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 borrowing for 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. Love your column. Serena – Tallaght Dublin 24
A. Thanks Serena 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 – your annual gross income multiplied by 4 times is the maximum amount you will be allowed to borrow by any lender (in the first 3 months of the year lenders have discretion to increase this multiple ) If you have a partner it is 4 times both your gross annual incomes. Secondly, do you have any debts ? A car loan for instance or any financial loan commitment will reduce the amount you are eligible to borrow. Thirdly, check www.centralcreditregister.ie to see your credit history is good. A missed payment will mean a mortgage decline and you’ll have to wait 5 years before you can apply again. Fourthly you need at least 10% of the purchase price – ideally saved and regularly in an account at least 6 months before applying – to prove you have repayment capacity.. even if you qualify for the Help to Buy Scheme and you are buying a new property or self-build within the rules of this scheme. 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 – extended to December 2030 ) and to justify that loan, you would need an income of € 67,500 or between you. Now you know… best of luck.