There are regulations in place since 2015 , set up by the Irish Central Bank that set lending limits on mortgages in Ireland.
These mortgage lending regulations first came into force in February 2015 and were amended slightly in January 2017 and in Jan 2018 .
In December 2019 it was confirmed by the Central Bank’s new governor ,Gabriel Makhlouf, that these existing limits would remain in place.
The mortgage lending restrictions relate to
- The percentage of the house value that can be lent. ( The LTV or Loan to Value)
- Income multiples. ( the size of loans compared to the income of the borrowers. )
It is important to note that every individual mortgage is not subject to these exact limits . Banks can sometimes 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) Owner Occupiers: LTV Restrictions
- non-first time buyers are subject to a limit of 80% LTV. (20% of lending can exceed this cap)
- first time buyers – the maximum loan allowed is 90% of the house value. (Lenders are allowed to exceed this 90% limit in up to 5% of cases.
- Switcher mortgages and housing loans for the restructuring of mortgages in arrears or pre-arrears are not in the scope of the Regulations. Only 21 mortgage exemptions on loan to value (LTV) were given to first-time buyers in 2018. A majority of the LTV exemptions went to second-time buyers, with a total of 1,654.
You can see some example figures of How Much You Can Borrow Here
- 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 (LTI) on Owner-occupier mortgages cannot be more than 3.5 times the borrower’s 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 first time buyers owner occupiers (by value) have this income restriction applied.
Note – in 2018 a total of 2,465 first-time buyers were allowed to breach the 3.5 times salary requirement.
For Second Time Buyers , banks are only able to exceed the loan to income ratio in 10% of case.
( Note: Re-mortgages/switchers on the same residential property with an amount that is the outstanding mortgage balance at the date of the switch are exempt from these LTI limits.)
C) Buy to Let mortgages (BTL)
BTL mortgages are 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 Help to Buy Scheme that can provide up to 5% of the deposit on a new build homes for first time buyers.
Check our tables of the Best Mortgage Rates in Ireland
See some examples of How Much You Can Borrow Here