13 Feb First Time Home Buyer Tips before applying for a Mortgage!

Karl Deeter, the Compliance Manager with the Irish Mortgage Brokers recently wrote on the topic of mortgage applications for first time buyers in the Sunday Business Post 20th January 2013.

His timing coincided more or less with the Permanent TSB announcement that it was going to loosen the purse strings in 2013 and go back into the mortgage market this year with €450 million to lend. Not a gushing amount but nevertheless this gives the First Time Buyer (FTB) another bank option. AIB Bank advanced approx. €1 billion in the whole of 2012 with a 2013 target of €2 billion, while Bank Of Ireland are the other significant player at present with all other institutions either pricing themselves out of the market with high rates and low Loan to Values (LTV’s) or simply not lending.

Deeter gives some very insightful and practical tips to would be FTB’s on the dos and don’ts in an eleven point guide. What I like about his advice is the simple, no jargon way he relates the approach to your first mortgage application. His advice is not ground breaking but basic and to the point. Be in a permanent job, have a good savings record, have good credit history with no current loans/credit card debt/overdraft, try to buy before you have kids, and have a proven capacity to pay rent.

Buying a house for first time now is particularly more difficult than in either of the last two decades and the planning for a home purchase can take some time. I particularly like the advice he puts forward about avoiding two key activities, namely
1. avoiding extravagant purchases in the immediate 12 months prior to mortgage application
2. avoid on-line gambling, the latter being a reason for refusal of otherwise good credit applications.

The latter gambling concern was also the subject of a Joe O’Shea RTE documentary on 28th January last which highlighted the level of online gambling in Ireland despite the recession, a bizarre twist.

The reality now is that you need to have planned well in terms of savings, be debt free with a good credit history and have no costly habits to be able to put your best foot forward first time you apply. Getting good independent financial advice will also work to your advantage and make the application process easier by going to a professional who has worked through applications before and is familiar with bank lending policies.

Read Deeter’s article in full here