It's your Mortgage Day!
According to the findings of KBC’s Irish consumer sentiment survey, published in November 2020, the outbreak of Covid-19 has impacted every aspect of life and for some, the pandemic has increased the importance of living space and facilities1. This would suggest that there is an increased focus on our living set up, that could likely act to boost property demand by a significant cohort of consumers.
In fact, prospective buyers – likely those whose personal financial circumstances have not been directly affected by the economic fallout from the pandemic – appear to have intensified their interest in property purchase and become more active in their property search. The age group whose interest was most likely to have increased was that of 25-34-year-olds, according to the findings of the survey.
These findings came as data from the Central Bank revealed that deposits in banks and credit unions soared in 2020, with over €120 billion in savings and deposits in various institutions. With this trend set to continue in 2021, the propensity and ability for those interested in buying a property will also likely increase, as purchasing power strengthens.
Conor McGowan, KBC Bank’s Head of Credit Products, said: “The survey results outlined above indicate that the pandemic has affected the thinking of some Irish consumers on homebuying. The outbreak of the pandemic, and the affect that has had on living conditions in terms of space and situation for some young adults, is likely to have increased the importance of homebuying for 25-34 year-olds. This is consistent with increased mortgage applications and drawdowns we are seeing at KBC of late, with a 4% increase in mortgage drawdowns for customers in the 25-34 age bracket year on year to November 2020.”
“We understand that the application process can be intimidating for prospective homeowners, which is why we have put together some obvious mortgage application need to knows. These don’t just apply to first time buyers, but also for movers and switchers.”
Top Tips for 2020:
Spend within your budget
There is a myth that if you frequently spend money on ‘things you don’t need’, your application is refused, and the same goes for spending money on ‘silly’ things. You don’t need to hide your spending, but make sure you spend in moderation and within your own budget as this shows that you’re comfortable with repayments.
Account for additional expenses
When deciding to apply for a mortgage, many homebuyers will start the application process when they have reached their savings goal in terms of a deposit. While the deposit is important, budgeting for other related expenses can often be a second thought. Solicitor fees, broker fees, valuation fees and Government Stamp Duty will also need to be factored in to your homebuying budget. KBC Bank offers first time buyers and movers a €1,500* cash incentive designed to support mortgage expenses such as legal and valuation fees.
Preparation in advance is key
Many homebuyers believe that the mortgage process starts with filling out an application form. While this is certainly the beginning of the formal process, prospective homebuyers should have their supporting documents in place prior to starting an application in order to make the journey as seamless as possible. Things like a valid ID, recent payslips, and evidence of savings and borrowings can often be overlooked, and collating documentation after the application has started may delay the process.
Additional documentation may be required for those who are self-employed, so make sure you do your research ahead of time to avoid any unwanted surprises.
Shop around for a value mortgage
While many people feel drawn towards their own bank when applying for a mortgage, it is often better to shop around to find a mortgage provider that is right for you. As a homebuyer at any stage, it can be daunting to navigate the mortgage process and find the best deal. If you feel you need some help navigating the application process you could consider speaking to a mortgage broker.
You are not bound to your own mortgage provider
Although it is the biggest financial commitment that you will ever make, you are not necessarily tied to the mortgage provider you opted for when you first took out your mortgage. It is always worth checking whether a different mortgage provider could save you money and make your life easier. Many people save a considerable amount on their mortgage by switching. According to Bonkers, customers can save over €300 a month or €18,000 over 5 years by switching their mortgage.**
Switching mortgages can save you money
If you are considering moving to another mortgage provider, there is a cost involved in the switching process. This will consist of a valuation fee of approximately €150.00 that you pay directly to the appointed valuer, as well as your legal fees which are to be paid to your chosen solicitor. However, the savings that can be achieved over the term of the mortgage can far outweigh the costs. If you switch your mortgage to KBC, you receive €3,000*** which will help to cover these costs.
McGowan added: “ While the landscape has changed, consumers are still looking for more choice and even better value when it comes to mortgage products, and KBC continue to offer some of the most competitive rates. To meet demand, we also enhanced our processes to facilitate customers who wish to apply for a mortgage over the phone and for our existing customers we extended the option to avail of new business loan to value rates without requiring a new property valuation. We are currently approving 86% of all applications received,”
For more information, please visit www.kbc.ie or call our dedicated mortgage team on 1800 51 52 53
121% of recipients, KBC’s Irish consumer sentiment survey, November 2020.
* The contribution of €1,500 is available to customers who submit a fully completed Private Dwelling House (PDH) application form on or before 30th June 2021. The contribution is paid after a customer draws down the full amount of the mortgage on either a 3, 5 or 10 year fixed interest rate or a combination thereof.
Customers must not exceed the maximum Loan to Value and/or Loan to Income thresholds required by the Central Bank of Ireland and must be a first time buyer or are moving house and it is their principal private residence.
**This is based on someone with a €250,000 mortgage, paying 4.5% who switches to a five year fixed rate of 2.20%
*** The €3,000 contribution is available to customers who switch their principal private residence mortgage to KBC from another financial institution and submit a fully completed Private Dwelling House (PDH) application form on or before 30th June 2021. KBC must subsequently approve the mortgage application and the mortgage must be drawn down within the availability period set out in their Letter of Offer.