The first questions most people usually ask about getting a mortgage in Ireland are ...
- How Much Can You Borrow ?
- How much of a deposit do you need ?
- How much will the monthly payments be?
Mortgage lending criteria in 2021 are less strict for first-time buyers than they were in back in 2016.
This – combined with the Help to Buy scheme might make it easier for more first time buyers get on the housing ladder. (Sadly – it looks like it might have just helped to bring about higher house prices.)
Lenders are governed by Central Bank Rules – see here – so in general, the most that first time buyers can borrow is 90% of the House value. This is known as Loan to Value or “LTV” .
There are some exemptions allowed – but only 21 mortgage exemptions on loan to value (LTV) were given to first-time buyers in 2018 . ( This is the rule requiring a 10pc deposit.)
There is also a restriction on mortgages being no more than 3.5 times annual gross income. (This is known as the income multiple)
How Much Can You Borrow?
Below are typical figures for mortgage amounts allowed by lenders for a single earner who is a first-time buyer. (Calculations based on 3.5 times earnings)
Price possible with
a 10% Deposit
Note: The figures will be exactly the same for joint applications. (Just add the two incomes).
See here for some sample mortgage payment calculations to give you an idea of how much your monthly repayments might be.
Exceptions to the Mortgage Income Rules
The banks are allowed to make exceptions in some cases and can lend more than 3.5 times income to up to 20% of first-time buyers.
The exemptions tend to be used up quickly – and it is possible that applications in the first 3 months of the year will have more chance of going over the earnings multiple of 3.5.
In April 2020, exceptions were paused by many lenders because of the affect of Covid-19. This will mean that there are probably going to be a lot more applicants hoping for an exception in 2021.
Banks can apply exceptions over Loan-to-Income (LTI) caps on up to 20pc of their mortgage business for first-time buyers and 10pc of second and subsequent buyer applications.
In 2018 a total of 2,465 first-time buyers were allowed to breach the 3.5 times salary requirement.
- In general terms – to be accepted for a mortgage offer, you will need to be permanently employed in “sustainable employment”. Banks will only lend if they believe your employer will be around in 12 months’ time or more.
- If you are self-employed – you will need to have been trading for a minimum of two years.
- If you are in contract employment or temporary employment other than in the medical profession, it might be more difficult to secure a mortgage.
- You will also need to have evidence of savings built up over at least a 12-month period to show your ability to make the repayments. A big gift from a parent may not be enough.
- If you are renting, banks will usually consider proof of paying rent as similar to saving.
If you have been refused a mortgage by 2 banks – you can then apply for an Affordable Mortgage from your local authority – with rates as low as 2.745 % fixed for 25 years.
Read more here about the Affordable Mortgage Scheme (Officially known as the Rebuilding Ireland Home Loan Scheme)
See our listings of the Lowest Mortgage Rates
You might also be interested in the legal costs when buying a house in Ireland