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In life, few things are certain, but one thing's for sure: you've likely encountered your fair share of mortgage myths. From the notion that banks will dissect your financial history back to the days of horse-drawn carriages to the belief that you need to stash away 20% of a house's value before you can even think of a mortgage, these myths can certainly muddy the waters.
But don't worry, we're here to lay the groundwork and guide you every step of the way. In partnership with Bank of Ireland, we'll navigate through the entire mortgage journey, from those essential initial preparations to the exhilarating moment when you finally unlock the door to your new home.
Let’s take a look at a few common mortgage myths and put them to bed once and for all:
Myth #1: Banks will inspect every receipt you've ever owned
BUSTED: Yes, when applying for a mortgage, you'll need to provide bank statements. But the idea that every penny you've ever spent will undergo forensic scrutiny is pure fiction. Take Bank of Ireland, for instance. They'll typically ask for the past 12 months of bank statements, alongside other checks like your credit history and employment records to make sure you are in a position to make repayments, so no one's going to scold you for the occasional splurge!
Myth #2: A little bet here and there spells mortgage doom
BUSTED: Right up there with the tall tales about exhaustive bank statement reviews is the fear that having a flutter at the bookies will ruin your mortgage prospects. Whether it's a cheeky Grand National bet or the occasional weekend flutter, your eligibility remains intact. It's only when your bank account shows a consistent gambling history that it might raise an eyebrow with your mortgage provider. So, if you're concerned, have a chat with them.
Myth #3: You absolutely need at least 20% saved for a deposit
BUSTED: Saving for a deposit takes time and strategy but you don't need to scale Mount Everest to secure your dream home. There's a misconception floating around that you always need to squirrel away 20% of a property's value. This isn’t always the case. Infact, first-time buyers typically need a deposit of just 10% to make that home sweet home dream come true!
Myth #4: You need to find your dream home before even starting
BUSTED: It's quite common for people to believe that finding the perfect house should come before applying for a mortgage. However, the process works a bit differently. Once you meet the necessary criteria and your application gets the green light, you'll receive something called "House Hunter Approval in Principle" (AIP) from the bank. This typically arrives in the form of a letter, outlining the amount you're eligible to borrow. The exciting part? With Bank of Ireland iIt's usually valid for a generous 6 months giving you plenty of time to house-hunt confident that your dough is secure.
Myth #5: You need to be an existing customer to get a mortgage
BUSTED: There's a popular myth that you must stick with your current bank or be an existing customer to even think about a mortgage. Well, let's shatter that myth to pieces! The reality is, you're not limited to your current bank, and being their existing customer won't give you any special treatment. Most providers carefully evaluate each application on its own merits. So, it's time to debunk not one but two myths at once!
Bonus round: Jargon Buster
As important as it is to clear up some of the most common myths, it’s just as essential that you know exactly what terms to keep an eye out for. Everyone remembers that guy on TV years ago telling us he doesn’t know what a tracker mortgage is, so here are a few pointers on understanding the lingo!
- Annual Percentage rate of charge (APRC): This is a calculation of the cost of your loan, taking into account things such as interest rates and valuation fees.
- Variable interest rate: Your mortgage interest rate may fluctuate from year to year, depending on various factors.
- Fixed interest rate: Unlike a variable rate, this locks in your interest rate at a specific percentage for a set period (usually 1-10 years).
- Green mortgage rate: Finding an energy efficient home is not only financially rewarding in the long run and can reduce your carbon footprint, but thanks to this scheme you can now obtain a lower interest rate on a home with a Building Energy Rating (BER) of B3 or better!
- Approval in Principle (AIP): As mentioned earlier, this is the letter you'll receive after your initial mortgage application is approved—a green light to begin house hunting!
- Loan to value (LTV): This figure represents how much of the property's value you borrow. For example, if you borrow €240,000 on a €300,000 house, your LTV is 80%.
To sweeten the deal, consider applying for a mortgage with Bank of Ireland and enjoy up to 3% Cashback. Their special Cashback Plus offer can ease the financial burden of professional fees or furnishing your new home. You'll receive 2% of your new mortgage back as cash from Bank of Ireland upon drawing down your mortgage, with an additional 1% coming your way in cash after 5 years, subject to meeting the mortgage conditions.
Lending criteria, terms and conditions apply. Over 18s only. Mortgage approval subject to assessment of suitability & affordability. Security & insurance required. You mortgage your property to secure the loan. Bank of Ireland Mortgage Bank trading as Bank of Ireland Mortgages u.c. is regulated by the Central Bank of Ireland.
Warning: If you do not keep up your repayments you may lose your home.
Cashback is not available with the High Value Mortgage fixed interest rate.
Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit, a hire- purchase agreement, a consumer-hire agreement or a BNPL agreement in the future.
For more information, visit their website here.
Featured Image Credit: Bank of Ireland