An Introduction

Whether you are a first time buyer, upgrading the family home or a property investor it is important that you carefully consider the various finance options available to you. Aside from banks and building societies there are a number of financial brokers that specialise in mortgage applications and insurance products. Remember; only discuss your financial affairs/requirements with qualified advisors that are properly registered. *Are looking for a competitive mortgage rate or would like another quotation? If so, Home Locators can organise competitive terms for suitable clients through preferred financial suppliers. All preferred suppliers are regulated by The Irish Financial Services Regulatory Authority as “Authorised Advisors” and all clients referred by Home Locators are treated in the strictest confidence at all times.

Before deciding on a particular mortgage product it is worth taking the time to consider some of the various financial products currently available on the market. Firstly, it is essential that you can prove an ability to re-pay any loan/mortgage application. This can often be determined by completing a simple household/lifestyle monthly income and expenses budget. The more accurate you are the easy it is to decide on the best financial option to meet your needs. Typically banks will only lend up to 90% of the value of the property or a multiple of the borrowers salary.

Shorter loan terms means higher monthly repayments but less interest paid over the duration of the loan. Longer borrowing terms offer the reverse, however, they also give greater flexibility. This is important to consider if addition funding is required for furnishings or repairs. Remember, higher repayments/lump sums can often be paid against the mortgage to reduce the balance at a later stage. Typically financial institutions offer mortgages between 20-30 years depending on circumstances, i.e. applicant’s age. Lenders for the most part like to see mortgages paid off before applicant is 65 years of age.

Having decided on the best loan term you should then decide on the best loan option to your set of circumstances. For first time buyers it is generally important to have predictable monthly repayments. Capital and interest borrowers can either choose a variable rate option (interest rate varies depending on market conditions) or decide on a fixed rate for one, two, three, five years etc. Fixed term applications tend to have slightly more expensive monthly repayments but give the borrower the added security of knowing the exact repayments for an agreed fixed term. Once again, the best option available is the one that fits in with the monthly household income/expenses budget. There are alternative options to the traditional capital and interest mortgage. These include financial mortgage products like interest only loans, tracker based loans or pension-backed mortgages. Some of these products have the added advantage of being tax efficient. These mortgage options will often suit the self-employed or property investor.

Finally, when you have decided on the best mortgage option for you, check to see that you have a competitive rate. This can be done in a number of ways including comparing APR (average percentage rates) and CPT (cash per thousand) borrowed. Careful consideration should also be given to fixed term vs. variable term. Comparable rates by financial institution are often quoted on the financial pages of national newspapers.

Tax relief is now added at source for owner-occupiers and interest is an allowable expense for the investor (post- Bacon). Another option for owner-occupiers is to rent a room. Recent changes in legislation now allow eligible property owners to receive some rent per annum tax-free. Finally when you have decided on the best mortgage option you should also seek competitive quotations for life assurance and buildings construction/contents insurance. Most banks will need policies in place prior to loan draw down. Your financial consultant can advise you on the best insurance product to suit you.

In addition to drafting a simple monthly income and expenses budget you should also be aware of your general financial position i.e. savings/investment products, equity in home vs. any loan, mortgages outstanding. Have all relevant support material to hand, e.g. bank statements (savings & loans) along with insurance documentation and any relevant valuations (house) and proof of income (P60, pay slip, set of accounts). Having this information to hand will speed up the application process.

*The material provided in this section is for information only. Potential borrowers are advised to seek professional advice from their financial advisor / accountant / tax consultant before making any financial decisions.

Canview Ltd T/A Home Locators is regulated by the Financial Regulator