Frequently
Asked Questions
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Why
should I use The Mortgage Advice Store?
Independence
The
Mortgage Advice Store act
as independent intermediaries for Ireland's major mortgage lenders.
Our recommendations are based on an independent assessment of
the suitability of a mortgage product to meet your unique requirements.
Our focus is on the long term value of the mortgage product. Our
website reflects our committment to bringing you all the latest
news and information on the Irish Mortgage market to assist you
in making an informed decision on the range of mortgages available
in Ireland.
Experience
All
Irish mortgage applications and enquiries are handled by highly
experienced finance specialists, and all final recommendations
are subject to review by qualified chartered accountants.
Service
We pride ourselves on providing an unrivalled professional service
to our clients.
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If
visiting our offices does not suit you, we will meet you at
a location and time of your choosing e.g. evenings or Saturday
mornings if required. |
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Each
application is allocated to an experienced mortgage consultant
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Your
dedicated consultant will deal with your application from
start to finish. |
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We
provide fast decisions and deal promptly with all relevant
matters. |
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Wherever
possible we meet with our clients in person. |
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We strive to build long lasting relationships. |
No
Fees
We do not charge arrangement fees for our service.
The Mortgage Advice Store
is Regulated by The Irish Financial
Services Regulatory Authority as a Mortgage Intermediary
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Which
lender offers the best mortgage package?
The Irish market is very competitive. No single lender can claim
to offer the best package. There is a wide range of mortgage products
available and significant differences between lenders in regard
to lending criteria. Our role is to advise on a mortgage product
that best suits your needs.
The
arrival of Bank of Scotland into the market drove lenders margins
down for the benefit of borrowers. Bank of Scotland continue to
compete aggressively although they tend to restrict facilities
to 80% of property value.
AIB
offer equally good variable rates in addition to impressive fixed
rates, while maintaining a cautious approach with income multiples.
ICS
offer an excellent range of rates backed up with very efficient
service.
IIB
are particularly strong in the re-mortgage area.
Irish
Permanent probably the best known lenders in the market, consistently
provide quality products and service.
First
Active are primarily a mortgage bank and offer excellent first
time buyers and re-mortgage facilities.
Matters
to be considered when choosing a lender include:
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Lenders
lending criteria |
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Current
mortgage rates – both new business and existing customer
rates |
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History
of rates compared to the rest of the market |
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Market
experience of lenders – commitment to the Irish market
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Product
flexibility |
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Service factors including speed of which mortgage can be processed
and service throughout the life of the mortgage |
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What
are the steps involved in the mortgage process?
1. Make a decision to buy property
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Once
decision is made, start saving |
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Forgo
entering into new loan agreements whenever possible |
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Keep
a close eye on property market |
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Establish
your property goals |
2.
Obtain loan approval
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Review
our site in detail – lending criteria, borrowing capacity,
costs etc |
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Complete
loan application form |
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Quickly
assemble all information needed to support your application
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Choose
lender in conjunction with The Mortgage Advice Store |
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Obtain
formal approval in principle |
3.
Choose a property
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Choose
your preferred location and match borrowing capacity with
property goals |
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Be
prepared to negotiate aggressively |
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Don’t
rush or buy when you are not convinced |
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Be
prepared to stretch - the property you want is usually just
beyond your reach |
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Obtain
approval in respect of the chosen property |
4.
Buy property
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Engage
a Solicitor-our site has details and contact names of a range
of solicitors |
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Read
contracts and offer letters before signing ask questions if
you are not happy |
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Sign
contracts for purchase |
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Sign
Loan Offer Letter – arrange house and life cover |
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Close
sale and draw down mortgage |
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Move
in |
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What
are lenders normal lending criteria for a mortgage?
