Want to apply for a mortgage in Ireland? This is how to manage your monthly bank account

2021-08-10

When you want to apply for a mortgage in Ireland, you’ll need to get a few ducks in a row.

The first is to use a mortgage calculator to calculate how much you can borrow. The calculator will help you come to a good estimate.

Secondly, you’ll need to start saving for your deposit. We never get tired of telling our customers that your deposit is your superpower.

And thirdly, you need to pay attention to how you manage your bank account.

Does your bank account stand up to a forensic tooth comb going through it?

It’s a good idea to manage your bank account smartly at all points. However, when you know you’re going to be applying for a mortgage in the future this becomes even more important.

As part of your mortgage application, lenders are going to place a priority on understanding how you manage money. The best way they can gain an idea of your money management skills is to thoroughly go through your day-to-day bank account.

To withstand this scrutiny, you need to do the following:

Avoid gambling at all costs with any of your accounts
Keep to as few accounts as possible (too many accounts can get messy and frustrate lenders)
Ensure that your monthly savings are clearly identified
Pay off all of your debt - or as much of it as possible
Always pay your rent by bank transfer and never by cash (lenders need to see evidence of your payments)
Maintain a credit balance always
If you have to venture into overdraft territory, make sure you have an approved overdraft facility
Make sure all of your standing orders and direct debits are paid every month

Good bank account practices

It’s important to understand that lenders will want to see six months’ worth of bank statements from you to gain an idea of your financial status.

While it’s best to keep your account as uniform as possible month to month, lenders do take into account that life happens. Therefore, if you have any additional large payment to make over and above your existing monthly expenses, keep a record. Lenders will most likely query this. As long as you can explain it, everything should be fine.

Please do not have any gambling transactions on your account. These are an instant red flag to lenders and will count heavily against you. Gambling can even be bets you take on sports. As you’re running up to the time to apply for a mortgage, rather leave all of these activities alone and focus exclusively on the activities that will strengthen the way your bank account is viewed.

Like saving for a deposit!

It’s in your favour to show that you save a set amount of money each month. This figure, coupled with what you pay for rent every month, will be used to calculate your ability to repay a mortgage. Save the same amount of money consistently to reassure lenders that you’re not a credit risk.

If you have money saved in your local credit union or you have your online bank accounts, you’ll need to have bank statements for these accounts too.

Managing the paperwork for your bank accounts

Your mortgage application will require a lot of paperwork from you.

Lenders want to see a lot of documents. These include

Your passport
Utility bills
Payslips
Employment Detail Summary (formerly P60)
Bank account statements
Loan and mortgage statements
Credit card statements
Credit union statements

It’s a big undertaking to get all of these together, but it is an exciting one. As you gather each piece of information required, you are one step closer to your mortgage goals.

Naturally, gathering all of this information takes time. We suggest you create a plan to take each step. We see examples regularly of our customers who set aside time once a week to collate all the documents needed.

Please feel free to contact us at any stage of your mortgage journey. Even if you are right at the beginning of your mortgage journey, we’d be delighted to have a confidential chat with you.

We help hundreds of customers every month. And we’d love to find which mortgage would be right for you too!