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What Are the Criteria for Mortgage Approval?

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02 Jul 2018

Posted in:  Mortgages and First Time Buyer

The first step on any mortgage journey is getting approved by your lender. But what are the criteria for getting approved? The mortgage application process may seem confusing and jargon-filled, which is why we’ve broken down exactly what is required from you to get approved for a mortgage. Read on to find out.

Your Bank Statements

In order to qualify for a mortgage, you’ll need to provide us with six months of bank and credit card statements. This allows us to see your everyday financial habits and determine whether you’ll be able to pay back the mortgage. We’ll need to see six months of statements for any savings or investments held with us and six months of statements for any borrowings held with another lender. We’ll look at things like at rent and utilities payments and whether you’re saving on a regular basis to satisfy us that you won’t have a problem with repayments.

Your Credit History

We may also look at your credit rating to determine your ability to pay back the mortgage. Your credit rating will take into account any loans you currently hold or have taken out within the last five years and monthly repayments made or missed on them. It will also note your failure to clear of any loans. However, the bank will consider your reasons for missing repayments, so a black mark on your credit rating doesn’t necessarily mean you won’t be able to get a mortgage. You can apply for a copy of your credit report from the website of the Irish Credit Bureau. There is a €6 fee per application.

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Proof of Your Income

If you are a PAYE worker, we’ll need to see three months’ pay-slips if paid monthly, six original payslips if paid fortnightly, or eight original payslips if paid weekly. The payslips must be your most recent and consecutive. We’ll also need you to complete a salary certificate signed by your employer.

If you own your own business, we’ll require three years of audited/trading accounts, certified by your accountant and a confirmation of your tax position from your accountant. We’ll also need a minimum of 6-months recent bank statements for your business and for any personal accounts or personal account borrowings not held with AIB

Proof of Identity

This one is straightforward enough. Before approving your mortgage, we’ll need to see official proof of identity. This needs to be a current valid passport or current drivers licence and a current utility bill or current bank/financial institution statement.

Your Deposit

The most important part. If you are a First Time Buyer, will need a deposit of at least 10% of the total value of the property. However, the Loan to Value is a maximum of 80% for a one-bedroom property. You may also be able to avail of the Government Help to Buy incentive if you are a First Time Buyer and are purchasing a newly built home. You can find out more about the scheme on www.revenue.ie.

Once we’ve received all the above and your deposit is in place, we’ll be able to give you Approval in Principle. You will now know exactly how much you have to spend on your new home and move on to the next step on your mortgage journey – finding the perfect house.

Want to Find Out More About Mortgages?

Take the first step on your journey by talking to one of our expert AIB Mortgage Advisors.

Allied Irish Banks, p.l.c. is an authorised agent and servicer of AIB Mortgage Bank in relation to the origination and servicing of mortgage loans and mortgages. Allied Irish Banks, p.l.c. and AIB Mortgage Bank are regulated by the Central Bank of Ireland. Copyright Allied Irish Banks, p.l.c. 1995.

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