Garda Mortgages Donegal
Members of An Garda Síochána Qualify For Higher Mortgages
When ICS and Finance Ireland entered the Irish home loan market, they have thankfully brought a bit of innovation to the marketplace.
Where they are making a big difference is how they view Garda’s income and in fact all Civil/ Public Servants income.
As you know St Paul’s and St. Raphael’s Garda Credit Union’s offer a mortgage option for you guys, so take time to shop around and have a chat with a trusted mortgage advisor.
So, what is different?
All lenders use your income in the first instance to calculate the amount of mortgage lending available to you.
ICS & Finance Ireland will calculate the lending figure for Servicing Garda based on 2 points up on your pay scale.
Both Lenders are offering slightly different lending guidelines for servicing members of An Garda Síochána due to the security of their employment and potential future earnings.
The big difference is the basic income for Garda will be considered to be two points up their current Pay Scale.
Variable Incomes
With regard to Variable income the following will apply:
Up to 100% of listed additional incomes below may be factored into your lending assessment if Salaries confirms it is regular on the salary certificate and is evident on the most recent Employment Detail Summary and on target income for current tax year
- Rostered and un-Rostered night duty
- Sunday allowance
- Over time
- Public Holiday allowance
- Allowances
- Rostered and un-Rostered Saturday’s & Sunday’s
The above is not an exhausted list and other variable incomes will be considered
Probationary Period
ICS & Finance Ireland will consider Garda who are promoted within the Service on a one year ‘probationary’ period.
New entrants to An Garda Síochána who are subject to any probationary period will be reviewed on a case by case basis. An applicant’s previous employment history is required to establish their experience and suitability for their new position.
Only one applicant needs to be a Garda to apply for this competitive mortgage proposition.
Rates Offered
Example of Mortgages for Garda in Ireland:
Helen is a Garda and was appointed after Oct 2013, she is currently on point 6 on the pay scale. Her basic income is €46,835
Based on just her basic income Helen would qualify for a mortgage of €163,922 with the traditional lending calculations. Not taking account of her variable incomes.
With ICS & Finance Ireland
We can now increase Helen’s income by 2 points to €51,105, now Helen would qualify for €178,867, not taking account of her variable incomes
This is difference of €14,945.
Obviously, when we then factor in the variable incomes, the lending figure will increase.
So, as a serving member of An Garda Síochána, ICS & Finance Ireland will lend more than any other lender in the market place at this time.
Please Note: In the example above, we used a simple income multiple of 3.5 times to work out the amount of available lending. A higher lending amount may be available if Helen qualified for an exemption. Other lending terms, conditions and criteria apply.
Not available for Self-Build
ICS and Finance Ireland currently do not offer mortgage for self-build. They are currently only in the purchase space. Normal lender criteria applies when self-building.
Flexible Repayment Options available*
ICS & Finance offer a range of flexible repayment options. These are aimed to suit your individual changing needs throughout your mortgage term
Overpay facility
– customers can pay an additional 20% off their fixed rate mortgage without penalty in any 12-month period. This can either be in a lump-sum or regular overpayments.
Mortgage breaks
– You can apply for a 3-month break from your mortgage up to 3 times throughout your mortgage term. This is to give a little breathing space during certain life events such as the birth of a child, medical of educational expenses. The mortgage must be drawn down for at least 12 months before applying for a mortgage break.
Loan- to- value rates
throughout the mortgage term. If you choose a variable rate and as your Loan to Value reduces, you may be able to avail of lower rates. You will need to provide a new valuation on your home.
*All flexible options are subject to our lending criteria and terms and conditions
Fact File: You can get mortgage approval in principle before you start to look for a property. This lets you know how much you have to spend. Most estate agents will request proof of funds before your offer will be put to the vendor.
- At least one applicant must be a member of An Garda Síochána
- All properties must be in the Republic of Ireland
- They must be used as Principal Dwelling Houses
- Applicants must have the required permission to reside and work in the state
- A full Valuation of each property is required
- Security, buildings insurance and life cover are required
- Minimum age of applicants 18 years and Maximum age on maturity 70 years
- Applicants must have a proven repayment capacity to meet stress test repayments
- A minimum deposit of 10% of the purchase price is required for first time buyers, 20% deposit is required for second time buyers
Lending criteria, Terms and Conditions apply and are subject to change
So, what is a Mortgage?
A mortgage is a loan required to finance the purchase of a property. A mortgage allows individuals to buy a property now and pay for it over a number of years.
When you are obtaining a mortgage, you will need to put down a deposit. The amount of this deposit will depend on whether you are a first-time buyer or non-first-time buyer. It will also depend on the lender’s criteria for the amount they will lend compared to the value of the property. The mortgage amount will be the purchase price of the home, less the amount of your deposit (which can be made up of savings and any financial gifts from e.g., parents). Regular payments must be made over the term of the mortgage to repay the mortgage loan. These payments are usually made monthly.
Fact File: The larger the deposit that you can put down, the less money you will have to borrow, meaning the less interest you will have to pay over the term of the mortgage
Buying a home
Before deciding on if buying is the best option for you, you should review your budget to find out how much you can afford in monthly mortgage repayments. The CCPC has a budget planner that you can use to see how much you can afford each month.
In general, properties are purchased and sold either by: Private treaty or public auction.
A private treaty sale is where the property is not put into an auction. You can contact the seller or the seller’s agent, usually an estate agent, to agree a purchase price.
Auctions are usually advertised in a local newspaper, estate agent or by a sign on the property.
There are lots of issues with buying a house at auction using a mortgage, so it is important that you seek advice from trusted advisor
A good mortgage advisor will be able to explain the choices available to you in simple language allowing you to make an informed decision.
