How to negotiate the mortgage maize to get your first home
  • Would be home buyers face challenges not least
    sky rocketing rents that make saving difficult
  • Under Central Bank rules borrowers are allowed to borrow 3.5 times their salary and
    need a 10% deposit, other home buyers need a 20% deposit
  • A limited number of borrowers can avail of exceptions to Central Bank Rules. In November 2017 the regulator tweaked its
    policy on exceptions, changing how the available budget for exceptions can be split between
    first time buyers and second and subsequent buyers.
  • Since January 2018 up to 20% of new lending to first time buyers can exceed the 3.5
    times salary borrowing gap, while up to 10% of it value of new lending to other
    home buyers can breach the limit.
  • This rule has created a rush at the beginning of the year. Top tip is now to get
    ready for 2019 and be ready for exceptions next year.
  • Understanding your mortgage rate options, interest rate is key, figures suggest that for the typical
    first time buyer a 0.25% increase to their mortgage will increase payments by
    €35 per month.
  • With European interest rates at record lows, a growing number of borrowers are
    choosing to fix their mortgage rate to lock in lower rates and the banks are
    now starting to offer very competitive fixed rates.
  • For borrowers it is very important to understand that interest rates will increase
    and that will happen within the next 12 months.
  • Presently variable rates in the making for somebody borrowing 90% range from 3.2% APR to
    4.4% APR. Fixed rates for the same type of person range from 3.3% APR for a 2 year fixed to 3.9% APR
    for a 10 year fixed rate. So you can see some very competitive fixed rate
    products.
  • Also some options to split between fixed and
    variable.
  • Fixed rates more flexible that in the past as a lot of banks do not charge penalties
    for breaking a fixed rate loan and also you can now with some lenders move
    house and retain the fixed loan.
  • The nuts and bolts of how a mortgage works,

    o
    How long your mortgage approval is valid for.

    o
    What you need to do to get a loan re-approved while you are searching for a
    property.

    o
    An increasing number of approvals expire and people haven’t found a house.


  • It is difficult to get a mortgage and that is probably correct.
    o
    Sometimes people need to plan for 6 months and clean up their bank current account before
    applying as banks look closely at your expenditure and savings pattern.

    o
    The Central Bank stress test all mortgage cases at 2% above the rate for prudence.
         
  • Some lenders offer cash back deals, I would say consider very carefully avoiding
    paying more in the long run. I would
    like to see these products withdrawn for to help transparency for an already
    complicated market.



    Oliver Farrell QFA is an experienced
    Mortgage And Financial Adviser with Over 25 years’ Experience and can be Contacted
    at (087) 252 5037 or farrellfinancialservices@eircom.net