Understanding mortgages
What to know before taking out a mortgage
Before taking out a mortgage in Ireland, it’s important to understand how much you can borrow, the deposit you’ll need and the total cost of the loan. Central Bank (CBI) rules generally limit borrowing to four times your income for first‑time buyers and 3.5 times for others, with minimum deposits of 10% for homes and 30% for buy‑to‑let properties.
Interest rates and extra costs like legal fees, stamp duty and insurance can make a big difference to what you pay overall, so always do the sums and shop around using the CCPC Mortgage comparison tool. Check interest rates, fixed vs variable options and whether cashback offers make sense for you.
What is a mortgage?
A mortgage is a long-term loan you take out to buy a home. You borrow money from a lender and agree to pay it back in monthly instalments over a set period, usually 20 to 35 years. Each payment includes part of the amount you borrowed (the principal) and interest, which is the cost of borrowing.
Until the mortgage is fully repaid, the lender holds a legal charge on your property, meaning they have rights over it if you don’t keep up repayments. Once you’ve paid off the mortgage in full, the property is entirely yours and the lender’s charge is removed.
Can lenders offer you more than the mortgage limits?
Aside from the CBI limits set out above, 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 to offer a limited number of mortgages outside of the CBI limits, for these reasons you should always shop around. However, exceptions are limited and subject to strict criteria, so ask your lender if you may qualify.
What are the costs of a mortgage?
Interest rate
Interest rate is one of the most important factors, as it affects your monthly repayments and the total cost over the lifetime of your mortgage. Always compare the total cost and all benefits before choosing a mortgage. Use the CCPC Mortgage comparison tool to compare lenders' mortgage offerings.
What are the additional costs with a mortgage?
When you take out a mortgage, you’ll face a range of upfront and ongoing costs in addition to your monthly repayments. Understanding these costs will help you budget more accurately and avoid surprises during the home-buying process. Always consider these as part of the total cost and shop around to compare what different lenders and brokers offer.
Mandatory costs payable to your conveyancing solicitor include:
- Deposit: Usually at least 10% of the property price.
- Legal fees: Typically, around €950 to €2,500 plus VAT. These fees are paid to your conveyancing solicitor. Use the CCPC Finding a solicitor checklist to help you shop around and compare firms.
- Stamp duty: Stamp duty is a tax of 1% on most residential property purchases in Ireland (on the first €1 million), and it’s paid by the buyer through their solicitor, who pays it to Revenue.
- Land registry: €400 to €800 – fixed by scale but varies by property value.
- Mortgage registration fee: €175.
- Searches – title, planning: €70 to €250 approximately.
- Commissioner for Oaths: €10 to €20 per document.
- Courier/postage/admin: €50 to €150 approximately.
Always ask the solicitor for a cost estimate breakdown. You are entitled to a ‘costs notice’ in advance.
Delays
Research from the CCPC and ESRI shows that delays during the conveyancing process are common for many first‑time buyers. To help reduce the risk of delays, engage a solicitor as early as possible and discuss any factors that might lead to delays.
Read the CCPC/ESRI research findings for more.
Other costs:
These costs are paid directly to the relevant provider listed below, not to your conveyancing solicitor.
Local property tax (LPT): LPT is based on the valuation band your property falls into. Find your band on Revenue.
Home insurance: Home insurance (buildings cover) is mandatory for all mortgages.
Mortgage protection insurance: Mortgage protection insurance is specifically designed to pay off your mortgage if you die during the term of the loan. Most lenders require you to have mortgage protection in place before they will issue your mortgage.
Arrangement fee: Some lenders charge a fee to arrange the loan. This fee is often a percentage of the loan amount (for example, 0.5%) and is generally applied to buy-to-let and investment mortgages.
Valuation fee: Valuation is mandatory. The fee is paid to a professional valuer to estimate the property’s value. Typically, €150 to €250 approximately.
Moving costs, furnishing and fittings: These vary depending on your needs.
Mortgage broker’s fee
If you choose to go through a broker rather than directly to a lender, some brokers may charge a fee for arranging your mortgage or providing advice. This could be a percentage of the mortgage amount or a flat fee.
In other cases, brokers may be paid a commission by the lender instead, so it is important to check how your broker is being paid and whether any fees apply.
If you plan to use a broker, it’s important to ask about their charges and to shop around for the best value. Always ask a mortgage broker for their Terms of Business (sometimes called Terms and Conditions) and confirm they are regulated by the Central Bank of Ireland. For a better understanding of the pros and cons of brokers versus going directly to a lender, go to our applying for a mortgage page.
