07 Mar 2017
The journey of a thousand miles begins with a single step: so said Chinese philosopher Laozi.
Getting a mortgage isn’t quite as difficult as walking across China. But the principal of getting there one step at a time is the same. Walking is basically a habit; you keep going step by step and eventually you get where you want to go.
Here are five good habits that will help get you over the mortgage line.
1. The savings habit
The great thing about saving is that it is habit-forming. Once you start, you get a sense of satisfaction from building a nest-egg. You don’t want to stop – and you probably won’t want to squander your hard-earned savings either.
Come mortgage approval time a good savings record delivers a triple-whammy in your favour.
2. Boosting your deposit
Demonstrating a financial capacity to repay the loan, and showing that you have the discipline to meet your mortgage payments on time.
If you are saving for a deposit, it makes sense to combine your nest-egg in a Regular Savings Account, where you get a better rate of interest than you would “on demand.”
3. Better spending habits
Spending is the other thing that lenders look at when going through your bank statements. What they want to see are sensible habits – i.e. reasonable sums spent on clothes, groceries, holidays and socialising.
You don’t have to live like a hermit; dine out, treat yourself to a new outfit and go out for a drink by all means. But there might be a raised eyebrow or two if you go overboard. So no excessive online gambling, mad shopping sprees or weekly splurges on champagne at 4 am in a nightclub!
4. Making good habits visible
There’s no point having brilliant spending and saving habits if your mortgage lender can’t see them. Clearly spell out your savings and lifestyle choices in your bank statements by filling in an explanatory narrative when banking online or in branches. So for example when you are paying rent make sure your statement says so.
Make sure there are no mystery sums disappearing out of your account. That will make it easier for the lender to know your finances and approve your application.
5. Regularise your payments
Your mortgage repayments are monthly financial commitments. So your lender wants to see that you can meet those commitments without missing any.
Set up standing orders for your rent and regular savings account payments – and any other important ones. Then not only are they visible and described, it will be hard for you to miss any.
Use your debit card
There’s nothing wrong with taking cash out of bank ATMs and spending it randomly. But it does make it hard for a lender to see the narrative of your finances.
So why not pay for weekly groceries, or other items, by debit card? You can even save on bank charges by getting whatever cash you do need at point-of-sale.
Thinking of applying for your first mortgage?
If you want to know more about applying for a mortgage, a 30 Minute Mortgage Meeting with your EBS mortgage will set you straight.
If you have any queries about opening an EBS savings account, call 0818 654 322 or email email@example.com.
EBS d.a.c. is regulated by the Central Bank of Ireland.
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