First Time Buyers

From 1st January 2023 the mortgage lending rules in Ireland state that first-time buyers can qualify for a mortgage of up to *4 times their salary/combined salaries. This is not an automatic guarantee because all banks must take your current circumstances into account when assessing you for a mortgage i.e., the number of dependents that you have, your age, the term of the mortgage required, any existing personal/car loans or family commitments and your demonstrated affordability over the previous six months. Your circumstances could reduce the mortgage amount that you qualify for but in general, the rule of 4 times your income is a good guide to work with.

*https://www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures

4 Times your income could be different with each bank because each bank treats your income differently. For example, if part of your salary includes bonus payments, commission payments, car allowance credits, health benefit credits, stock income, premiums for weekend work, overtime and shift allowance, each bank looks at this differently. Some banks may take all your extra income into account, and some may not. Therefore, your variable income could be your leverage in terms of increasing the mortgage amount that you qualify for depending on which bank you proceed with. Finding the right bank for you is our job. Feel free to send us your payslips in order to see which bank or banks are the most suitable for you.

In certain circumstances the banks may be able to offer you a higher mortgage than 4 times your income. This is called an exemption. The banks may be able to offer you a mortgage of say, up to 4.5 times your income or more (this depends on each bank’s own policy). These exemptions are not freely available, while the banks also only have a limited number of exemptions that they can give out if they decide to offer any exemptions. In addition to this each bank will have their own policy regarding this and may require your situation to fall within specific parameters in order to qualify for an exemption.

As a rule, you need to contribute a deposit of at least 10%* with effect from 01.01.2023. This means that if you are purchasing a property costing €300,000, you will need to contribute at least €30,000. This deposit can come from your savings and savings plus a family gift. If you are buying a new build property, this can come from the help to buy scheme (https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx). You can also contribute more if you wish to, but you cannot break the 10% deposit rule.

*https://www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures

If you are not availing of the HTB (you could be buying a second-hand property or a new build that exceeds the limits of the HTB), the banks generally want to see that you have saved some of your own money towards the deposit and that it does not all come from a gift. Some banks have a policy that states you must have saved at least 5% yourself when you are not using the HTB scheme. However, there can be some allowances in this case where some banks may allow 100% of the deposit to come from a gift. Therefore, it is important to find the right bank.

The banks in Ireland will consider you a FTB if you have never held nor currently hold a mortgage in Ireland or outside Ireland. They will also consider you a first-time buyer even if you own 10 properties but never held nor currently hold a mortgage on any of the properties that you own or previously owned. A first-time buyer is specifically linked to whether you held a mortgage or not.

If you are a joint couple where one person is a FTB and where the second person is not (i.e., the second person previously held or currently has a mortgage), the joint application will be deemed as a second time buyer application because one of the applicants holds or previously held a mortgage. This means that second-time buyer lending rules apply. The reason for this is because it is deemed that the second time buyer may have benefited from the sale or equity in the property that they currently hold or previously held a mortgage on. Although, if the second-time buyer qualifies under the *’fresh start’ criteria, with effect from the 1st January 2023 that would mean that your application could qualify as a first-time-buyer application.

*https://www.centralbank.ie/news/article/central-bank-announces-targeted-changes-to-mortgage-measures-framework

Yes, you can apply for a mortgage in most cases. A lot of the time, the banks will condition for your probation period to be completed before your mortgage funds issue/collect the keys to your new home. Generally, the timeframe from submitting your mortgage application to completing the purchase of a house takes a few months which means that you may naturally have passed your probation period by the time you are due to collect your keys. The banks will simply require a one-liner from your employer to confirm that you have successfully passed your probation period, then they will issue your mortgage funds.

For certain professionals, some banks could waive this condition. It all depends on your overall profile, your employment sector, your job role, your length of service in your previous job etc. In these cases, we would approach the most suitable lenders at the start of the process for you in order to give you the certainty that you need.

The banks will first look at it in this way – you are possibly seeking mortgage funds to issue while you are on maternity leave (and even on unpaid leave). This can leave the banks with no guarantee that you will go back to work at the same terms as before because they are unable to see it in your bank statements and payslips. If they are using your income to calculate how much you can borrow, they want to be sure that you will still be on that same income when you return to work. Therefore, in general the banks will ask that the mortgage funds will issue when you are back at work i.e., they will let you progress to formal contracts but will seek a payslip at the very end and before they issue any mortgage funds in order to confirm that you are back at work on the same terms (the same salary, not part-time on taking parent’s leave). Although, the banks can waive this condition sometimes depending on your profession, length of time with current employer and industry. Every case is different.