Just when you thought you knew all there was to know about mortgages, another little snag arises to delay your house purchase. You haven't, for example, remembered to organise your life cover, or insuring the new house has slipped your mind.
Small details such as this combine every day to hold back property purchases that would otherwise run smoothly. They may not delay them by long - just long enough to make the situation stressful and add to the "to do" list of the already-hassled buyer.
Happily, help should be at hand, with every mortgage broker or lender worth his or her salt trained to direct all buyers through what can be a confusing process. Take, for example, a new set of tips prepared by the Dublin-based Irish Mortgage Corporation (IMC). The firm has drawn up a "first-time buyers' dozen" - essentially a step-by-step guide to the hurdles that stand between a buyer and their dream home.
Step one, obviously enough, is saving. IMC points out that lenders will look favourably on applicants who have a history of some money in the bank. In this light, it makes sense to maintain healthy bank balances in the six or so months before the loan application is made. This displays consistency and financial discipline, and will help ease the path to loan approval.
Step two is making sure to keep a good credit record. Lenders tend to shy away from loan applicants who have defaulted on loan payments in the past, or have an overly long list of outstanding current commitments. Such commitments could include innocuous items, such as repayments on college loans or credit card payments. And just in case you are tempted, there is little point in massaging the truth on this front - the banks have the power to check and lies will not go down well with the people making the loan decision.
IMC's third tip concerns "additional costs", or other monthly outlays that could affect a mortgage application. The broker advises buyers to think twice before heaping financial commitments, such as car loans, on themselves while considering a mortgage. The cash lost every month on car loan repayments could, IMC points out, influence where or when you might buy your home since it will reduce the amount you can dedicate to your mortgage.
Fourth is working out roughly how much you can borrow. House purchases fall though with regular frequency because the would-be buyer over-estimated the amount they could get from the bank and couldn't, in the end, come up with the goods. It thus makes sense for all involved if the buyer enters the process with the full forward knowledge that they can access the necessary funds.
At number five, we have some guidance on minimising costs. IMC suggests that buyers could avoid stamp duty by buying a new house rather than a second-hand property. While the advice may not suit all, it will be worth considering.
Half-way through the "dozen", we come to special tax incentives. IMC points out that some developments offer very valuable tax relief to owner-occupiers - a device that could make a home considerably more affordable than a buyer might initially expect. While such incentives will be rare, it will always make sense to check on their availability, just to make sure.
Next week: the last half-dozen tips
