Important Note on Planning as Part of Your Refinancing
Loan Approval
Loan Approval represents a significant step forward in your journey to acquiring your new home.
This guide aims to provide a comprehensive overview of your Loan Approval and outlines the subsequent steps involved in the process. References to ‘loan approval’ or ‘Loan Approval‘ are interchangeable and refer to the same document.
The terms offered are tailored to your specific financial profile, taking into consideration the purchase price, loan amount, your age and occupation, your personal contribution, and the preferred repayment period.
Should you have any questions regarding the financial aspects of your loan, please consult directly with your broker or lending institution.
It is essential that you verify the financial terms of your loan approval to confirm your satisfaction with them.
Should you wish to make any amendments or seek clarification, such as a change in interest rate or fixed term, please liaise directly with your broker or lender.
Carefully check for any typographical errors in your personal details or the property description. Any inaccuracies must be corrected by your broker or lender, as the loan approval is a legal document and must be accurate.
Signing procedures vary by lender.
We will examine all terms and conditions of your Loan Approval in detail. Should any term raise concern or appear burdensome, we will notify you immediately and recommend appropriate action.
In most instances, provided everything is in order, we will confirm that you may proceed with your loan approval.
There are three essential steps in the upcoming stage of your transaction:
Please note
Step 1: Securing loan approval – now complete.
Step 2: Commissioning a property survey – applicable only for second-hand properties. If this has not been arranged, it should be done immediately.
Step 3: Receipt of title and contracts – Once received, we will review the documentation and advise you regarding execution.
Loan approvals are valid for a period of six months.
If the property purchase is expected to exceed this timeframe, please ensure your lender is prepared to renew the approval.
Your broker or lender can guide you on the renewal process to avoid any disruption.
Please be advised that the interest rate outlined in your loan approval is not fixed until the loan is drawn down.
If interest rates decrease before drawdown, you should confirm with your lender that the lower rate will apply. Conversely, if rates increase, the higher rate will be in effect at drawdown.
This potential variability should be factored into your financial planning.
You may switch lenders at any time before drawing down funds. Even if all documentation has been completed, you are not obligated to continue with the current lender.
Please note, however, that switching may take several weeks. If you are working toward a strict completion deadline, timing may be a constraint.
Opting for a fixed rate at the outset of your loan term can provide valuable certainty, especially as you transition into your new home and manage associated expenses.
Do consider the following:
You will be committed to the fixed rate for its duration. If interest rates drop, you will not benefit from the reduction.
Exiting a fixed rate early may incur significant penalties. These costs should be carefully considered in your financial planning.
Mortgage protection is a legislative requirement. It is a life insurance policy assigned to your lender to clear the loan in the event of your death.
In rare medical cases, a waiver may be granted, though these are difficult to obtain. If you anticipate difficulties securing coverage, please address this urgently, as failure to obtain protection may prevent loan drawdown.
We recommend arranging life cover early in the process, but only activating it approximately two weeks before your expected key collection date.
For house purchases, you must have buildings insurance in place 10–14 days before drawdown. You may arrange this earlier, but defer activation until the appropriate date.
For apartments or duplexes, building cover is typically provided by a block insurance policy. We will liaise with the vendor’s solicitor to ensure your lender’s interest is noted via an indemnity letter.
If you are receiving a financial gift toward the purchase, your lender will require documentation stating that the funds are non-repayable and confer no ownership interest to the donor.
For gifts exceeding €15,000, a legal ‘deed of confirmation’ is required. We will include this in your loan documentation and guide you through the signature process.
Your lender will arrange for a valuation of the property. This serves to confirm that the purchase price aligns with market value.
Note: This valuation is for the lender’s benefit only and should not replace a personal survey.
Possible valuation issues include:
Undervaluation: If the property is valued below the purchase price, and your deposit is insufficient, this may affect your loan approval.
Required Works: The valuer may identify necessary repairs, resulting in the lender withholding funds until completion.
If major repairs are needed (e.g., plumbing, electrical), your lender may withhold part of the loan until the work is complete.
An example:
You purchase a home for €600,000 with a loan of €500,000. The property needs €40,000 in repairs. The lender agrees to the loan but retains €40,000 until repairs are verified.
You will receive €460,000 at closing, requiring you to provide €140,000 upfront (your deposit plus the withheld amount). Upon completing the repairs and submitting verification, the lender will release the retained €40,000.
Plan for this temporary shortfall in your budgeting.
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