Ireland is the fourth most expensive EU State to live in according to the Independent.ie as of April 2016, with only Denmark, Sweden and Finland ranking higher. This is not only down to the house prices creeping back up but also the inflation in rent over the past 5 years. In those past couple of years we’ve seen large global organizations such as Google setting up shop here and an influx in expats increasing the cost of living.
Just a little daunting for any young Irish person starting off in the work place and in property, no? How can we afford to live and work in such an expensive city?
Following on from my post about buying a house in your 20’s, I thought I would share a bit more about what we’ve experienced so far in our house hunting story in one of the most expensive cities in Europe. If you’re like me and you are a first time buyer, than maybe you’ll find this helpful. As I searched online to find some advice last year I was left in the lurch and a bit boggled as to where to even start. Buying a home is a big deal and a major milestone, I’m the kinda gal that likes to do her research. I also like to share information, so here goes…
*Disclaimer: this is only my personal experience, I’m not a broker or banker. There are some exceptions by Central Bank depending on each individual.
Save, Save, Save.
Cannot simplify it enough. Set up a savings account it can be with your bank, building society or credit union and save the same amount every month without touching it. You cannot dip in and out of your savings, they have to be steady and it’s highly advised to do all your transferring into savings accounts online where there is a paper trail. When applying for mortgage approval the bank takes into consideration the previous 6 months specifically of your savings and account transactions. Also, on top of saving you need to ensure you have enough money per month to live.
The biggest factor the bank considers (along with savings) is your record of employment. Are you permanent? Have you been in your job full time minimum 1 year? Do you earn enough to cover the mortgage repayment monthly? These are the first questions asked. My advice would be to stay with the same employer and ensure you reach 1 year or thereabouts before applying.
If anybody reading this is also like us, has lived away for a number of years and returned 1 year ago, the bank will ask for a record of employment from the country you’ve come from and tax history. In Ireland it’s called your P45 but in Canada a T4. Or again, if you had a similar situation to me, they’ll ask for the offer letter from the employer you moved home for to prove you had employment directly upon return. If you’ve been in your latest job 1 year they will ask you to provide a letter from your employer to say you have been there for 1 year with continuous employment.
I strongly advise speaking to a mortgage broker! It was the best thing we done in this whole process. We spoke to a recommended mortgage broker about 9/10 months ago and he gave us some great advice. We knew straight out what our aim was going to be, how we could reach it (saving per month, etc) and what to expect (what house prices were in our budget). The mortgage broker we used was totally free of charge as they are paid by the mortgage provider depending on whichever bank you opt for.
Further down the line, they’ll package your application to suit each mortgage provider’s criteria. They will then deal with the bank on your behalf as they usually have agencies with a number of lenders – AIB, PTSB, BOI, KBC, etc so you don’t have to. Upon first speaking to the broker he will ask you to fill in a number of questions from which he will derive what amount you qualify for. Due to the new central bank rule, getting a mortgage has never been harder and having the broker on our side definitely eased the stress.
Having gone through the paperwork for permanent residency in Canada, I wasn’t surprised by the amount of paperwork expected for the mortgage application!
Gathering all up-to-date bank statements, savings statements, salary certs, employment forms, employment history from Canada, tax history, etc was the most difficult. Once all the paperwork is sent to the broker and then sent to the banks, it can take a minimum of 2 weeks to hear back. In regards to our experience it took approx. 8 weeks as we had to gather so much information from Canada, etc. Depending on the situation (everybody is different) it can go back and forth for some time, if the bank has any questions, etc.
Once the bank gives you mortgage approval you receive “Approval in Principle Letter” which is basically the bank stating how much they will lend you along with a number of conditions. This is valid for 6 months and if it’s not used within that time then you have to reapply. The reason why its approval in Principle is because you then have to find a house.
I thought this would be the easy part! Turns out house hunting is more stressful than the mortgage application. I feel like this needs a whole post on itself so I won’t elaborate too much or I’ll be here until tomorrow. But the best websites we found were daft.ie and myhome.ie. Once you sign up to both you can save particular houses as favourites (dangerous! don’t get too attached lol) and especially with daft they email you when they think they’ve found a house you would be interested in depending on what criteria you select. For example, which areas you want to live, house type, max. price.
Ps. Still search pinterest for dream homes…