How the Central Bank’s New Mortgage Rules Affect You
The Irish Central Bank introduced significant mortgage rules in February 2015 that have fundamentally changed the lending landscape. These new regulations have brought stricter criteria for mortgage approval, focusing on two key areas: Loan-To-Income (LTI) and Loan-To-Value (LTV) limits.
Loan-To-Income (LTI) Limits
The LTI limit caps the amount borrowers can loan based on their income. Specifically, applicants can borrow up to 3.5 times their gross annual income. This rule applies to:
- Private residential home mortgages
- Trading Up Mortgage applications in negative equity
It’s important to note that Buy-To-Let Mortgage applications are exempt from this income-based limit.
Loan-To-Value (LTV) Limits
The Central Bank has also implemented new LTV restrictions that reduce the percentage of a home’s value that can be borrowed. Here’s a breakdown of the maximum LTV for different mortgage types:
| Mortgage Type | Property Value | Maximum LTV |
|---|---|---|
| First Time Buyer | €220,000 or less | 90% |
| First Time Buyer | €220,000+ | 90% of €220,000 plus 80% of the balance over €220,000 |
| First Time Self Build | €220,000 or less | 90% |
| First Time Self Build | €220,000+ | 90% of €220,000 plus 80% of the balance over €220,000 |
| Trading Up Mortgage | Any Value | 80% |
| Non First Time Self Build | Any Value | 80% |
| Remortgage with Negative Equity | Any Value | At lender’s discretion |
| Buy To Let Mortgage | Any Value | 75% |
| Non Resident (Expat Mortgage) | Any Value | 65% |
Navigating the New Rules
While these rules may seem restrictive, mortgage approval is still achievable with the right guidance. Experienced mortgage advisors can help applicants navigate these new criteria effectively.
If you’re concerned about how these rules might impact your mortgage application, don’t hesitate to seek professional advice. A knowledgeable mortgage advisor can help you understand these regulations and explore your options.
Are you ready to take the next step? Consult with a mortgage professional who understands the intricacies of the Central Bank’s new mortgage rules and can help you find the best path forward.
Further changes were made to these rules in 2022 which you can read about here Understanding the Central Bank’s Mortgage Lending Rules in 2022