What are the Central Bank mortgage lending rules?
Understanding the Central Bank mortgage lending rules is essential for anyone planning on taking out a mortgage and buying a home in 2025. These lending rules were introduced by the Central Bank to encourage prudent borrowing & to protect the housing market. The Central Bank mortgage lending rules have significantly influenced Ireland’s housing market, creating a more stable and sustainable property market.
What do you need to know if you’re applying for a mortgage in 2025?
The Irish mortgage market is constantly evolving. Over the past 12 months we’ve seen mortgage rates climb and then gradually start to fall. There has also been the arrival of 2 new mortgage lenders. Lending rates are currently ranging from 3.4% to 6.4% with green mortgage options available too, so being informed is key to getting the best mortgage option for you in 2025.
How much can I borrow?
Lenders will assess a mortgage application based on your ability to repay the mortgage and that you have a minimum 10% deposit saved to go towards the purchase
The Central Bank mortgage rules will result in loans being capped (based on your income) in order to maintain affordability. However lenders interpretation of “allowable income” can differ slightly e.g. if your income includes variable elements such as bonuses, overtime, commissions, or allowances
- First-Time Buyers can borrow up to 4 times their gross annual income.
- Second time and subsequent Buyers are normally limited to borrowing 3.5 times income.
- Mortgage Switchers are exempt from the lending rules if they doing a straight mortgage switch to another bank( in order to get better terms)
Exceptions are available to allow you to borrow more than the Central Bank levels. For a first time buyer this means you could potentially borrow up to 4.75 times income and for second and subsequent buyers the maximum is 4.5 times allowable income.
Can I Get a Mortgage Exception?
In order to get a mortgage exception you must meet specific criteria. Exceptions are limited and at the discretion of the lender
- Loan To Income Exceptions: A percentage of loans can exceed the LTI cap, which allows borrowers to access higher amounts at more than 4 times LTI.
- Loan To Value Exceptions: There is some flexibility here for certain buyers, for example those with a strong financial profile or unique circumstances. However usually banks will not allow borrowings over 90% LTV.
What Government supports are available?
There are government supports available but they are limited and not available to everyone.
The Help to Buy, First Home Scheme, and Local Authority Affordable Purchase schemes provide great support, however they are limited to new-build homes.
· First Home Scheme or FHS will bridge the gap between your mortgage and deposit and the purchase price, giving up to 30% of the property’s value.
· The Help to Buy Scheme offers up to €30,000 (or 10% of the purchase price) as a tax rebate for new-build homes. This can be used as part of your deposit.
· The Local Authority Affordable Purchase Scheme (LAAP) helps eligible applicants buy a home at a discount to the home’s market price.
Should I review and switch my mortgage?
Once you secure your mortgage doing regular reviews is advisable can save you money. As property values rise and the balance you have to pay off on your mortgage decreases, your loan-to-value (LTV) improves which means that you may be eligible for better rates.
If your properties BER rating improves (Building Energy Rating ), you may also be able to get Green rates, which are normally very competitive.
Buying a house in 2025
Getting a mortgage in 2025 is challenging, but staying well informed and asking for advice and guidance is key. At Citywide Financial we specialise in helping borrowers get to grips with lending rules and their implications. We work with our clients to secure the best possible outcome for their mortgage including free mortgage consultations and reviews, advice on exceptions and guidance through every step of the paperwork.
If you are not sure where to start then contact our mortgage team
(01) 513 8710
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