Fact File: You can get mortgage approval in principle before you start to look for a property. This lets you know how much you have to spend. Most estate agents will request proof of funds before your offer will be put to the vendor.
Mortgage Protection Insurance
When taking out a mortgage, you need to consider how it will be paid off in the event of your death. You may also consider how to continue repayments if your income falls, due to illness, or other reasons. When you get a mortgage to buy your home, you will generally be required to take out mortgage protection insurance.
This is a particular type of life assurance taken out for the term of the mortgage and designed to pay it off on the death of the borrower or joint borrower.
There is also another type of Mortgage Protection insurance called Mortgage Repayment Protection insurance. This insurance is usually optional. It is a type of payment protection insurance that is designed to repay your mortgage for a certain amount of time. It is important to review your mortgage protection policy regularly which can be done through your trusted advisor.
Fact File: In most cases, the lender is legally required under Section 126 of the Consumer Credit Act 1995 to make sure that you have mortgage protection insurance before giving you a mortgage. You can shop the market for this insurance, you do not have to take out with you lender, in most cased we would recommend that you don’t take it with your lender.
The Reliefs that are available
Help to Buy (HTB) Incentive:
As a first-time buyer, this incentive will help you towards the deposit you need to buy or build a new home. The incentive gives you a refund of the income tax and Deposit Interest Retention Tax (DIRT) you paid over the previous four tax years. The incentive applies if you buy, or self-build a new residential property as your main home.
First-Time Buyers (FTB) Relief: You pay DIRT on interest you receive on your savings in financial institutions such as banks and building societies. If you are a first-time buyer that buys or self builds a property to live in, you may be able to claim a DIRT refund. The FTB is relief applied to homes bought or self-built between 14 October 2014 and 31 December 2017.
Why use a Mortgage Brokers like Advice First Financial?
Clear. Concise. Professional.
Advice First are trusted experts for Mortgage Advice and Financial Planning matters and work on your behalf giving you a choice of products and providers from across the market. We will work with you to understand your mortgage & financial goals and helps you create a plan to meet your personal finance objectives.
Our services can include Mortgage Advice, personal financial planning, life cover, serious illness cover, income protection, savings, investments, pensions, retirement planning, business financial planning, inheritance tax planning, mortgages.
We will be able to explain the choices available to you as a first-time buyer in simple language allowing you to make an informed decision.
Conclusion on Mortgages for Garda
As you can see lending criteria differs between lenders, the amount of lending available can differ greatly between lenders, so, it is important to speak with A trusted Mortgage Advisor who knows the marketplace and who has access to a number of lenders, as well as some that are not on the high street.
Take Action to Find Out Which Mortgage Option Is Best For You
Our advice is, if you are thinking of applying for a mortgage, or looking at your existing mortgage, get advice, this will be one of the biggest decisions you will make in your lifetime.
Asking for help and advice is first place to start
What you should know for your mortgage application
- If you haven’t yet found a property, you can get an approval in principle, you should think about:
- The area in which you want to buy
- Your desired price range or the price range in that area.
- If you’ve found a property you wantto buy
- The exact correct address of the property, including the Eircode.
- The agreed price of the property
- Your income
Your annual base income. We have also said ICS & Finance Ireland will take account of all the variable income and allowances as well. You pay slip and Detail Employment Summary will provide the info needed.
- Outgoings and Spending
What you typically spend each month including rent/mortgage payments, groceries, bills, clothing, travel, entertainment, childcare, loan/credit card repayments. Take account of major irregular expenses such as house/motor/health insurance or holiday expenses.
- Savings
The amount of savings that you have and any regular savings commitments that you have. Savings are important to pay for a deposit and additional expenses, including legal costs, involved in buying a property.
Lenders will also take into account whether applicants can show the ability to manage money and save.
- Outstanding loans
Any outstanding loans including overdraft balances, personal/motor loans, hire purchase agreements, credit union loans, point-of-sale credit agreements and credit card balances.
The more borrowing you have, the less additional borrowing, in the form of a mortgage, you will be able to take on.
- How much you need to borrow
The difference between the price you will pay for the property and the amount you will put towards the house yourself. This will depend on the savings and other funds you have available to pay for the deposit. You will need to factor in other expenses such as solicitor’s fees and a valuation/surveyor report into the purchase price.
- Repayment term
The period in years over which you plan to repay the mortgage. The shortly the repayment term the higher the monthly repayments will be and vice versa
Checklist of items needed for a mortgage Application
When applying for a mortgage the following will be needed for all applicants.
This list is for guidance only and different lenders may not require everything in this list
- Photographic ID (originals or certified copies)
- Address verification
- Most recent 6 months’ bank account statements (for all bank accounts)
- Most recent 6 months’ online bank account statements (i.e. Revolut)
- Most recent 6 months’ savings account statements (if applicable)
- Most recent 6 months’ credit union statement (if applicable)
- Last 6 months’ credit card statements (if applicable)
- 12 months’ statement on all loans if applicable
- Most recent mortgage statement for all mortgages (if any)
- Foreign Credit History Report, English version, (if living in or have a loan or bank account in any country outside Ireland)
- Gift letter (if getting a gift for the deposit)
- Copy of your Marriage Cert (if applicable)
- Copy of your Divorce or Separation agreement (if applicable)
- Up to 3 months’ recent pay slips
- Most recent Employment Detail Summary
- Salary Cert completed by your Salaries Dept
If you are self-building
- Breakdown of build costs (Your lender will provide the template)
- Copy of architects’ PI cover
- Copy of planning permission
- Copy of plans
- Copy of ordinance survey/ site map
- Gift letter if site was gifted
Fact File: The above list is for guidance only and does not constate a completed list. Lenders may require more or less information than listed above. If you are borrowing from the lender you bank with you will not have provide bank accounts etc.
