Getting 'approval in principle'
First, you'll need to start your mortgage application! This can be done in a way that best suits your needs. Visit one of our branches, phone, apply online, arrange an appointment with one of our mobile mortgage managers, bank at work (in certain locations) or set up a Skype or FaceTime call. How much you expect to borrow and the amount a lender may approve can differ, but lenders need to make sure that you can comfortably afford your monthly repayments without any risk or stress.
Once you start a mortgage application you will be given a First Step Approval in Principle (First Step AIP) which tells you what you may be able to borrow based on the information you have provided. This will also outline the documents you need to provide in order to complete your application and make it ready for credit assessment. A First Step AIP is not an underwritten mortgage offer and should not be relied on when looking for properties to buy.
A clean credit history
All mortgage applicants need to pass a credit check. This is an assessment of your financial history, highlighting any previous loans and debts, if any, and your track record on meeting repayments. Don't worry if you've never taken out a loan before. This demonstrates an ability to live within your means.
A paper trail
Your lender will need to see your bank records to verify your income, spending and saving patterns. At Bank of Ireland, we need 6 months of your most recent bank statements (if you bank elsewhere) covering all of your accounts, from current to savings, investments and borrowings.
You'll also need to supply us with your most recent P60 and last three payslips. We need to know about any other financial commitments you may have too.
If you are currently renting and don't have evidence of a standing order or direct debit of rent being paid out of your current account, we'll need to see your lease or rental agreement.
A mortgage is a huge loan, so lenders will need to know about your work history and your level of regular dependable income. If you're self-employed, most lenders will need to see your last two years’ certified/audited accounts, your accountant's or auditor's written confirmation that your personal/business tax affairs (PAYE/PRSI/VAT) are up to date, and your management figures for the current trading year.
Other documents may be required depending on your particular circumstances.
Stamp duty costs
One of the biggest amounts, after your deposit, is stamp duty. It's not part of your mortgage so it's vital to remember to save for this as well as your deposit. Stamp duty is calculated at 1% of the selling price of a residential property up to €1m, and 2% on the balance above.
If you buy a home worth €300,000, you will need to pay stamp duty of €3,000. For new builds, stamp duty is payable on the purchase price excluding VAT.
Stamp duty may change and full details are available from the Revenue.ie website (Bank of Ireland is not responsible for information on third party websites). When closing a sale, your solicitor will calculate the stamp duty you owe to the Revenue Commissioners.
You will also need funds to cover other additional expenses, which you can read about on the costs and fees for buying a house.
Once you have provided all of the documents the bank requires to make a credit assessment and your application is approved, you will be given an underwritten Approval in Principle (AIP).
This means that you can start looking for a suitable property knowing you have your finance in place. (If you already have a property lined up you can go straight to Offer Letter and skip the underwritten AIP stage.)
Once you have found a suitable property that you want to buy, let us know and we will give you a formal Offer Letter for you to sign and return within 30 days. Your Offer Letter includes all of the conditions of your loan: this is the loan contract that binds you and the bank.
For more information on getting mortgage ready and top tips, signup to get your First Time Buyer e-book today.