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27 Jun 2017

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If you’re reading this article, you’re more than likely thinking about owning a home of your own. It might not be right now – but it is something you want down the line. The problem for so many first time buyers at this stage, is that they have no experience in the mortgage market. There’s so much financial jargon and uncertain costs; not to mention that this is the biggest purchase you’ll ever make. Yikes! Luckily, EBS have a lot of mortgage experience to make up for this. We’ve been helping Irish families find homes since 1935, after all. Our EBS Mortgage Masters go over and above the call of duty. That’s why their advice is not exactly the kind of thing you might see in a textbook – these tips get to the real home truths and realities about the process.

We spoke to Mortgage Master Brian Carey from EBS Tallaght, who shared his insights and decades of mortgage knowledge passed down.

Get the right savings-income ratio

“First things first. There are a few basic things that you need to know before you start thinking about your mortgage. You need to have your finances in order. That means that you need to have a 10 percent deposit ready as a first time buyer. So, if your dream house costs €200,000 then you’ll need €20,000.

Secondly, your mortgage should be a maximum of 3.5 times your earnings. So, in the case of that €200,000 house, your mortgage would be €180,000. That means you (or you and your partner combined) need to earn a total of €52,000.

However, if you’ve been squirrelling your savings away for years then your total mortgage amount is lower and you don’t have to earn as much. So, if you are on lower wages than most– then you need to get saving as hard as you can.”

It’s not just about the mortgage

An interesting piece of advice Brian shares, is that when a customer comes in to him for a mortgage advice session – he always lets them know that it’s more than ‘just the mortgage’.

“When people come in to us, they are obviously focused on mortgages,” he explains. “That’s only natural and with the way things are, they just want to get approved and moved into their new house as quickly as possible. But we’ve been dealing with people in their situation for years.

One of the things I always recommend is for people to have an emergency fund. That’s three-month’s net salary in a savings account that they just have they in case something happens. That can be an illness or a bereavement or someone being laid off work. You just never know.”

I totally understand that people are putting everything they have into a mortgage but I always tell them to try and replenish that emergency fund as quickly as possible. I know that we’re going to be dealing with our customers for 25 or 30 years so you never want to see them stuck. An emergency fund is huge in that regard.”

Check, check and check again

“When you are applying for a mortgage, a credit check is going to be a part of it. This is basically a report of all loans and credit that you’ve applied for, repaid or defaulted on. It’s standard practice and all applicants have to go through it.”

Most people do a check themselves online as it only costs €6. But Carey says that it’s not always as simple as that.

“People do a credit check, but they only do it on the address they now live in. That’s the mistake.

You might have lived in five or six places over the last few years and you need to do one for every address. People think that credit checks are the be-all and end-all but they’re not always. If you missed a payment once four years ago, you could be okay. But if you have a history of constantly missing them that’s a different story.”

So make sure to check fully with the ICB and with your bank, too.

Refer to sender

Another big stage Carey helps customers with involves cleaning up their bank statement. But, as many a mortgage master knows, wisdom is not a matter of simply highlighting the problem, but also coming up with the solution.

“A lot of the time, we see a lot of ‘referral fees’ on people’s statements. These are fees that the bank charges you for paying for things when you don’t have the money. It’s not an overdraft but it can be that you tap your debit card on a contactless pad for a coffee and your wages haven’t gone into your account yet. The transaction goes through, but you get charged a referral fee and they don’t look great on any statement.”

The solution? Ask your bank to put a small overdraft of say €100 on your account for that sort of scenario. So long as you only use it for that and aren’t constantly on that €100 limit, then you’ll be grand. There’s no harm in an overdraft or a credit card if you manage it correctly and clear it on a monthly basis.”

Want to chat to your local EBS Mortgage Master?

If you’re thinking of your own home, you can get some free mortgage master wisdom in your local area. Book a mortgage meeting to suit you with one of our mortgage expert, try out our mortgage calculator or get the ball rolling with our First Time Buyer guide.

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EBS d.a.c. neither accepts nor assumes any responsibility in relation to the contents of this blog and excludes all warranties, undertakings and representations (either express or implied) to the fullest extent permitted under applicable law.

EBS d.a.c. is regulated by the Central Bank of Ireland.

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