What a lender needs to know
Lenders assess mortgage applications in different ways. The lender will take into account the information you provided to assess how much you can afford to borrow and whether or not you will be able to meet the mortgage repayments.
In making a decision, the lender must comply with the Central Bank of Ireland rules which apply limits to mortgage lending in the Irish market. These limits apply to loan to value and loan to income measurements and are reviewed every year.
In making its decision, the lender will also look at other issues:
- Your age – how old you are and when you will retire may affect the repayment term most appropriate to your situation.
- Your credit record – your history of loan repayments may affect the lender’s assessment of your ability to meet repayments in the future.
Help to Buy (HTB) scheme
The Help to Buy (HTB) scheme is an incentive for first-time property purchasers. It will help you with the deposit you need to purchase or self-build a new house or apartment. You must purchase or self-build the property to live in as your home.
Where you meet the required conditions, you will receive a refund of:
- Irish Income Tax
And
- Deposit Interest Retention Tax (DIRT) you paid in Ireland.
The refund will be from the four tax years prior to when you make your application. The refund will not include any refunds you have already claimed.
Who can claim HTB?
To claim HTB, you must:
- be a first-time purchaser at the time of the claim
- purchase, or self-build, a qualifying property between 1 January 2017 and 31 December 2022
- live in the property as your main home for five years after you purchase or self-build it
- be tax compliant. If you are self-assessed, you must also have tax clearance
- take out a mortgage on the property with a qualifying lender.
The mortgage must be at leas
- 70% of the: purchase value of the property
Or
- approved valuation, in the case of a self-build.
To qualify, you must not have previously purchased or built a house or apartment, either on your own or jointly with any other person. If you are purchasing or self-building the new property with other people, all of them must be first-time purchasers. If you have inherited, or have been gifted, a property, depending on the circumstances, it may not affect your eligibility.
If you are purchasing the property, you must have signed a contract to purchase that property to get payment.
If you are self-building, you must have drawn down the first part of the mortgage to get payment.
Approved developers and contractors
The contractor you are purchasing your home from must be approved by Revenue. You can check the list of approved developers and contractors to ensure that your developer or contractor is approved.
If you are self-building, you do not need to use a Revenue approved contractor. You can use direct labour. However, you will require a solicitor (registered with Revenue as a ‘HTB approver’) to verify your HTB claim.
A qualifying property?
To qualify for HTB, the property that you purchase, or self-build must be:
- your home
- newly built with the construction subject to Value Added Tax (VAT)in Ireland.
The property must never have been used, or have been suitable for use, as a residential home. If the property was non-residential, but has been converted for residential use, it may qualify for HTB.
If you purchase or self-build the property as an investment, it does not qualify for HTB.
- Purchase value
The purchase value of a new build means the price you purchased it for. The value of the property must be €500,000 or less to qualify for HTB.
- Approved valuation
If you are self-building a property, the approved valuation is the valuation of the property approved by the lender at the time you took out the mortgage. The approved valuation must be €500,000 or less to qualify for HTB.
- Mortgage
You must take out your mortgage on the property. This loan must only be used for purchasing, or self-building, the property. The loan must be at least:
- 70% of the purchase value
Or
- 70% of the approved valuation. For a self-build the approved value will on the completed property, the market value, which also takes account of the site value.
This is known as the loan to value ratio.
You are allowed to have a guarantor on the loan. The guarantor does not need to be a first-time purchaser. Please Note: Most lenders currently will not allow a guarantor on the mortgage.
How much can you claim?
An enhanced HTB scheme was introduced in 2020 as part of the Government’s July Jobs Stimulus Plan.
You are eligible for increased relief under the enhanced HTB scheme if, during the period from 23 July 2020 to 31 December 2022, when you:
- sign a contract for the purchase of a qualifying property
or - make the first draw down of the mortgage, in the case of a self-build qualifying property.
The original HTB scheme applies from 1 January 2017 to 22 July 2020.
Amount of relief under the enhanced HTB scheme
The amount that you can claim is the lesser of:
- €30,000
- 10% of the purchase value of a new home or of the approved valuation of the property, in the case of self-builds
- the amount of Income Tax (IT) and Deposit Interest Retention Tax (DIRT) you have paid for the four years prior to your application.
The maximum payment is €30,000 per qualifying property under the enhanced relief. This cap applies regardless of how many people enter into a contract to purchase the qualifying property.
Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) are not taken into account when calculating how much you can claim.
Amount of relief under the original HTB scheme
The amount that you can claim is the lesser of:
- €20,000
- 5% of the purchase value or approved valuation
- the amount of Income Tax and DIRT you have paid for the four years prior to when you make your application.
The maximum payment is €20,000. This cap applies regardless of how many people enter a contract to purchase the qualifying property.
USC or PRSI are not taken into account when calculating how much you can claim.
How will the refund be paid?
If you purchase a qualifying property, the refund will be paid to the qualifying contractor.
If you self-build the qualifying property, the refund will be paid to a bank account you hold with your loan provider, following the first stage payment.
What is needed before you apply?
Before you apply, you must be registered for either:
- myAccount, if you are an employee and pay tax through Pay As You Earn (PAYE)
- Revenue’s Online Service (ROS), if you are self-assessed.
If you are employee pay tax through PAYE
Before you apply for HTB, you must submit an Income Tax (IT) Return for each year you wish to select as a refund year. A refund year must be within the four years prior to when you make the application. Any outstanding tax due for the selected refund years must be paid in full prior to submitting your claim.
