{"id":20092,"date":"2024-02-16T15:00:15","date_gmt":"2024-02-16T15:00:15","guid":{"rendered":"https:\/\/www.ccpc.ie\/consumers\/?page_id=20092"},"modified":"2025-03-05T10:55:15","modified_gmt":"2025-03-05T10:55:15","slug":"understanding-mortgages","status":"publish","type":"page","link":"https:\/\/www.ccpc.ie\/consumers\/money\/mortgages\/understanding-mortgages\/","title":{"rendered":"Understanding mortgages"},"content":{"rendered":"<p>A mortgage is loan that you take out to buy a property. A mortgage is a long-term commitment, so it\u2019s 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 <a href=\"https:\/\/www.ccpc.ie\/consumers\/money-tools\/mortgage-comparisons\/\">mortgage comparison Money Tool<\/a>.<\/p>\n<h2>How much can you borrow?<\/h2>\n<p>There are many factors that lenders consider when deciding how much they will lend you. These include:<\/p>\n<ul>\n<li>Your income<\/li>\n<li>Your age<\/li>\n<li>If you have any dependents<\/li>\n<li>Other loans\/debts you have<\/li>\n<li>Previous mortgages\/other houses you own<\/li>\n<\/ul>\n<p>Lenders must apply <a href=\"https:\/\/www.centralbank.ie\/consumer-hub\/explainers\/what-are-the-mortgage-measures\">Central Bank of Ireland (CBI) rules<\/a> 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\u2019re buying a house they want to live in and a 30% deposit for a buy-to-let mortgage.<\/p>\n<p>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.<\/p>\n<h2>What are the costs of a mortgage?<\/h2>\n<p>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:<\/p>\n<div id=\"accordion-1\" class=\"accordion no-js\">\n\t\t\t\t\t<h3 role=\"button\" id=\"accordion-1-t1\" class=\"accordion-title js-accordion-controller\" aria-controls=\"accordion-1-c1\" aria-expanded=\"false\" tabindex=\"0\">\n\t\t\t\tFixed interest rates\t\t\t<\/h3>\n\t\t\n\t\t<div id=\"accordion-1-c1\" class=\"accordion-content\" aria-hidden=\"true\">\n\t\t\t<\/p>\n<p>With a fixed rate mortgage your monthly repayments are fixed for a set period. The main benefit of a fixed rate is knowing exactly what you will repay each month and having the peace of mind that your repayments will not increase during the fixed-rate period. However, if rates drop, you may end up paying more in the long run. <\/p>\n<p>If you want to break out of a fixed rate you may have to pay a penalty or fee. You might want to break out of your fixed rate if you decide to switch lenders, re-mortgage, pay off a lump sum or if you want to sell your home. You should find out more about any penalty before you sign up to a fixed rate or decide to break out of an existing one.\u202f The penalty or fee lenders are entitled to charge should not exceed the financial loss to them, that means that the sum charged should reflect the possible costs to the lender directly linked to an early repayment. <\/p>\n<p>At least 60 days in advance of the end of the fixed rate period, your lender will write to you and inform you of your options which may include moving to a variable rate or availing of another fixed rate.\u202f They must provide details of the new rate applicable from the expiry date. If you don\u2019t choose an option, your lender may automatically put you on their standard variable rate which might not be the most suitable or cheapest option for you. <\/p>\n<p>If you wish to overpay \/ pay more than the monthly repayment amounts on your fixed rate mortgage you will need to review the terms and conditions of your mortgage to see  <\/p>\n<ul>\n<li>the number of overpayments per annum that are permitted and<\/li>\n<li>how much the overpayment can be, as it may be limited to a set percentage of the outstanding sum<\/li>\n<\/ul>\n<p>\t\t<\/div>\n\n\t\t\n\t\t\t\t\t<h3 role=\"button\" id=\"accordion-1-t2\" class=\"accordion-title js-accordion-controller\" aria-controls=\"accordion-1-c2\" aria-expanded=\"false\" tabindex=\"0\">\n\t\t\t\tVariable interest rates\t\t\t<\/h3>\n\t\t\n\t\t<div id=\"accordion-1-c2\" class=\"accordion-content\" aria-hidden=\"true\">\n\t\t\t<\/p>\n<p>A variable rate is a rate which is set by your lender and can change at any time. Variable rates may not be the cheapest option, but they allow you to over pay, switch lenders or sell your home without any breakage fees.<\/p>\n<p>\t\t<\/div>\n\n\t\t\n\t\t\t\t\t<h3 role=\"button\" id=\"accordion-1-t3\" class=\"accordion-title js-accordion-controller\" aria-controls=\"accordion-1-c3\" aria-expanded=\"false\" tabindex=\"0\">\n\t\t\t\tTracker interest rates\t\t\t<\/h3>\n\t\t\n\t\t<div id=\"accordion-1-c3\" class=\"accordion-content\" aria-hidden=\"true\">\n\t\t\t<\/p>\n<p>None of the lenders in the Irish market offer tracker rates to new customers, however many existing customers still have these rates. Tracker rates are set at a fixed percentage or margin above the <a href=\"https:\/\/www.ecb.europa.eu\/stats\/policy_and_exchange_rates\/key_ecb_interest_rates\/html\/index.en.html\">European Central Bank<\/a> (ECB) rate and as this rate rises and falls, so does a tracker mortgage rate.<\/p>\n<p>If you switch from a tracker rate you are unlikely to be able to revert back to it. If you are coming to the end of a fixed term and you think you are entitled to revert back to a tracker rate, you should check this with your lender.<\/p>\n<p>\t\t<\/div>\n\n\t\t<\/div>\n<p>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\u2019s important to look at the total cost and all benefits combined to work out which is overall the best mortgage for you.