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Good
Credit History |
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Age
21 or over |
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Age
not greater than 65 at end of mortgage term |
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Ability
to repay – as a guide repayments on all loans including
your mortgage should not exceed 40% your net income |
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Secure
employment |
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Continuous employment for 2yrs |
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Maximum
mortgage available to Irish residents is 92% - Non-Residents
70% of property value |
The
primary focus is on repayment capacity.
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How
long does mortgage approval take?
Use our calculator
to estimate your borrowing capacity and review the typical lending
criteria above. The next step is to give us a call or complete
our online contact form.
Based on the information we will generally be able to advise you
straight away whether you will qualify for a mortgage and we will
also provide you with an estimated borrowing limit. Our consultant
will then advise you of the precise information required and make
an appointment to meet you. At that meeting our consultant will
explain the various options available and will guide you through
the completion of any application forms required. We will then
submit the applications to the chosen lenders and we would expect
formal approval in two to three days.
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How
much can I borrow?
The key consideration for you is to be happy that you can comfortably
afford your repayments. To calculate your borrowing limit please
review our how much can you borrow calculator. Lenders look at
two main areas when considering an application.
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Income |
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Loan
to Value |
Income
Lenders look at both gross income and net income. As a guide lenders
will advance up to 3.5 times the gross income of the main earner
plus 1 times the gross income of the second earner. In reviewing
net income repayments on all borrowings including the proposed
mortgage should not exceed 40% of net income.
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Some
overtime will be taken into account |
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An
element of bonus, to the extent, it is guaranteed, will be
taken into account |
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Consideration
will be given to length of employment and security of employment
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For
commission based income – lenders estimate normal income
levels |
Loan
to Value
Irish residents qualify for a loan to value of up to 92% for Irish
properties. Foreign residents borrowing in Ireland are usually
limited to a loan to value of 70%.
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Which
rate should I choose?
One decision which needs to be made is whether to choose a variable
or fixed rate mortgage. There are several factors to consider
in making your choice. Future interest rates are uncertain and
fixing interest rates should be considered in the following circumstances:
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Where
mortgage repayments represent a major portion of net income
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Where
mortgage levels are large > Euro120K |
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Where
there are general feelings that interest rates will rise |
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Where
rates are historically low |
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Where
client is risk averse |
Most
lenders offer products, which allow you split your mortgage into
fixed and variable elements. It is important to bear in mind that
breaking a fixed rate contract may involve penalties. Your mortgage
consultant will discuss the various options open to you.
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What
is a First Time Buyers Grant?
The
First Time Buyers grant is only available to a first time buyer
of a new property. It is not available for the second hand buyer.
A
grant of €3,810 is available from the Department of the Environment
for new houses (including flats and maisonettes) where the buildings
in question meet the conditions of eligibility as laid down by
the Department.
These
conditions include:
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The
size of the building must not exceed 125 sq. metres |
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The
contractor is registered for VAT and holds a C2 or tax clearance
certificate |
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The
buyer and his/her spouse has never previously owned or built
another dweller in Ireland or abroad for his/her occupation.
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Application
form for new house grant form HAI 93 from the Department of the
Environment and Local Government Offices, Ballina, Co Mayo Ph:
096-24200.
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Costs
associated with a mortgage?
The Mortgage Advice Store do not charge arrangement or acceptance fees.
There are several costs associated with the mortgage process as
outlined below:
Deposits
Savings are a key part of the mortgage process. Whereas banks
currently place less reliance on savings than in the past, the
discipline of saving cannot be underestimated. As max facilities
of 92% are only available the remaining 8%, plus funds to furnish
the home etc. needs to be found. A steady savings record helps
an application. Banks will require evidence of the deposit in
the form of savings books etc as part of the loan underwriting
process. Loans from parents very often form a part of the deposit.
Savings also reduce the necessity for short term borrowing which
may have a strong impact on cash flow following a house purchase.
