Celebrating Homeownership Month: How to Achieve this with Humdinger Mortgages

If you're a contractor looking to purchase a home in Ireland in 2024, it's important to understand that every application is unique. To celebrate Home Ownership Month in June, our partner, Humdinger Mortgages, has shared essential tips to ensure your application starts on the right track. Review these tips now to navigate the mortgage process with ease and confidence!

Can You Meet the Universal Criteria to Apply for a Mortgage?

Before delving into specifics, it's crucial to recognize the universal criteria applicable to all mortgage applicants, regardless of employment status. These include:

Deposit:
Every borrower must contribute a deposit towards the property's cost: 10% for first-time buyers (FTBs) and 20% for non-first-time buyers (NFTBs), unless an exemption is granted.

Loan to Income:
First-time buyers can borrow up to 4 times their gross annual income, or a combined amount in joint applications, while second-time buyers can borrow up to 3.5 times their gross annual income.

Repayment Capacity:
Banks will want to see that you have clearly demonstrated a capacity to repay the mortgage you have applied for. They stress test this repayment by assuming a 2% increase in the mortgage interest rate and will want to see that you have been able to live without the amount for at least the previous 6 months. You can demonstrate an ability to repay by showing a strong savings history and strong payment history, i.e., the ability to pay a specified rent each month.

Credit History:
Poor credit history can influence your mortgage approval; mortgages are underwritten based on your previous credit history. If you have had any issues with this in the past, you will find it difficult to navigate past this when it comes to getting approval.

Minimize Breaks in Contract Work

In addition to following the normal criteria, it's important for contractors to have a reliable and consistent work history. Lenders evaluate your reliability and consistency within a defined timeframe. Demonstrating a consistent work record not only signifies a stable income source but also reassures lenders of your capability to fulfill financial obligations. It's worth noting that banks require a minimum of 12 months of contracts to be in place for contractors to be eligible for a mortgage.

Maintain Your Credit Rating and Show Strong Savings

Lenders will require evidence of savings. It's advisable to start saving early and regularly deposit funds into a savings account to establish a routine. Additionally, consider aiming for a larger down payment if feasible. Increasing your deposit size expands the range of mortgage options available to you, potentially enabling you to secure your dream home.

Keep Your Finances in Order

Maintaining good credit is essential for mortgage eligibility. Review your credit report for inaccuracies and ensure there are no outstanding direct debits or standing orders on your statements. If you have an overdraft, examine your bank statements for the past six months to confirm you're not consistently dipping into it. Clearing any existing debts before applying for a mortgage is advisable to strengthen your financial position.

Required Documentation

Lenders require proof of financial stability, so it's essential to gather all necessary paperwork and ensure your finances are well-organized. If you're self-employed, you'll need to present two years of certified accounts. For Icon Accounting clients seeking a mortgage, we can assist by providing the following documentation:

Certificates of Salary and 3-6 months’ payslips

A letter confirming up-to-date tax payments with a Tax Clearance Certificate

Copies of relevant tax returns for the past three years

Financial statements and bank statements for your limited/umbrella company

Use a Mortgage Brokerage

Navigating these complexities is where a knowledgeable mortgage broker becomes invaluable. Finding a broker who understands contracting is essential. Humdinger Mortgages, an award-winning mortgage brokerage, specializes in assisting contractors. They will provide you with a dedicated mortgage advisor who will be with you every step of the way, calculating exactly how much you can borrow, how much everything will cost, and walking you through the entire purchasing process from start to finish.

Begin your journey to homeownership with confidence. Contact Humdinger Mortgages today at hello@humdingermortgages.ie to start your seamless mortgage journey, customized to meet the unique needs of contractors.