Lending Limits for Mortgages

New regulations were announced in January 2015 by the  Irish Central Bank that applied lending limits for mortgages in Ireland . 

These regulations first came into force in February  2015 and were amended slightly in January 2017.

The restrictions relate to the percentage of the house value that can be lent. ( The LTV or Loan to Value) as well as  income multiples.  It is important to note that every individual mortgage will not be subject to these exact limits . Banks can lend more than the specified limits in some cases – but they have to stick to annual targets on the amount of mortgage loans that they allow to go over these limits.

There are different limits for different categories of buyers:

A)  Principal Residence (Owner Occupiers) LTV Restrictions

Every individual mortgage will not be subject to these exact limits – but the banks will have to ensure that at least 85% of the total value of mortgages issued each year  for principal dwellings do not  breach the limits given below.

i ) non-first time buyers are subject to a limit of 80%  LTV. (20% of lending can exceed this cap)

ii) first time buyers  – since Jan 2017 the maximum loan allowed is now 90% of the house value.  (Lenders are allowed to exceed this 90% limit in 5% of cases) . You can see some example figures of How Much You Can Borrow Here

Switcher mortgages and housing loans for the restructuring of mortgages in arrears or pre-arrears are not in the scope of the Regulations.

Note – (Borrowers in negative equity who wish to obtain a mortgage for a new property are not within the scope of the new  LTV limits.)

B) Owner Occupier Mortgages  – Income  Restrictions

There are also limits on the size of loans compared to the  income of the borrowers. The Loan to Income Ratio Or LTI on  Owner occupier mortgages cannot be more than 3.5 times the  borrowers gross income.
Again – this limit is not strictly applied to every individual mortgage – but the banks must ensure annually that  at least 80% of their home loans to owner occupiers (by value) have this income restriction applied.

( Note: Re-mortgages/switchers  on the same residential property with an amount that is the outstanding monetary balance at the date of the switch are exempt from these LTI limits.)

C)  Buy to Let mortgages (BTL)

BTL mortgages are now subject to a limit of 70% LTV.
Each  individual mortgage is not subject to this limit – but  the banks must ensure that at least 90% of their BTL mortgages each year (by value) have this LTV limit of 70% applied.

There are No income related limits for Buy to Let mortgages.

First Time Buyers might be interested in reading about the new Help to Buy Scheme that is now up and running and can provide up to 5% of the deposit on a new build home.

See some examples of How Much You Can Borrow Here

One thought on “Lending Limits for Mortgages

  1. Can anyone tell me if the restriction of mortgages for “new Builds”only has also been lifted?
    Regards.

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