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Things you need to know about when applying for a Mortgage

Young couple looking at newly built houses on construction site

Are you trying to save in the hope of securing a mortgage – but confused about what lies ahead?

In the year to date, mortgage approvals for first-time buyers are up 43% each year  but this doesn’t mean it’s an easy process.

Here are some things you need to know about when applying for a mortgage.

The first thing you should look at is the interest rate that lenders are offering. The rate is the biggest thing to look at because it is important that you know how much you have to repay.

A red flag to look out for when applying for a mortgage is an overdraft that is not organised or arranged with any bank.

It is important to note that the bank will look at a persons credit rating.

If you are buying a ‘doer-upper property,’ you will receive some special treatment from the bank.

The key areas are; do you need planning permission, you need invoices for the work you’re doing to the property, and you need to ensure the loan you’re applying for does not exceed 90pc of the total end value of the property.

If you buy a house for €200,000 and do €50,000 worth of work, this does not mean the end value of the house if €250,000.

The rule is it’s 60% of the value of works. So if you buy the house for €200,000 and you do €50,000 worth of work, the end value of the house would be €230,000.

A lot of people fall flat on that. Banks cannot lend more than 90% of the value per completion.

You will also need invoices and typically you need a registered builder’s invoice.

There is not a ‘scheme’ asuch in place for those buying doer-uppers, but you can receive the money in stages. You get the first part of the loan paid down when buying the house, and then your value of works is split into two payments. You receive one payment when half the work is done on showing an invoice, and you receive the second payment when the works are completed.

As well as your deposit, financial experts advise that you have the money aside to pay for the extra costs which include stamp duty, solicitors’ fees and surveying fees.