Q. I am a young woman in my early thirties and, with the help of my parents, I am now in a position to buy my first home. I would like some advice on buying my first home. There seems to be so much financial jargon attached to the process that my head is in a spin. Short and simple please. Niamh – Clondalkin Dublin 24
A. Thanks Niamh and yes you are right. You have to cut through the jargon to really understand what is needed to own your own home. I have 5 points for you. Firstly, check your income – currently your annual gross ( before tax deductions ) income multiplied by 4 times is the maximum amount as a first time buyer you will be allowed to borrow by any lender ( unless they also use their allowable discretion in the first 3 months of the year ) If you have a partner it is also 4 times ( if first time buyer ) both your gross annual incomes. Secondly, do you have any debts ? A car loan will reduce the amount you are eligible to borrow – formula is your monthly repayment X 12 and that amount is taken off your annual income ! Thirdly, check www.centralcreditregister.ie to see your credit history if you have had loans or debts. A missed payment which is recorded will mean a mortgage decline and you’ll have to wait 5 years before it is erased and you can apply again. Fourthly you need at least 10% of the purchase price – preferably saved and regularly in an account at least 6 months before applying – so they know you have repayment capacity.. unless you qualify for the Help to Buy Scheme or First Home Scheme and you are buying a new property or self-build within the parameters of this schemes. Lastly, as a first time buyer, you will be restricted to 90% of a loan. So if your property is going to cost € 300,000, the maximum loan would be € 270,000 ( and you may qualify for up to € 30,000 with the Help to Buy Scheme or € 90,000 under the First Home Scheme ) and to justify that loan, you would need an income of € 67,500 or between you. Now you know… best of luck.