Stamp
Duty Rates
| Property |
FTB's |
Owner
Occupiers |
Investors
in Property |
| Up
to 127,000 |
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| 127,001
- 190,500 |
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3% |
3% |
| 190,501
- 254,000 |
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4% |
4% |
| 254,001
- 317,500 |
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5% |
5% |
| 317,501
- 381,000 |
3% |
6% |
6% |
| 381,001
- 635,000 |
6% |
7.5% |
7.5% |
| Over
635,000 |
9% |
9% |
9% |
There
is relief for first time buyers as per above table. Stamp Duty
on property transfer is expensive in Ireland. For larger properties,
the rate is as high as 9% of the value of the property. Funds
need to be set aside by the borrower to cover stamp duty, which
is payable on closing. Lenders do not advance funds to pay stamp
duty.
LEGAL
FEES
Use
1% of property value plus vat at 20% as a general guide. In addition
outlay for stamp duty on the mortgage document and other miscellaneous
costs might add in the region of €400 for a standard mortgage.
Should you require a solicitor, contact us and we would be happy
to make a recommendation.
INDEMNITY
BOND
Indemnity
Bonds are insurance policies taken out by the lender to insure
against a potential loss in the event of a forced disposal of
the property. Lenders only take out such bonds when the loans
exceed 75% of the value of the property (which is highly likely
for first time buyers). Many lenders waive indemnity bond charges.
SURVEYORS FEES
It
is recommended that you employ the services of a qualified surveyor
to check the property for any structural problems or to advise
you on any matters that may involve significant outlay e.g. dry-rot,
subsidence, dampness etc. The structural survey is usually not
a condition of the loan offer and is a completely different matter
to the valuation, which is carried out on the lenders behalf.
Use a reliable firm, agree their fees at the outset and insist
on a written report. Budget €200 approx.
VALUATION
FEES
Before
a lender will issue a formal offer letter in respect of a property,
they require an independent valuation from a qualified valuer.
We will arrange this for you. Budget €125 approx.
LIFE
ASSURANCE
Lenders
require mortgage holders to take out a life insurance policy.
This policy provides for the repayment in full of the mortgage
in the event of death of one of the mortgage holders. You are
not required to take this policy out with the mortgage provider.
HOME
INSURANCE
The
lender will also require that you take out a building insurance
policy on your house and that the interest of the lender be noted
on the policy.
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What
documents will I need to support a mortgage application?
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Signed
Application form |
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Latest
P60 |
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Recent
Payslips x 3 |
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Completed
Employee Status forms |
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ID
– 2 forms – Photo and Utility Bill |
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Recent statement of ALL loans outstanding including mortgage
statement |
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Evidence
of Savings e.g. copy of deposit book etc |
If
you are Self-Employed:
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Up
to date accounts |
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Recent
bank statements |
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Completed
Auditor’s Reference Report |
If
you are building your own house:
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Copy
of Planning Permission |
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Architect’s
Drawings |
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Building
Contract |
NOTE:
We will provide you with the application form for signature together
with Status Forms for your Employer.
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What
classes of mortgages are available?
1.
Annuity Mortgages:
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Majority
of mortgages in Ireland are Annuity Mortgages |
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Interest
and capital are repaid over term of mortgage. In early years
bulk of repayments represent interest |
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Not
exposed to stock market fluctuations |
2.
Pension Mortgages:
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Repay
interest only over mortgage term |
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Suitable
for Self-Employed |
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Pension
fund builds up over life of mortgage |
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Pension
lump sum on retirement used to clear mortgage |
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Tax
efficient |
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Professional
advice essential – taxation, pensions etc. |
3.
Endowment Mortgage:
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Repay
interest only over mortgage term |
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Exposed
to stock market |
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Less
popular today than in the past |
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Do
you provide finance for Non-Residents buying a property in Ireland?