If you were registered for another tax in any part of the refund years you are applying for, you must have a Tax Clearance Certificate (TCC).
Use myAccount to submit an IT Return for the relevant years. Online Income Tax returns are pre-populated with your pay and tax details.
You should not make your HTB application until:
- you have submitted an Income Tax Return for each year you want to select as a refund year
- you have received a Statement of Liability for all years for which you submitted an Income Tax Return
- there is no outstanding tax due in any refund year
- you have received your Tax Clearance Cert, if applicable.
Failure to do this could result in delays to your application.
If you are Self Employed and are self-assessed for Tax
If you are self-assessed, you must be fully tax compliant and have tax clearance. You must have filed your Income Tax returns and paid all the tax that you owe for all years when you were self-assessed. Use ROS to submit your IT Return (Form 11). Obviously, if you have an accountant, they can do your claim for you.
Selecting years for refund
The refund of IT and Deposit Interest Retention Tax (DIRT) is based on the four years immediately prior to the year of application, starting with the earliest year.
In order to select a year in your HTB application, you must:
- have submitted your annual Income Tax Return for that year
and
- have received:
- your Statement of Liability from Revenue for that year, if you are a PAYE taxpayer. The Statement of Liabilities is not issued until after your return has been submitted.
- a Letter of Acknowledgement of your self-assessment, if you are a self-assessed taxpayer.
How to apply for HTB?
There are three stages to the online process:
- Application stage
- Claim stage
- Verification stage.
1: Application stage
Before starting your application, please ensure you are tax compliant. You can apply as:
- an individual
- part of a group.
Use myAccount or Revenue Online Service (ROS) to apply. Complete the declaration and select the years you wish to use for a refund.
If you are tax compliant, your application will be approved, and you will be given:
- an Application Number
- a summary of the maximum amount you can claim
- an Access Code (sent through MyEnquiries).
Keep a safe note of these numbers, you may need to provide them to your:
- lender
- contractor or solicitor at the verification stage.
Please Note
Even if your application is approved, all conditions of the Help to Buy (HTB) scheme must be satisfied for the claim to be approved.
A valid claim must be submitted before the application expires, otherwise your application will have to be resubmitted. Applications made between:
- 1 January and 30 September automatically expire on 31 December of the same year
- 1 October and 31 December automatically expire on 31 March of the following year.
Lenders and contractors can use Revenue’s Mortgage Query Tool to check your potential maximum HTB refund.
2: Claim stage
You can make your claim using revenue websites ROS for the self-employed or MyAccount if you are an employee, once your application is approved, and all other conditions are satisfied.
Step 1
Upload evidence of your mortgage and, if you are:
- purchasing a new property, upload a copy of the contract, signed and dated by the vendor and all purchasers
- self-building, upload:
- proof of the draw down of the first part of the mortgage
and
- a copy of the valuation report from your lender.
Step 2
You need to confirm details about the:
- property
- purchase value (if you are purchasing a property) or approved valuation (if you are self-building)
- date of completion
- mortgage
- amount of deposit already paid.
If you are applying with other people, you will also need to confirm the portion of the refund due to each person.
If you are self-building, you will need to provide the BIC and IBAN of the relevant bank account held with your mortgage provider.
Once you have submitted your claim, you will be provided with a Claim Number.
If you enter incorrect information during your application or claim, you must cancel it. You can then submit a new application or claim before continuing to the next stage.
3: Verification stage
Before you receive any refund, the information you have provided will need to be verified by the:
- Qualifying contractor, if you are purchasing a property
- Your solicitor, if you are self-building.
When you have submitted your claim, advise your eligible verifier and provide them with your:
- Claim Number (issued after the claim stage)
And
- Access Code (issued when your application was approved).
The refund that you receive is limited to 10% (5% under the original HTB scheme) of the:
- purchase value
- or
- approved valuation.
This may mean that it is different to the maximum relief amount advised at the application stage.
Can Revenue claw back a refund?
Revenue can claw back refunds if you:
- were not entitled to the refund
- do not live in the property for a minimum of five years
- did not finish the process to purchase the property
- did not finish building the property.
Revenue can claw back refunds from the contractor if:
- the property is not purchased by you within two years from when the refund was made to the contractor
- Revenue has reasonable grounds to believe that the property will not be purchased by you within that two-year period.
There is some flexibility around the two-year period. This can apply if Revenue is satisfied that the property is either:
- almost complete at the end of the two years
- likely to be completed within a reasonable time period.
Once the property is completed and purchased by you, you are solely responsible for meeting the conditions for the Help to Buy refund. The developer is no longer responsible after this point.
Please Note: The above list is for guidance only and does not constate a completed list. Lenders may require more or less information than listed above. If you are borrowing from the lender you bank with you will not have provide bank accounts etc.
Still Unsure?
Why not take advantage of our Garda Mortgage Review, which will give you a professional assessment on how ‘Mortgage Ready’ you are now.
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What some of our happy Garda Mortgages customers have to say…
Frequently Asked Questions About Garda Mortgages
What exactly is a mortgage?
How do I start the application process?
There are a number of easy ways to begin your application:
Get in touch with a mortgage broker, who will do all the work for you or get in touch with the lenders directly. Obviously, we would recommend the mortgage broker route as they will shop around all the lender and provide you with the best options for you. I would suggest dealing with a fee-based broker though. If the broker is not charging a fee, then they will only deal with lender who pay them a commission, which means you only get options from a select number of lenders rather than the entire market.
What’s a fixed rate mortgage?
With a fixed rate mortgage, your interest rate and monthly repayments are fixed for a set time as agreed between you and the lender. You can choose the best time frame for you.