Structural survey
A structural survey can be carried out to assess the condition of a property. Your lender may require a survey with a written report if the property is very old (over 100 years), unusual or if any issues arise during the valuation. Even if your lender does not require it, you may want to get a survey for your own peace of mind to ensure there are no hidden problems with the building.
A walkaround survey or inspection – a quick visual check for obvious issues with no written report – may cost around €150 to €250. A full structural survey is a detailed inspection with a written report on condition and defects. It may cost around €400 to €800. For a better understanding of why it can be so important to get a structural survey done, go to applying for a mortgage. Check if a surveyor is registered here: Society of Chartered Surveyors Ireland (SCSI).
Fixed interest rates
Most lenders offer short-to-medium fixed periods of 2, 3, or 5 years. Longer options like 7 or 10 years exist, and some lenders even offer 20 to 30 years fixed, but these are less common and usually at higher rates. Check for early repayment or overpayment penalties before choosing a fixed-rate mortgage.
Why 3 or 5 years are popular
3-year fix:
- Often slightly cheaper than 5-year deals
- Good if you expect to move or switch lenders soon
- Less commitment, but you’ll face market rates sooner
5-year fix:
- Offers longer certainty for budgeting
- Protects you from rate hikes for a longer period
- Usually costs a little more than 3-year fixes but gives peace of mind
Pros and cons of short vs longer fixes
Short fixes (2–3 years):
- Lower initial rates
- Flexibility to switch sooner
- Risk of higher rates when term ends
Long fixes (5+ years):
- Stability for longer
- Protection against rising rates
- Higher initial rates
- Early exit fees if you need to switch
Things to consider about fixed-rate mortgages
Costs and risks
End of term
Overpayments
Overpaying may be limited – check your terms for how many overpayments are allowed and the maximum amount.
Variable interest rates
A variable rate is set by your lender and can change at any time. Lenders decide their variable rates based on a range of factors that affect the cost of borrowing and lending, often called the interest rate environment. These include:
- Central bank policies
- Wider economic conditions
- Demand for credit
When we say variable rates “move with the interest rate environment”, we mean that changes in central bank policy, such as decisions by the European Central Bank (ECB), can influence lenders’ funding costs.
Lenders may respond to these changes by reviewing their rates, but they are not required to mirror ECB rate changes, and any increase or reduction is a decision made by the lender. Because of this, your repayments may rise or fall, but changes are not automatic and can vary between lenders.
Variable rates may not always be the cheapest option. However, some mortgage providers may offer greater flexibility on variable rates, such as allowing overpayments or selling your home without early repayment fees (sometimes called “breakage fees”), but this depends on the terms of your mortgage and should always be checked.
Are lenders’ special offers like cashback worth it?
Many lenders offer incentives such as cashbacks, but it is important to look beyond the headline offer and check the long‑term cost.
Mortgage cashback usually comes in two forms:
- Lump‑sum cashback is a one‑off payment you get at the start of your mortgage, often used to help with upfront costs.
- Ongoing cashback is paid monthly as a small percentage of your mortgage for a set number of years.
A lower interest rate can be better value than cashback, but this is not always the case. For a short fixed‑rate period, the cash you receive up front may sometimes work out better. Before accepting any incentive like cashback, you should always:
- Calculate the total cost over the full mortgage term, and
- Calculate the cost over the fixed‑rate period
What you are choosing between
When choosing a mortgage, you may find yourself comparing:
- A lower interest rate with no cashback: Your monthly repayments will be lower, or
- A higher interest rate with cashback: You get money up front, but your monthly repayments will be higher.
However, these are not always your only options. Some mortgages offer competitive interest rates while also including cashback. Choose the option that leaves you better off overall by comparing total repayments over the fixed‑rate period with the value of the cashback.
Simple check;
(Higher monthly repayment − lower monthly repayment) × number of months in the fixed‑rate period = extra cost
Compare this extra cost with the cashback:
- If the extra cost is more than the cashback, the cashback deal may not be worth it
- If the cashback is more than the extra cost, you may be better off overall with the cashback option
You can use the CCPC mortgage comparison tool to see what cashback incentives are available. If you are unsure, speak to your mortgage provider or a mortgage broker to get a clearer picture of which option best suits your situation.
What to keep in mind
In Ireland, most lenders offer fixed-rate mortgages for relatively short terms (usually between three and seven years). After that period ends, you’ll need to decide whether to take out a new fixed-rate deal – based current Irish market interest rates – or switch to a different lender offering a more competitive rate.
What is a tracker mortgage?
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 European Central Bank (ECB) rate, and as this rate rises and falls, so does a tracker mortgage rate.
A margin is the fixed amount your lender adds to the ECB base rate to calculate your mortgage interest. 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.
How do you improve your chances of approval for a mortgage?
Go to applying for a mortgage for more information.
