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It’s a very exciting time, buying your first home. You have to comply with a lot of rules, bring your own money, show numbers and have multiple conversations with advisors.
Besides many things to do, it is mostly a very fun time where you start looking for your first dream home. And have you found that great house? Then you start looking at your options and start looking for advisors and specialists that suit you!
A very important one in this is the right mortgage broker who is going to help you with the whole process around applying for your mortgage.
But, what all does the mortgage broker want to know about you?
Level of your income
The banks want to know what your gross income is and would like to see a recent pay stub from this. This allows the bank to estimate whether you have enough money coming in to pay your monthly expenses.
If you have a permanent contract, we include under gross income the salary, your vacation pay and any fixed thirteenth month or year-end bonus.
But of course it is also possible that you have a fixed-term contract or are a self-employed person, for example. Then the bank takes a different approach.
Usually they then want to see a statement from the employer that they are going to convert your contract to an indefinite term contract (letter of intent).
And as a self-employed person, they want to see annual figures from the accountant for the last 3 years. This can sometimes include other things such as a bonus or structural overtime. But that really needs to be calculated in detail.
What is the value of your house or apartment?
Also not unimportant in this one is the actual value of the dream home you have your eye on.
How much will you take out a mortgage for and what is the value of the home?
In any case, you cannot borrow more than the house you have your eye on is worth. And to determine the current value of the house, you can hire an appraiser who will then issue an appraisal report.
So the value of your dream home has a lot of influence on the amount of your mortgage as well as the amount of your own money you need to buy the house.
Do you want to do odd jobs, renovate and/or make things more sustainable? Then it is possible to opt for a construction deposit.
A building deposit is a special, escrow account where you set aside an amount of money for a planned remodel or new construction.
It is part of your mortgage. From the construction deposit, you pay the invoices for the work and materials.
Do you have financial obligations?
Your mortgage advisor will also want to know from you if you have any financial obligations that could affect your monthly spending amount.
These may include, for example, the following:
- A student debt
- Being in the red at the bank
- A credit card where you may repay in instalments (i.e. a kind of loan)
- A smartphone on installment
- A private lease contract of, for example, to car
They all seem like innocuous contracts but actually affect your monthly expenses and therefore what maximum amount you can borrow.
This is because you get, the often well-known, BKR registration behind your name and this can cause restrictions when applying for your mortgage.
Living lum sum
This one is a little less well-known but no less important: the housing ratio.
The housing ratio is the maximum percentage of your gross assessment income that you can spend on paying off your mortgage (including interest). The housing ratio depends on the following:
- Your income and that of your partner, if any
- The actual mortgage rate
- The fixed-interest period you choose
- Whether you are retired
The housing quote is reset annually. This quote exists because in addition to your housing costs, you need to keep enough money for your groceries, healthcare costs, and other living expenses.
This way a lender cannot lend more than what is affordable for an average family. This reduces the risk of financial problems for both you and the lender.
Loan Standard
To prevent you from borrowing too much and getting into financial trouble, the bank also looks at your income and your fixed expenses.
They also determine how much money you should have left over after paying your monthly principal and interest each month to live on. The latter is called the loan standard.
What can you expect from a mortgage broker?
A mortgage broker provides financially expert advice on mortgages and helps you find a mortgage that suits you. So to do this, he or she will first assess your financial situation with the questions above and want to know what your future plans are.
Based on your financial situation, a mortgage broker will investigate whether you qualify for an (NHG) mortgage and whether you need certain insurances or perhaps a bridging mortgage.
To make an appropriate mortgage recommendation, the mortgage broker goes to work looking at various options. He calculates additional costs, reviews various product terms and conditions from lenders and compares interest rates.
With mortgage advice, you know exactly what a mortgage will cost you monthly and what the terms are.
Once you have provided all this information, the mortgage broker can get to work for you and see if you can actually buy your dream home.
But what if it can also be done the other way around? And before you start looking and bidding you already have an almost certain mortgage in your pocket? Then we have good news, because from now on you really can!
Mortgage2Go allows you to complete your mortgage application first. You can then not only view but also buy your dream home.
Want to know if you qualify for a pre-checked mortgage? Start your application!