Although a fixed rate means your repayments cannot increase for a set period of time, your repayments will not fall during the fixed rate period. As a result, you could miss out on lower interest rates and lower repayments. Fixed rates may cost more over the long run, but they offer peace of mind as you know your repayments will not rise during the fixed rate period.
We would recommend speaking with a mortgage broker though, you can discuss all rate options and they will help you decided whether a variable rate fixed rate is right for you. They will also be able to do market research for you on the best rates available for you.
What’s a variable rate mortgage?
Variable rates offer the most flexibility. They allow you to increase your repayments, use a lump sum to pay off all or part of your mortgage or re-mortgage without having to pay any fixed rate breakage fees.
However, because variable rates can rise and fall, your mortgage repayments can go up or down during the term of your loan.
How much will my repayments be every month?
Your repayments will depend on how much you borrow, the term or length of your mortgage as well as the interest rate that you’re charged. See this handy online Mortgage Calculator for an indication of how much your monthly repayments might be. We would recommend speaking with a mortgage broker though, you can discuss all rate options and they will help you decided whether a variable rate fixed rate is right for you. They will also be able to do market research for you on the best rates available for you.
What’s the minimum amount I can borrow?
The minimum loan amount you can borrow for a mortgage approx. €40,000. The minimum loan amount for a top-up, can also be called a further advance, is €25,000.
What’s the maximum amount I can borrow?
When giving you a mortgage, lenders use different criteria to decide how much they are willing to lend you and they must follow specific Central Bank of Ireland rules when doing this.
The Central Bank of Ireland’s rules apply limits to the amount that lenders in the Irish market can lend to mortgage applicants. These limits apply loan-to-income (LTI) ratios and the loan-to-value (LTV) ratios for both family homes and buy-to-let properties and are in addition to the lenders’ individual credit policies and conditions. For example, a lender may have a limit to the percentage of your take home pay that can be used for mortgage repayments.
How long will my mortgage last for?
Every mortgage has a life span or term. The minimum term would be 5 years and you could also possibly qualify for the maximum term possible which is 35 years. For a family home the maximum term of the mortgage is determined by your age. The maximum to have the loan repaid is age 68 with some lenders and age 70 with others. For Buy to Let mortgages have a maximum term of 25 years.
A shorter term means you’ll pay your mortgage off quicker, but it also means your monthly repayments will be higher. It is good advice to clear your debts, including your mortgage, as quickly as you can, it is also important to have a life and have to money to do all the other things in life that are important. So, striking the right balance is very important.
What documents do I need to make a mortgage application?
You will need certain documents when you apply for a mortgage, and you should keep a copy of anything you give to a lender or broker.
Proof of ID, proof of address and proof of your Personal Public Service Number (PPSN)
Proof of income: latest P60, payslips, certified accounts if self-employed
Evidence of how you manage your money such as current and loan account statements for the last three to 12 months, depending on the lender
Her is Permanent TSB’s full list of documents required here.
Her is AIB’s full list of documents required here.
You can see that the lists are very similar, which is the same with all other lenders.
These lists will not be complete for everybody as they do not take account of your individual circumstances.
What’s a loan-to-value (LTV) ratio?
LTV, or loan-to-value, is all about how much mortgage you have in relation to how much your property is worth. It’s normally a percentage figure that reflects the percentage of your property that is mortgaged, and the amount that is yours (the amount you own is usually called your equity).
For example, if you have a mortgage of €150,000 on a house that’s worth €200,000 you have a loan-to-value of 75% – therefore you have €50,000 as equity.
So, the lenders set LTV limits, which means you need to have a deposit of a certain amount before you can get a mortgage. There are different limits in place depending on what category of buyer you are.
- First-time buyers need to have at least a 10% deposit
- Second and subsequent buyers need to have at least a 20% deposit
- Buy-to-let buyers need to have at least 30% deposit
Lenders have a limited amount of discretion when it comes to these limits and in a calendar, year can make exceptions for:
- 5% of the value of mortgages for first-time buyers
- 20% of the value of mortgages to second and subsequent buyers
- 10% of the value of buy-to-let mortgages
These rules don’t apply to switcher mortgages and housing loans for restructuring mortgages that are in arrears and pre-arrears.
What is the Loan to income limits?
Lenders have a certain amount of discretion when it comes to mortgage applications. For first-time buyers, 20% of the value of mortgages a lender approves can be above this limit and for second and subsequent buyers 10% of the value of those mortgages can be above this limit.
How much can you afford to borrow?
When making a mortgage application it can be tempting to apply for the maximum amount possible. However, you need to make sure you will be able to cope with future events such as an increase in interest rates, having children, redundancy or illness.
You can use this budget planner to work out what you can afford to repay each month and make sure to include a regular amount for ‘unforeseen expenses’. You can use our mortgage calculator to see how much your monthly mortgage repayments would be.
If you have other loans or debt, your lender may offer you a lower amount, ask that you pay off these loans or refuse your application.
The shorter the term of your mortgage, the higher your monthly repayments, but you will pay less interest in total. With a longer-term mortgage your monthly repayments will be lower, but you will pay more in interest over the lifetime of the loan.
