WHEN YOU’RE APPLYING for a mortgage, the amount you have saved isn’t the whole picture the bank looks at when they determine whether and how much you’ll be able to borrow.
Banks will look at your total savings, how consistently you’ve been able to save, as well as your general spending habits. So we asked two savings experts about the big savings no-nos you should avoid to ease that mortgage process for your first home.
1. Online gambling
Online gambling can be a red flag to a mortgage officer, explained Cathal Coates of BRM Mortgage Brokers. “With people staying at home and not going out, they might be more inclined to do online gambling,” he said, “Try and stay away from that.” Banks will want to see that you don’t have any reckless spending in your recent track record.
2. Regularly dipping into savings
Coates recommends paying your savings account like a bill after you’ve been paid every month – but warns against dipping into that account too often. “Proving your payment capacity is a big part of applying for a mortgage,” Coates said, “If you end up having to dip into it every other month, it’s not going to have the same impact as a savings account you’re not going to touch.”
3. Not providing full account details
Using cash for your day-to-day expenditure can make it more difficult for the bank to see where your money is going – and make your own budgeting trickier too. Instead, Cheevers recommends using a digital debit account, like N26 or Revolut. “Digital debit cards can be fantastic for mortgage applications because you can track them on a macro level,” she said, “You can set yourself budgets for socialising or clothing expenditures and have it marked.”
However, when you use a digital debit account, you’ll want to ensure you provide those accounts when you make your mortgage application, as banks will want to see the specific expenditure if they see transfers into a digital debit account. Forgetting to provide those accounts could lead to a delay in your mortgage application being reviewed.
4. Unmarked rent (or other) payments
If you’re renting, the good news is that those monthly payments will count toward your ability to repay a mortgage when it comes time to apply at the bank. However, you should mark them clearly as rental expenditure, recommended Cheevers. “Make sure your expenditure is marked on your bank accounts,” she explained, “If you’re taking out cash for your rent, either use a rent book, or begin doing a monthly bank transfer instead.”
Similarly, if you have a monthly car payment or other recurring cost, label those payments in your online banking system as well, so these will be clear to the mortgage officer when you make your application. Unknown expenditures can make banks less likely to offer the maximum amount for a loan, and can draw out the process of getting the loan approved.
At Glenveagh Homes, our vision is that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. We understand that buying a home is possibly the biggest decision you will ever make in your life – but we want to make it your easiest. Click here to find out more about Glenveagh developments.
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