Five things to add to your mortgage checklist as Irish rates rise higher

Despite the rise, Irish mortgage rates fifth lowest in Eurozone

Irish mortgage rates moved higher again in April, rising to their highest level since at least mid-2017, according to the Central Bank of Ireland today.

At 3.63% in April, the average interest rate on a new mortgage was up from 3.54% in March.

Rates rose sharply in most Eurozone countries, though they fell in Malta, Germany and Slovenia.

Despite the month-on-month jump, Ireland still has among the lowest mortgage rates in the Eurozone, for now at least.

The Eurozone average rose to 3.57%, almost three times the rate it was two years ago.

Commenting on the news, Daragh Cassidy, Head of Communications at mortgage broker bonkers.ie says: "Since last July, the ECB has hiked rates by 3.75 percentage points. With another 0.25 percentage point hike likely to come when the ECB meets tomorrow.

"However the main banks have only hiked their fixed rates by around 1.5 to 2 percentage points on average. And variable rates have hardly moved at all.

"This 'generosity' has largely come at the expense of savers. Savings rates in Ireland are still poor. The best rate from the Irish banks is just 2% from AIB and that comes with caveats. And BOI and PTSB only pay a maximum of 1.5%. However deposit rates over 3.50% are now available from some banks in Europe."

Here are five things to think about when looking into your your mortgage. [caption id="attachment_582378" align="alignnone" width="2048"] Credit: Getty Images.[/caption]

Affordability.

The very first thing you need to know before heading to the bank is how much you can afford. Mortgage expert and MD of Switcheroo, Alison Fearon told the Irish Mirror: "The central bank will say that you can borrow up to three and a half times your income and that can be a joint application with a combined income or for a single person. "For example, if you are in a combined income household making €70,000, then you will be able to get a mortgage of €245,000." Remember that when you look at your payslip, your wage will count for 100% of your income as well as 100% of any guaranteed allowances such as a car allowance.

Proving you can pay it back.

The next thing is proving that you can afford 100% of the expected monthly repayments on the mortgage. The bank will go through your payslips and examine your bank statements to determine what kind of a lifestyle you live. Alison said: "The bank will want to see how you can afford this every month. You might earn €70,000 between the two of you, but do you have that €1,000 extra every month that will be used to pay the mortgage." The main things the bank will look at are rent, savings and overdrawn accounts.

Next is the deposit.

The bank will then look to prove that you have the capability of providing the deposit for the home. They could lend you up to 90% of the cost of your new home but you must have the remaining 10%. Your deposit can come from three things - your savings, a gift or from the help to buy scheme.

Many many documents.

Ensure you have the correct documents before heading to the bank because they will need to review every one of them and they're very strict on that as you could imagine. Mortgage expert Alison said: "You’ll need six months' bank statements for all of your bank accounts, savings, or if you have a credit union loan or anything like that." You’ll also need three months' credit card statements, a proof of address, and proof of ID. If you're on a salary, you’ll need a salary cert from your HR department.

The do's and don'ts.

The mortgage expert shared more advice and said you should avoid applying for a loan before or during your mortgage application. Don't get a car loan or a personal loan, even if it's only a small amount of money. Alison said: "Another thing is, try not to go overdrawn. "If every single month you’re going overdrawn but are saving say €300 a month, you might think that is fantastic, but the bank will look at that and say well you’re not really saving that much because you’re overdrawn by that much, or more over here." If you have a credit card, pay off that dept before you even start the mortgage application. Save as much as you can in the six months leading up to your application because it impresses the bank and shows them your disposable income.

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