Getting ‘mortgage ready’ in Ireland, some thoughts for first time buyers

This morning I’m going to talk about getting mortgage ready and tips on how to do that. So one of the things that I find most problematic with new mortgage applications tends to be clients who have multiple bank accounts and when we talk about multiple bank accounts you’re talking about for a couple maybe somewhere in excess of ten bank accounts. The ideal mortgage application realistically for a couple should maybe be two individual current accounts with salaries are mandated into and maybe two savings accounts.

You might have couples with joint current account to manage household bills and that kind of thing that’s fine but I think anything more than that really is just over complicating it. When you get people are opening up different bank accounts for you know for specific things all the time like separate savings accounts for Christmas holidays and then current accounts some for getting paid into some for paying their bills joint accounts and then you have Revolut accounts and different savings accounts for different things. I just think it’s a it makes the job of underwriting that application so much more difficult and when underwriters are struggling with multiple bank accounts and numerous money movements and it just as I say makes it more complicated and they’re less likely to approve it if they find it too complicated.

So the most important thing is to oh I always say this on every application is just to keep it simple and that’s you know that is something that I think people struggle with. I think with today’s technology and things you know banking apps are brilliant you know they’re great they’re so easy but the thing is that banking technology and being able to move money now at your fingertips it means people are moving money around all day every day in some cases. With numerous transactions and making it more complicated to track finances. So now you get applications in and people have 10-15 bank accounts and  its very complicated to make a good mortgage application out of these, because with the banking apps people are moving money numerous times during the day, there can be hundreds and hundreds of transactions over maybe a one month period in some people’s bank statements.

I currently have a mortgage application on my desk and a couple have 16 bank accounts. SIXTEEN! It does include a mortgage, but apart from their mortgage statement there are 15 other bank accounts, and the funny thing is they have no money, they have virtually no savings. This couple are second time buyer couple and I think they probably will get approval in the end because they are going to be selling a property that’ll fund the deposit for the new property, but 16 bank accounts no savings in any of those accounts numerous numerous money movements every day and I don’t know I think people maybe get bored they’re like playing around it’s a bit of a hobby playing around with the banking apps which okay I understand you know technology is wonderful but it just complicates it makes it more difficult.

I’ve spent a lot of time tracking their transactions and it’s just money going around in circles and you know I don’t know the thinking behind it, and I’m sure  there’s a logic to it, but look, it just doesn’t make any sense to us and if an underwriter looks at that they’ll probably think the same thing and will most likely postpone those clients application, and say come back in six months tidy up your finances. Come back to us when you aren’t a ball of chaos. So the most important thing is I say is keep it simple my advice to anyone starting in the journey, whether you be a first-time buyer second-time buyer or whatever, is to you know keep it simple one current account one savings account and if you’re a couple okay a current account and a savings account each maybe a joint account for household bills but other than that I think it just gets too complicated.

I know one of the other things that a lot of people will say particularly about multiple savings accounts is they’re trying to get the best rates of interest for the savings and I totally get that but if you’re doing a mortgage application in the next six months you know trying to to get the squeeze the best rate of interest out of your savings just doesn’t really make sense I get it if it’s a long-term thing absolutely you know we all want to make money we want to make our money work as hard as possible for us but for the sake of a few quid you know saving ten or twenty euros and maybe squeezing it a quarter of a percent out with a different account you’re talking about pennies and in terms of a mortgage application you’re trying to save over maybe a six month to 12 month period to get mortgage approval, that few quid is just not worth worth it, it’s complicating your mortgage application and making an underwriter less likely to approve you so my advice is keep it simple and you know as I say one dedicated savings account one dedicated current account for all your ins and outs don’t compartmentalise don’t be opening the current account for one specific purpose and then having a current account for each specific purpose in your life have all the transactions going in and out have and have all your outgoings going in and out of that one account that’s the best way to do it

This post was written by Stephen Hughes, a Director with Irish Mortgage Brokers