Understanding mortgages

A mortgage is loan that you take out to buy a property. A mortgage is a long-term commitment, so it’s important that you understand it before taking one out. There are many lenders in Ireland who offer mortgages, and you can compare all your options using our mortgage comparison Money Tool.

How much can you borrow?

There are many factors that lenders consider when deciding how much they will lend you. These include:

  • Your income
  • Your age
  • If you have any dependents
  • Other loans/debts you have
  • Previous mortgages/other houses you own

Lenders must apply Central Bank of Ireland (CBI) rules as well as their own criteria. CBI rules limit borrowing to 4 times your income for first time buyers and 3.5 times your income for other buyers. They also require borrowers to have a 10% deposit if they’re buying a house they want to live in and a 30% deposit for a buy-to-let mortgage.

Lenders will also have their own criteria, for example if they count overtime and bonuses as income for calculating your mortgage limit. Lenders are also allowed offer a limited number of mortgages outside of the CBI limits, for these reasons you should always shop around.

What are the costs of a mortgage?

When choosing a mortgage, the interest rate is the most important factor to consider. The rate you pay has a significant impact on the amount you pay each month, and over the lifetime of the mortgage. There are a few different types of interest rates available:

As well as your interest rate, there other fees you may have to pay, and special offers (such as cashback), that you may be eligible for. When comparing mortgages, it’s important to look at the total cost and all benefits combined to work out which is overall the best mortgage for you.



Last updated on 16 February 2024