Mortgages when earning 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 boarder 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.
Example 1: Single Applicant
John is earning £30,000. In the first instance when calculating the amount of lending John would qualify the lenders use 3.5 times income.
With his income being reduced by 20%, he would qualify for a mortgage of €101,740. This is the amount of lending available to John from traditional high street lenders.
This is the amount of lending available to John from ICS.
Without his income being reduced he would qualify for lending of €122,100.
As you see, the difference in the lending amount available to John is €20,360. Which could make all the difference.
Example 2: Joint Applicant both earning in Sterling
A couple; John is earning £25,000 and Mary is earning £35,000
With their incomes being reduced by 20%, they would qualify for a mortgage of €203,400. This is the amount of lending available to them from traditional high street lenders.
This is the amount of lending available to them from ICS.
Without their incomes being reduced they would qualify for lending of €244,200.
So, they would qualify for an extra €40,800, a big difference.
The message is always speck with a Broker, who knows the lending criteria of the different lenders and who can shop around to find you the best available option for you
Warning: In the examples above we used a simple income multiple of 3.5 times and an exchange rate of 0.86% to work out the amount of available lending. Other lending terms, conditions and criteria apply.
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 an advisor/broker who knows the market place and who has access to a number of lenders, as well as some that are not on the high street.
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
If you want help, we are happy to advise.
Call us today in Letterkenny: 074 910 3938
Warning: If you do not keep up your repayments you may lose your home
Warning: You may have to pay charges if you pay off a fixed-rate loan early.
Warning: The cost of your monthly repayments may increase.
Warning: If you do not meet the repayments on your loan, your account will go into arrears.