Mortgages can be extremely overwhelming to any buyer, but especially those new to the market. Competition in the market is at extremely high levels, especially within the major Irish cities. This is due to rising house prices, little availability, and the intensity that comes with making an offer against other prepared competitors. In order to make an offer on any property, there are many hurdles that you must be able to jump through to even begin being an eligible purchaser.
Loans have become much harder to get approval for as a first time buyer, especially if your credit history is not as detailed or robust as another person applying for the same type of loan. With high intensity competition beginning at stage one of getting a loan, many possible home buyers feel distressed from the get go.
With Brexit on the horizon, banks have an iron hold on most of their funding; they are being extra selective about loan recipients in the hopes that they will have no issues in the repayment process.
Under the Central Bank rules, first time home buyers are allowed to take out a mortgage that is 3.5 times that of their single or combined annual income. You must also be able to have a 10pc deposit of that total loan available as a minimum down payment in the transaction for the bank to approve their lending. Many times, young people looking to invest in a permanent home may not have the savings available to have a deposit of 10pc.
Additionally, consumers looking for loans may find that their annual income will not provide them with the funds necessary to purchase a home or flat that is within their budget and standards. This is when they begin looking for other options, and most times the main source of cash for the down payment comes from a parent or parental figure.
According to a recent survey, more than one half of the Irish people believe that it is a parental duty to help support their children financially through the purchase of their first home. This survey does not mention how many of the participants are under the age of 30, prime first-time buyers age, so needless to say there may be some flaws in the collection of data here.
The cases are most likely to vary from family to family, given the financial situation. Additionally, the number of children that are in the family is another large factor in a parent’s decision to help their offspring financially.
Overall, this sensitive topic continues to spark debate among lenders, lendees, and families alike.