Example:
| MORTGAGE AMOUNT | TERM | INTEREST RATE | MONTHLY REPAYMENTS | TOTAL COST OF CREDIT |
| €200,000 | 20 years | 3% | €1,109 | €66,206 |
| €200,000 | 25 years | 3% | €948 | €84,526 |
| €200,000 | 30 years | 3% | €843 | €103,554 |
| Difference in cost of credit between 20- and 30-year terms | €37,348 | |||
Even a small difference in interest rates can have a big impact on the overall cost of a mortgage.
| MORTGAGE AMOUNT | TERM | INTEREST RATE | MONTHLY REPAYMENTS | TOTAL COST OF CREDIT |
| €200,000 | 20 years | 3% | €1,109 | €66,206 |
| €200,000 | 20 years | 2.5% | €1,059 | €54,353 |
| Difference in cost of credit between interest rates | €11,853 | |||
Example:
When you apply for your mortgage, and over its lifetime, it is important to get the lowest rate possible as it can lead to significant savings.
As well as mortgage repayments there are other costs to consider when it comes to buying a home
What are the other Mortgage fees and charges?
When buying a property, or switching your mortgage, it is not just your regular mortgage repayments you need to think about. There are a number of other costs involved which you should be aware of and ask your lender about. Some of these can be reduced or avoided by shopping around.
They include:
- Brokers’ fees – 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. If a broker is not charging a fee, check with them what lenders they advise on. They may only work with lenders who pay them commission and you may not get a full market comparison.
- Estate agent fees – if you are selling a property and using an estate agent you will have to pay a fee for this service. It is usually between 1% and 2.5% but can also be a flat rate.
- Solicitor’s fees – to look after the legal aspects of your mortgage a solicitor will charge a flat fee or a percentage of the mortgage amount, typically 1% to 2%. It is worth shopping around a few solicitors.
- Valuation fee – this is paid to a professional valuer to estimate a property’s market value and is required by the lender as part of your mortgage application. A valuation is valid for a short period of time, typically four months. You will need to get an up-to-date valuation of your property if you want to switch mortgage. Valuation fees typically run between €150 and €185.
- Structural survey fee – 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. The amount you will pay can be dependent on the type, age and location of the property. It is not always a requirement for the lender, but it is always recommended to have a structural survey done for your own peace of mind.
- Stamp duty – this is a tax payable on documents when you transfer ownership of a property. For residential property it is charged at 1% of the property value up to €1 million and 2% for anything above that.
- Local Property Tax – this tax, collected by Revenue, is charged on all residential properties and came into effect in 2013. It is a self-assessment tax, and you calculate what is due based on your own assessment of the market value of your property. It can be paid in a lump sum or spread out over the year.
You should take the above into account when you are working out how much you will be able to borrow.
What is the stamp duty payable on mortgages?
What are lenders' normal lending criteria for a mortgage?
Every lender will look at various criteria before deciding whether to approve a mortgage. Some of the main factors that are taken into account are:
- A good credit history.
- Being aged 18 or over.
- Age not greater than 70 at the end of the mortgage term. With some lender this age is 68.
- Ability to repay – as a guide mortgage repayment on all loans including your mortgage should not exceed 35% of your net income
- Secure employment.
- Continuous employment at least 12years.
- Self-employment for at least 2 years, some lenders require 3 years.
- Good bank account management
With all lenders the primary focus is on your repayment capacity.
How much of a deposit do I need?
All lenders must follow Central bank deposit rules, which require a 10% deposit for first time buyers. So, if the value of your property is €200,000, you’d need a deposit of €20,000. This deposit can come by way of a gift, or part gifted, if you are lucky enough to have some-one willing and able to help you out. Borrowing for your deposit will not be acceptable to your mortgage lender, no matter where you are borrowing for.
What else should I bear in mind when taking out a mortgage?
You’ll generally need to arrange home insurance and mortgage protection before drawing down your loan.
Home insurance is a property insurance which covers private homes, buildings and contents. The cost of home insurance often depends on what it would cost to rebuild your house and how much it would cost to replace all of the contents of the house. The replace value of your property may be more than the purchase price.
When taking out a mortgage you’ll also need to consider how it’ll be paid off in the unlikely event of your death before the mortgage has been fully repaid. When you get a mortgage to buy your home, you’ll generally be required by your lender to take out mortgage protection. This is a particular type of life assurance taken out for the term of the mortgage and is designed to pay it off on the death of the borrower or joint borrower before the end of the mortgage term.
What is the timeline for the mortgage process?
Wherever you are on your mortgage journey, whether you’re ready to make an application, or just want to ask some questions – we’re here to support you so book an appointment today with our mortgage team!
We’ll outline the mortgage process and the required documents you’ll need for your application and you can then gather and submit the documents required at a time that suits you, allow 1-2 weeks for gathering these documents.
Once the lender receives your application and supporting documentation, they will get back to you in 3 working days to let you know if it’s ready to go to our underwriting team for a full assessment, or if they need any further documents or information from you first.
Once they submit the documents to their underwriting team for full assessment, they will let you know if they can approve your application within 10 working days. In the rare event that they can’t come to a decision in that timeframe, they will be in touch to let you know and to inform you of when they will have a decision.
If you are using a mortgage broker the lenders will communicate this update to them who will in turn communicate with you.
Once your application for credit is approved, (called approval in principle, AIP) and you have found your home, you will be required to arrange for a valuation of your property. A credit check will also be undertaken on all applicants of the mortgage, and you will need to arrange Life Insurance and Home Insurance. Your lender will issue the loan offer to your solicitor and once you sign the documents, your solicitor will arrange the transfer of funds and collection of your keys to your new home.
Switching Mortgage - FAQs
Can I switch my mortgage?
Yes, is the answer in most cases, but it is the right answer for everyone. So, get advice from unbiases mortgage broker. If
If you decide that switching your mortgage is the right for you, there are different lending criteria for different types of borrowers.
