
- savings plus rent (evidenced) in excess of the stress tested repayment - from memory this was the mortgage repayment at the current rate plus 2%.
- a history of savings.
- affordability. Do you have enough left after paying mortgage (stress tested amount) and any other repayments (plus maybe childcare if you have this expense?) to live on - AIB define enough to live on as (from memory) 2K for a couple and 250 per child per month.

If I was doing it again - I would watch my current account management in the 6 months prior to application.
 
Tvman, can i ask when you say they expect you to live on 2k per month for couple and 250 per child, is that after bills are paid too?
We have 3 kids and currently saving 50/week for them, thats roughly 200/month for each child would they look at that as affordability also. 2k for the couple, I'm presuming thats to include what needs to be paid in bills and savings etc???
 
I was going to ask the same thing just to be sure.
But I had always assumed the 2k included all bills, savings and monthly expenses and was the figure you are expected to have after your mortgage is paid.
 
As far as I could see when they walked through the application - the 2K + 250 per child (not sure of the exact figures but these are approximately correct) per month would be to cover all bills and living expenses other than "fixed expenses" - which seemed to be childcare and repayments on other debt. In other words if you can pay the stress tested mortgage repayments + other debt repayments + childcare and you have, in your case €2K + 3*250 left over, that would satisfy the requirement.

Another point - we both had credit cards with zero balances and the treat credit cards (with or without a balance) as reducing your income by (Credit Card Limit * 5%) per month (again not certain of figures but this was the general formula)
 
I don't think it would make much difference unless they indictate over spending or the limit is very high
 
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