<\/p>\n<div id=\"accordion-2\" class=\"accordion no-js\">\n\t\t\t\t\t<h3 role=\"button\" id=\"accordion-2-t1\" class=\"accordion-title js-accordion-controller\" aria-controls=\"accordion-2-c1\" aria-expanded=\"false\" tabindex=\"0\">\n\t\t\t\tOther fees\t\t\t<\/h3>\n\t\t\n\t\t<div id=\"accordion-2-c1\" class=\"accordion-content\" aria-hidden=\"true\">\n\t\t\t<\/p>\n<p>Some fees you may have to pay for your mortgage include:<\/p>\n<p><strong>Arrangement fee<\/strong> \u2013 some lenders charge a fee to arrange the loan. This may be a percentage of the loan amount, such as 0.5%. In general, this is for buy-to-let and investment mortgages.<\/p>\n<p><strong>Brokers\u2019 fees<\/strong> \u2013 some brokers charge a fee to arrange your mortgage or for mortgage advice. This might be a percentage of the mortgage amount or a flat fee. Not all brokers charge a fee so if you are planning to use a broker it is important to ask about this and to shop around.<\/p>\n<p><strong>Valuation fee<\/strong> \u2013 this is paid to a professional valuer to estimate a property\u2019s value, some lenders may pay this fee for you.<\/p>\n<p><strong>Structural survey fee<\/strong> \u2013 a structural survey is done to find out the condition of a property. If any issues arose during the valuation of the property or it is very old, your lender may insist on a structural survey. Even if your lender does not require it, you may want to get a survey anyway to be sure there are no problems with the building.<\/p>\n<p>\t\t<\/div>\n\n\t\t\n\t\t\t\t\t<h3 role=\"button\" id=\"accordion-2-t2\" class=\"accordion-title js-accordion-controller\" aria-controls=\"accordion-2-c2\" aria-expanded=\"false\" tabindex=\"0\">\n\t\t\t\tSpecial offers\t\t\t<\/h3>\n\t\t\n\t\t<div id=\"accordion-2-c2\" class=\"accordion-content\" aria-hidden=\"true\">\n\t\t\t<\/p>\n<p>Many mortgage lenders offer incentives to take out a mortgage with them, but you need to consider if these short-term incentives are worthwhile when compared to the long-term costs of the mortgage. The interest rate should be your main consideration as this is what will determine the overall cost of credit.<\/p>\n<p>If you get a cashback payment when taking out your mortgage, your lender is not entitled to claw it back if you switch to another lender.<\/p>\n<p><div class=\"example col-md-12\"><\/p>\n<h4>Example<\/h4>\n<p>John has an outstanding mortgage of \u20ac300,000 on his home and wants to switch his mortgage.<\/p>\n<p>He is doing research and finds a bank that is offering cashback of 2%. John is delighted that he will get \u20ac6,000 cash back to move to Lender A. But there is another lender in the market with a lower APRC and no special offer \u2013 the table below shows the true cost of both options.<\/p>\n<table style=\"border-collapse: collapse; width: 100%; height: 168px;\" border=\"1\">\n<tbody>\n<tr>\n<td style=\"width: 16.6667%;\"><\/td>\n<td style=\"width: 16.6667%;\"><\/td>\n<td style=\"width: 16.6667%;\"><\/td>\n<td style=\"width: 16.6667%;\"><\/td>\n<td style=\"width: 16.6667%;\"><\/td>\n<td style=\"width: 16.6667%;\"><\/td>\n<\/tr>\n<tr style=\"height: 120px;\">\n<td style=\"width: 16.6667%; height: 120px;\">Lender<\/td>\n<td style=\"width: 16.6667%; height: 120px;\">Amount borrowed<\/td>\n<td style=\"width: 16.6667%; height: 120px;\">APRC<\/td>\n<td style=\"width: 16.6667%; height: 120px;\">Monthly repayments<\/td>\n<td style=\"width: 16.6667%; height: 120px;\">Total cost of credit<\/td>\n<td style=\"width: 16.6667%; height: 120px;\">Total cost of credit minus cashback<\/td>\n<\/tr>\n<tr style=\"height: 24px;\">\n<td style=\"width: 16.6667%; height: 24px;\">A<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac300,000<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">4.6%<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac1,667<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac200,249<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac194,249<\/td>\n<\/tr>\n<tr style=\"height: 24px;\">\n<td style=\"width: 16.6667%; height: 24px;\">B<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac300,000<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">3.6%<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac1,502<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u20ac150,561<\/td>\n<td style=\"width: 16.6667%; height: 24px;\">\u00a0\u20ac150,561<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>His mortgage repayments with Lender A are \u20ac165 more expensive a month than they would be with Lender B<em>. <\/em>The temptation to take the 2% cashback offer will cost John \u20ac43,688 over the term of the mortgage.<br \/>\n<\/div><\/p>\n<p>\t\t<\/div>\n\n\t\t<\/div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A mortgage is loan that you take out to buy a property. A mortgage is a long-term commitment, so it\u2019s important that you understand it before taking one out. There are many lenders in Ireland who offer mortgages, and you &hellip;<\/p>\n","protected":false},"author":240,"featured_media":0,"parent":221,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"tags":[],"class_list":["post-20092","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Understanding mortgages - CCPC Consumers<\/title>\r\n<meta name=\"description\" content=\"The Competition and Consumer Protection Commission is an independent statutory body that enforces competition and consumer protection law in Ireland\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.ccpc.ie\/consumers\/money\/mortgages\/understanding-mortgages\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_GB\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Understanding mortgages - 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