ONLINE gambling and evidence on your credit card statements of paying Paddy Power and other internet bookies is a 'red flag' that may stop you getting a mortgage, the Sunday Independent has learned.
And as well as backing slow horses, a hedonistic lifestyle with erratic spending habits and cash withdrawals on your credit card, even while on your sun holiday, can also stop you getting your foot on the property ladder.
The property market is in recovery, with nine out of 10 mortgages now approved as the banks at last loosen the purse strings. As much as €3bn could be provided for new mortgages this year – up from €2.5bn in 2013. And there is evidence of first-time buyers now planning their mortgage application like a military campaign.
During the boom, banks were willing to give mortgages of up to 110 per cent of the purchase price. Now 92 per cent of the house price is the limit on home loans.
This has led many who are desperate to own their own home to seek out expert advice on how to present the very best case to lenders, according to Trevor Grant, chairman of the Association of Expert Mortgage Advisers. But he says there are red flags which may lead the bank to turn down a mortgage application. These include an online gambling habit with the evidence contained in credit card and bank statements, as lenders parse and dissect financial histories before they give the green light.
And he warns many borrowers are simply not prepared for the mountain of paperwork they must now present if they are to be taken seriously as a mortgage applicant. It means many are initially missing out because by the time they get mortgage approval their dream home has already been sold. Mr Grant said there there are a number of reasons behind the higher approval rates for mortgages.
He told the Sunday Independent: "The mortgages currently being applied for are more affordable and are based on disposable incomes and loan amounts. This combined with the calibre of mortgage seekers – particularly first-time buyers – in terms of earnings, employment and savings record makes them very attractive to lenders."
Mr Grant forecasts there could be up to 3,000 new applications in the first quarter of this year up from 2,068 in the same period last year. "That would mean the number of mortgages for 2014 should be up 20 per cent on 2013, from 14,985 to about 18,000. In value terms that's about €3bn in cheques issued by the banks for home loans for the full year."
The relaxation of the five-year credit squeeze means that applicants in secure employment and able to demonstrate repayment capacity and have a strong credit history have a good chance of getting a mortgage application approved.
But he warned that potential borrowers must have all their ducks in a row. "Some borrowers are not prepared from a documentation perspective to apply for a mortgage. In most instances you need to prepare at least three months in advance of applying so you can ensure your paperwork is in order and that you will receive the mortgage approval you require," he said.
Sensible current account activity and prudent management of your financial affairs must be demonstrated.
You also have to be able to show you possess what the banks call "repayment capacity" – in other words have the documentation to prove that you can afford the mortgage repayments .