In general the profile that lenders are looking for in respect
of non-resident and a residents are very similar. Many non-resident
mortgages are for investment purposes perhaps with the intention
of returning at some time in the future with the property initially
being available for rent. In such instance, mortgages are usually
charged at the investment mortgage rate, which is typically ½%
higher than home loans and may not attract some of the discounted
offers available to resident home owners. With e-mail and fax
facilities, there is no reason to expect any significant delays
in processing non-resident applications. The main difference is
the percentage loan to value. For residents this is 92% and for
non-residents the normal limit is in the region of 70%.
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Do
you provide finance for Foreign Property Investments by Irish
residents?
In certain circumstances, foreign banks are willing to advance
in the region of 60% facilities to Irish residents buying properties
overseas. We do not currently act for any foreign banks in this
regard. Irish banks will only fund overseas property by taking
security on existing property in Ireland. We can provide facilities
in this area.
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What
is a repayment mortgage?
With
this type of mortgage your repayments are made up of interest
and a part of the capital itself. In the early days your repayments
are mostly interest, but over time the balance reduces and as
you near the end of your loan your repayments are mostly capital.
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What is an endowment mortgage?
Here
you repay only the interest element of the loan. At the same time
you make separate payments into an endowment policy. At the end
of the mortgage term, depending on the performance of the endowment
policy, the proceeds may be enough to pay off the mortgage.
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What is a pension mortgage?
Here
you pay only the interest on the mortgage and also make payments
into a pension plan. When you retire you use the proceeds of the
pension lump sum to pay off your mortgage. This type of mortgage
is more suitable for self-employed people.
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What is tax relief at source (TRS)?
January
1st 2002 introduced a change to the way you receive Mortgage Interest
Relief. Under the old system relief was given by way of an increased
tax-free allowance. Interest Relief is now granted at source.
In
pratice this means that all qualifying ICS mortgage customers
will continue to make their mortgage repayments as normal. On
the same date as repayments are made, we will refund the interest
relief you are due back to the account you are paying your mortgage
from.
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What is APR?
People
often have difficulty comparing different interest rates. The
Consumer Credit Act 1995 has attempted to rectify this situation.
APR stands for Annual Percentage Rate. It must be included in
advertising to make it simpler for consumers to compare offers
of credit from different sources.
APR
calculates the total amount of interest which will be paid on
a loan, and adds to this any other charges which the borrower
has to meet. This total cost is then divided by the number of
years in the loan term to find out what the borrower will be paying
per year. This amount is then expressed as a percentage of the
loan, i.e. as the APR.
Finally, when choosing a mortgage, don't always be swayed by an
attractive rate alone. While it is certainly important, you should
also consider the flexibility of the mortgage on offer and whether
it is suitable for your particular needs as you move through your
mortgage term.
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What is loan to value?
Loan
to value shows your mortgage as a percentage of the value of your
property.
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Which type of rate is better, fixed or variable?
That
really depends on how you feel about your mortgage repayments
changing from time to time. Variable rates will rise and fall
as general market rates rise and fall. However, a fixed rate will
always stay the same for as long as the fixed rate period is in
effect. This makes monthly budgeting easier. Contact
us now to talk to a mortgage consultant.
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Can I borrow more money if I need to?
Yes.
Additional funds are available for a range of purposes, from home
improvements to educational or medical fees.
You
can top up your loan provided it does not exceed 90% of the value
of the property. Additional funds are normally issued as a separate
loan, so that you can choose a different term of repayment, interest
rate etc. as required.
If
you require additional funds, or would like further information,
Contact us now to
talk to a mortgage consultant.
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Can I alter my repayments when it suits me?
Yes.
As your life changes so will your mortgage needs. What suits you
this year may not suit next year. That’s why we can offer
you a wide range of useful options that let you change your mortgage
to suit your needs. At different times these options allow you
to pay more, pay less – and believe it or not – pay
nothing at all by deferring payments! Check out our Flexible Options
package for more information.
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Can I take a break from my mortgage repayments?
We
have a number of mortgage breaks available to Mortgage Store customers,
ranging from 1 to 3 months. Check out our Flexible options package
for mortgage information.
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