Since the 1st 2017, first-time buyers have been allowed a 90% loan-to-value limit, meaning that they are required to provide a deposit of 10% up front for any property. This percentage goes up to 20% for second-time and subsequent buyers.
The Central Bank (the ruling authority on mortgage lending) states that a prospective property buyer cannot borrow more than 3.5 times their annual income.
So, for example, if you earn €45,000 a year, you can buy a house with a maximum value of €157,000. If you’re buying with a partner who also earns €45,000, that amount doubles to €315,000.
It’s important to note that there are exceptions; 20% of first-time buyer mortgages can be above the 3.5 times your income cap and from January 1st 2018, 10% of second and subsequent mortgages can be above this limit.
When applying for a mortgage one of your biggest decisions will be to choose between a variable or fixed rate of interest for your repayments. Variable rates are traditionally more popular as they offer greater flexibility (there are no penalties for top up payments, term extensions or paying your mortgage off early)and you could benefit from falling ECB rates. However, variable rates can’t offer predictability or stability, leaving the customer at the mercy of changeable rates.
Fixed rates on the other hand, can offer budget-conscious mortgage customers much sought after peace of mind in the form of stable, predictable monthly repayments for a predetermined term. Of course, however, if you lock yourself into a long term fixed rate you could find yourself missing out on comparatively lower variable rates meaning you’ll end up paying more than you have to.