Check here to see which category you fall into:
Switching my mortgage with no additional funds
- Maximum Loan to Value (LTV) of 90%
- Minimum mortgage amount of €40,000
- Minimum term of 5 years
- Maximum term of 35 years
Switching my mortgage and looking to borrow additional funds (via Equity Release):
- Maximum Loan to Value (LTV) of 85%
- Minimum mortgage amount of €40,000
- Minimum term of 5 years
- Maximum term of 35 years
Switching my Buy-to-Let mortgage.
- Maximum Loan to Value (LTV) of 70%
- Minimum mortgage amount of €40,000
- Minimum term of 5 years
- Maximum term of 25 years
Before switching, please make sure to take advice from a mortgage broker to make sure you are getting analysis of the entire marketplace.
There are costs involved in switching your mortgage to a new provided. Some lenders do offer Cashback & Incentives to cover these costs.
Two Reasons why you would consider Switching Your Mortgage.
- Low-Interest Rates
Fixed-rate mortgages are at an all-time low in Ireland, and so the time to switch has never been better. Your mortgage broker will compare the market to find you the best deal based on the outstanding amount owed and the term of your mortgage and provide you with impartial advice on choosing the right mortgage for your home. Make sure the broker you choose is comparing the entire marketplace,
- Release Equity
If you have equity in your home, you could release some of that when switching your mortgage for home improvements or repairs. Alternatively, you could potentially use this opportunity to consolidate other debts into one affordable monthly repayment. Speak to your mortgage broker for advice.
While mortgage switching might not be suitable for everyone (if you have negative equity or impaired credit rating, for example), most homeowners can benefit from switching their mortgage to a new lender. If your current interest rate is more than 3%, there is a good chance that you could save a considerable amount of money, reduce the term of your mortgage, or do both by making the switch.
It’s easy to put things like this on the back-boiler and promise yourself that you’ll do it later, but the earlier you switch, the sooner you’ll start saving money.
Switching mortgage has never been easier, and by employing the services of an unbiased mortgage broker with your best interests at heart, the only thing you’ll have to do is sign on the dotted line to start reaping the rewards of your new mortgage plan.
What fees are involved in switching my mortgage?
As part of the switching process, a valuation of your property will need to be completed. You will also need to appoint a solicitor to take care of the legal work involved. However, the cash back offered by some lenders will go a long way to covering your legal fees!
Before switching, please make sure to take advice from a mortgage broker to make sure you are getting analysis of the entire market-place.
Will I need to pay Stamp Duty?
Property stamp duty is only payable on the purchase of a property and does not apply when switching your mortgage.
What are the timelines for switching?
Wherever you are on your mortgage journey, whether you’re ready to make an application, or just want to ask some questions – we’re here to support you so book an appointment today with our mortgage team!
We’ll outline the mortgage process and the required documents you’ll need for your application and you can then gather and submit the documents required at a time that suits you, allow 1-2 weeks for gathering these documents.
Once the lender receives your application and supporting documentation, they will get back to you in 3 working days to let you know if it’s ready to go to our underwriting team for a full assessment, or if they need any further documents or information from you first.
Once they submit the documents to their underwriting team for full assessment, they will let you know if they can approve your application within 10 working days. In the rare event that they can’t come to a decision in that timeframe, they will be in touch to let you know and to inform you of when they will have a decision.
If you are using a mortgage broker the lenders will communicate this update to them who will in turn communicate with you.
Once your application for credit is approved, (called approval in principle, AIP), you will be required to arrange for a valuation of your property. A credit check will also be undertaken on all applicants of the mortgage, you will have to provide the mortgage protection and house insurance.
A Letter of Approval will then be issued to your solicitor who will your work with your new lender and existing mortgage provider to finalise your switch.
Can I be penalised for switching mortgage provider?
This is a question we get asked to allot. The answer is no, but…
Check is your current rate, if you are on a fixed rate and are looking to switch lender before it’s due to end there may be a break fee to get out the fixed rate. It should be on a sliding scale though.
Other than this you cannot be penalised for looking to switch mortgage provider. This includes anyone who has gotten a ‘cashback mortgage’.
If you received cashback as part of your original mortgage, you do not have to pay any of this money back when switching.
What are the steps involved in switching your mortgage?
Know your current situation.
Find out the following as the lender will need to know
- how much is still owed on your existing mortgage
- the term remaining.
- the interest rate you’re currently paying
You can find all this information on your most recent mortgage statement or by contacting your lender. You’ll also need an estimate of how much your home is currently worth.
With the above info to hand, you can compare mortgage rates to find out who’s offering the best rates and whether it makes financial sense to switch.
You can give us a call to do the comparison for you or this mortgage calculator and comparison service lets you easily compare interest rates, offers and cashback incentives from all of Ireland’s mortgage lenders and will quickly show you what your new monthly repayments would be.
We would recommend using a unbiases Mortgage Broker to do the market research for you. They may charge a fee, but it is worth it.
What are the new Central Bank requirements on mortgage switching?
To make it easier for you to switch your mortgage, the Central Bank has introduced six new measures that lenders have to follow:
- If you have a fixed-rate mortgage, your lender will have to tell you about any cheaper options they have available 60 days before your fixed term is due to end.
- If you have a variable-rate mortgage (other than a tracker) your lender will have to tell you at least once a year if you can switch to a cheaper rate with them based on how much equity is in your home i.e., your loan-to-value ratio.
- Lenders will have to clearly explain the pros and cons of any mortgage incentives such as cashback offers.
- Lenders must give you a comparison of how much your mortgage costs versus other options offered by your lender if you ask for one.
- If requested, lenders must give switchers all the information they need to switch, including how long it will take.
- And when you’re looking to switch your mortgage, lenders must give you a decision within 10 business days of receiving a completed mortgage application.
