1 December 2023

From deals to documents: a first-time buyers guide to mortgage applications

Here's a breakdown of the main lending options and all the boxes you need to tick when applying for your first mortgage.

Applying for a mortgage will be one of your first steps as a potential homebuyer, and it's normal to feel confused or overwhelmed.

Once you've nailed down the perfect mortgage product, however, things become clearer. There are many things you can do to ensure that your mortgage application process goes by smoothly.

A mortgage is a long-term financial commitment. So it's essential that you assess your finances and ensure that you can manage the repayments on the house you want.

Read on to learn about the following:

  • Should I choose a broker or commercial lender?
  • What documents do I need when applying for a mortgage?
  • What are some things to keep in mind before applying?

It's possible for you to start your mortgage application online if you are certain that the mortgage you’ve chosen is right for you. Alternatively, you can hire a mortgage broker to find you the best deal on the market.

Getting a mortgage from a lender

Going directly to the commercial lender means walking into a bank or logging in online and applying for a mortgage. With this option, you need to do your own research and make sure you’re absolutely sure that the mortgage you choose will be right for you before your application is received.

You might have heard about a mortgage offer via an advertisement, or from a friend who bought the same one. Your bank might give you preferential rates if you’re already a customer and have a current account with them.

This option is advisable only if you are 100% sure what mortgage product is right for you.

Getting in touch with a mortgage broker

A mortgage broker acts as a middleman between you and the lender. If you go to a mortgage broker, they’ll ask you questions about your income, credit history, how much you have saved for a down payment and how much you wish to borrow.

Then, in essence, the mortgage broker will shop around on your behalf. They have relationships with banks and lenders, therefore they might have access to products you might not be aware of. As a result, it’s more likely they’ll be able to find one that suits you down to the ground.

On top of all that, they’ll handle the application process for you. Mortgage brokers are expert negotiators and will navigate emails, phone calls, and meetings with ease. They’ll be able to assess all of your options from a professional point of view and give you their recommendation.

Lenders are obliged to keep mortgage brokers up to date with all of their offers and the latest interest rates, so this is a great option if you want to get the best deal.

Some firms will charge you upfront for their service, while others will receive a commission from the lender. Make sure you know about the costs involved before you hire a mortgage broker.

What documents do I need to apply for a mortgage?

When you apply for a mortgage, both lenders and brokers will require a number of documents. These would typically include proof of identification and evidence of financial stability.

Documents for proof of identification

You will be required to provide standard identification documents and confirmation of your address to prove you are who you say you are. This usually consists of the following:

  • A current valid passport or driving license;
  • A recent utility bill;
  • Your PPSN.

Documents for proof of finances

Both banks and brokers will want to ensure that you can repay them. This is why it's important for you to show them that you're financially stable with a steady income and enough savings. To make a decision, they will need information on your employment, living costs, lifestyle, and any outstanding debts.

If you are an employee in a company and pay your taxes through the PAYE scheme, you will need to provide:

  • Payslips from the last three months as proof of income;
  • Bank account statements from the last six months to reflect your spending habits (if your current account is not already with the lender);
  • A stamped and signed Salary Certificate from your employer which confirms your permanent employment and basic salary.

If you are a self-employed contractor who is responsible for filing your own taxes, you will need to give them:

  • Certified and audited accounts from the last two years;
  • Business bank account statements from the last six months (if your business account is not already with the lender);
  • Proof that your taxes are paid with a Charges and Payments Statement from Revenue, or a letter from your auditor stating that your taxes are in order.

It's crucial for lenders to confirm your level of debt. For this reason, they will have a look at:

  • Your credit card statements;
  • Your loan statements.

If you're on a variable income, it means you may need to provide your last year’s Employee Detail Summary from Revenue.ie.

What documents do I need after being approved?

If your application is approved in principle, then first of all – congratulations! After being approved, depending on your employment type you’ll need to provide the following documents to your lender:

  • PAYE: Certificate of Income, which is a standard form provided by the bank for completion by your employer.
  • Self-employed: Your accountant’s or auditor’s written confirmation that your taxes are up to date for the current trading year.

This may sound excessive and stressful, but remember that a mortgage is a big responsibility. A good mortgage broker will be worth their weight in gold if you’re worried about filling out the paperwork.

Things to remember when applying for your first mortgage

The homebuying process can be both exciting and stressful in equal measure. The financial and legal hoops to jump through are seemingly endless. So, it can be very overwhelming for first-time buyers. In such a situation, it's only natural for you to panic and accept the first offer that comes your way. Here are a few things to be aware of:

  • Do not apply to just one lender. It's a good idea to shop around, compare rates and keep your options open.
  • Offers such as cashback and free legal expenses may seem very tempting. However, these are gratifying only in the short term and could end up being more expensive over time.

Ready to apply?

If you’re reading this article, you’re probably still shopping around for a mortgage that suits you. It’s definitely a good idea to take your time and ensure you understand mortgages before committing.

Ensuring that your finances are in order before you apply is the most critical part. Pay down any debts you owe, improve your credit history (if necessary) and do the sums required to make sure you can make repayments on your dream house.

And finally, don’t forget that Government incentives (such as the Help to Buy and the First Home scheme) are there to help you get on the property ladder, so make sure you take advantage of it.

To find out more about the homebuying process, don’t forget to check out our content hub dedicated to first-time buyers!