The Central Bank of Ireland’s rules limit the amount that is lent to mortgage applicants. These limits apply loan-to-income (LTI) ratios and the loan-to-value (LTV) ratios. These are in addition to the lenders’ individual credit policies and conditions. Lenders have a limited amount of discretion when it comes to these limits. For more information see the Central Bank of Ireland rules.
These don’t apply to switchers or for restructuring mortgages in arrears/pre-arrears.
Loan to income limits
A limit of 4 times your gross annual income (income before tax) applies to first-time buyers. This limit also applies to ‘fresh start’ applicants. This includes borrowers who are divorced/separated or have undergone bankruptcy/insolvency. They must also have no interest in another property.
A limit of 3.5 times your gross annual incomes applies to second-time/subsequent buyers. This limit also applies to those in negative equity applying for a mortgage for a new property.
Loan-to-value limits
LTV limits mean you need to have a deposit of a certain amount before you can get a mortgage. There are different limits in place depending on what category of buyer you are. If you’re borrowing for a property you intend to live in you need a 10% deposit and buy-to-let buyers need a 30% deposit.
It can be tempting to apply for the largest amount possible. However, you need to make sure you will be able for future events such as an increase in interest rates, having children, redundancy or illness.
You can use our budget planner to work out what you can afford to repay each month. Make sure to include a regular amount for ‘unforeseen expenses’. You can use our mortgage calculator to see how much your mortgage repayments would be.
The shorter the term, the higher your monthly repayments, but you will pay less interest in total. With a longer term mortgage your monthly repayments will be lower, but you will pay more in interest over the lifetime of the mortgage.
Example:
| Mortgage amount |
Term |
Interest rate |
Monthly repayments |
Total cost of credit |
| €200,000 |
20 years |
3% |
€1,109 |
€66,206 |
| €200,000 |
25 years |
3% |
€948 |
€84,526 |
| €200,000 |
30 years |
3% |
€843 |
€103,554 |
| Difference in cost of credit between 20 and 30 year terms |
€37,348 |
Even a small difference in interest rates can have a big impact on the overall cost of a mortgage.
Example:
| Mortgage amount |
Term |
Interest rate |
Monthly repayments |
Total cost of credit |
| €200,000 |
20 years |
3% |
€1,109 |
€66,206 |
| €200,000 |
20 years |
3.5% |
€1,154 |
€77,028 |
| Difference in cost of credit between interest rates |
€10,822 |
If you are a first-time buyer, you may also be eligible for the government’s First Home Scheme. This is a shared equity scheme and can provide up to 30% of the purchase price of a home.
Read more about the First Home Scheme.