So, in a nutshell, these changes should make it a whole lot easier for mortgage holders to be able to spot and understand if, and when, they should switch lenders throughout the course of their loan period. And if you do decide to switch, the process should be a little bit easier.
How much could I save by switching?
Big Savings.
Someone who has a mortgage of €150,000 and is paying a 4.5% standard variable rate could save over €180 a month, or over €2,160 a year, by switching to the cheapest rate on the market. And while there are some upfront costs associated with switching mortgage provider, in many cases banks will provide cashback to those who switch or a contribution towards the legal fees.
And while switching may not be an option for everyone or indeed the right advice for everyone, particularly for those who are in negative equity, or on a tracker rate, we’d encourage anyone who’s been with their mortgage provider for a few years to review their options and see whether they could save by switching to a better deal. For more on Switching providers, click here
How can I compare the mortgage rates available?
If you want to check the best rates available to you by switching your mortgage, you can compare interest rates and incentives across all the main lenders in Ireland with this handy Mortgage Calculator. Give it a try: it’s accurate, impartial, and free to use. You can also give us a call.
General Mortgage - FAQ’s
Can I get a mortgage if earning in Sterling?
This is area for confusion for lots of people. Especially for our friends living in or working in Northern Ireland who want to buy a home and live in the Rep. of Ireland. This is very prevalent for people around the border areas of Derry and Tyrone wanting to move to Donegal, where property prices are cheaper.
Firstly, can I stress that Mortgage lending is available to cross border workers, contrary to some information being given.
Whilst lending is available there are a couple of issues for those earning Sterling to be aware of, these apply whether you currently live in the Rep. of Ireland and working in Northern Ireland or the UK or those living in Northern Ireland and wanting to move to Rep. of Ireland
If you earn in Sterling there are 2 main challenges to be aware of, these are
- There are a limited number of lenders willing to lend. Not all lenders are in the market for you.
- The lenders that will lend will allow an exchange rate but will also reduce your Sterling income by 20%. As, in the first instance the amount of lending you qualify for is based on your income, the reduction of 20% does have a major effect on the amount of lending available. Where you have 2 people earning in Sterling this can, in some case, push them out of getting lending all together. Read More
If working aboard, can I get a mortgage in Ireland?
Yes, is the answer, here comes the but.
If you earn in any other currency other than Euro there are 2 main challenges to be aware of, these are
- There are a limited number of lenders willing to lend. Not all lenders are in the market for you.
- The lenders that will lend will allow an exchange rate but will also reduce your income by 20%
As, in the first instance the amount of lending you qualify for is based on your income, the reduction of 20% does have a major effect on the amount of lending available. Where you have 2 people earning in a non-Euro currency it be challenging.
What mortgage service we offer and what fees we charge?
Our Mortgage Service…
Your personal mortgage advisor from Advice First Financial can add significant value to your financial situation. Our mortgage service encompasses much more than form filling! Our extensive knowledge, market comparison technology and established relationships with Ireland’s mortgage lenders means you are in the best hands…
What we offer you………..Initial Discovery Meeting
- To learn about you, your requirements and financial needs
- To clearly explain the mortgage criteria applicable to you
- To reassure you by breakdown of any confusing jargon
Initial Research
Market analysis of the mortgage products available to identify a shortlist
of potential mortgage providers based on your priorities. We look at……
- Interest Rates
- Borrowing Amount
- Cash Back Offers
- The Process
- Discuss Any Challenges
- Discuss Any Challenges
- Total Costs
- Help to Buy Scheme
Application Support
- Assisting you to complete your mortgage application
- Preparing your application for approval
- Identifying, discuss & help overcome potential reasons for decline
Application Management
- Submitting your application, confirming receipt by lender
- 72hr application follow up with lender
- Dealing with any issues as they arise
Detailed Selection
- Discuss mortgage approval/terms of conditions
- Presentation of approval and up dated quotes for your selected Mortgage
- Dealing with any issues as they arise
Application Proceeding
- Help you get the property valuation completed
- Follow up to ensure all paperwork is submitted to the lender for formal approval
- Review of formal approval to ensure accuracy
- Co-ordination of your third-party interactions (lender, solicitor, estate agent, broker)
- Follow up to ensure all paperwork is submitted to the lender for cheque issue
Protecting Your Financial Health
- Completion of a financial fitness profile
- Identification of your financial needs
- Recommendations and quotations of financial needs
- Assisting you to complete your insurance applications
- Follow up to ensure all paperwork is submitted to the lender for cheque issue
- Co-ordination of underwriting requirements and documentation
- Follow up to ensure policies are issued correctly and in a timely fashion
And that’s not all….
- Unlimited phone and email access to your advisor and their support team
- Post completion service call to ensure all your requirements have been satisfied
This service is divided into 2 parts (1: Initial meeting & research, 2: Application & Loan offer). Our total fee for this comprehensive service is €945 (+23% vat) for standard residential mortgage applications. €95 payable on initial discovery meeting and initial research, €400 payable on application assessment with the balance €450 payable once an official Approval in Principle (AIP) has been secured from a lender.
For more complicated lending requirements fees will be arranged beforehand.
The fees paid at initial meeting, research and application stages are non-refundable even if the mortgage application is not successful. We will not go to application stage if we think we will not be successful. Once we have secured an offer and you elect not to proceed for any reason, we reserve the right to charge our fee for our advice and services. In the event of a lender rejecting an application from us on your behalf due to information or an unacceptable credit history not disclosed to us, we reserve the right to charge our fee.
Call us today in Letterkenny: 074 910 3938
All Irish Mortgages are regulated by the Central Bank. For more on these Mortgage Measures visit centralbank.ie