+353 1862 3000

info@covermore.ie

Book a No-Fee Consultation

Mortgage Rules in Ireland

by | Mortgage

Central Bank

As part of its goal to safeguard financial stability and contribute to the long term resilience of the financial system, the Central Bank has in place a series of mortgage measures. These measures were first introduced in 2015 and are reviewed on an annual basis. The measures are designed to ensure that banks and other lenders lend money sensibly. They are also designed to stop house buyers from borrowing more than they can afford and prevent excess credit from building up within the Irish financial system.

The measures set ceilings on the amount of money that can be borrowed to buy residential property using:

  • Loan to Value (LTV) limits
  • Loan to Income (LTI) limits

Loan-to-Value limits

The LTV limit requires you to have a minimum deposit before you can get a mortgage. The size of this deposit depends on what category of buyer you are.

  • First-time-buyers need to have a minimum deposit of 10%
  • Second and subsequent buyers need to have a minimum deposit of 20%
  • Buy-to-let buyers need to have a minimum deposit of 30%.

Banks and other lenders have the freedom to lend a certain amount above these limits. In any one calendar year they can give an allowance to:

  • Up to 5% of the value of mortgages to first time buyers
  • Up to 20% of the value of mortgages to second and subsequent buyers
  • Up to 10% of the value of mortgages to buy-to-let buyers.

Loan-to-Income limits

The LTI limit restricts the amount of money you can borrow to a maximum of 3.5 times your gross income. So for example, a couple with a combined income of €100,000 you can borrow up to a maximum of €350,000.

Once again banks and other lenders have the freedom to lend a certain amount above these limits. In any one calendar year they can give an allowance to:

  • Up to 20% of the value of mortgages to first-time buyers
  • Up to 10% of the value of mortgages to second and subsequent buyers

Ireland is not alone in introducing these kinds of mortgage measures. Many other EU countries have introduced some form of mortgage regulation to help safeguard their national financial systems.

Categories

Not sure what financial step to take next?

    By submitting your enquiry, you agree to receive updates from Covermore Financial in accordance with our Privacy Policy.

    Do Covermore charge a fee for financial advice?

    Covermore provides no-fee financial advice consultations. We will explain how the process works clearly before you make any decision.

    Do I need to know what service I need before contacting you?

    No. Many clients come to us because they are not sure what they need. We can help you understand whether your next step relates to your mortgage, protection, pension, savings, investments or wider financial planning.

    Can Covermore help if I already have policies or pensions in place?

    Yes. We can review what you already have and help you understand whether it still suits your life, goals and current circumstances.

    Do you only work with clients in Dublin?

    Covermore is based in Dublin, but we work with clients nationwide.

    Can you help business owners and company directors?

    Yes. We work with business owners, sole traders, partnerships and company directors on pensions, protection, savings, investment planning and broader financial advice.