Mortgages When Earning Sterling in Letterkenny
If you are looking for a Cross Border Mortgage, you have come to the right place.
This is an area of confusion for lots of people. Especially for our friends living in or working in Northern Ireland who wants to buy a home and live in Donegal or anywhere the Republic 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 given information?
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 Republic 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 an effect on the amount of lending available. Where you have 2 people earning in Sterling, this can reduce the lending figure a lot.
Example 1: Single Applicant
John is earning £35,000. In the first instance when calculating the amount of lending John would qualify the lenders will:
- Reduce John’s income by 20%, so, £35,000*1.15*/120%=€33,541
- Use 4 times income, if John is a first-time buyer, to establish the amount John can borrow. = €134,166 of 90% loan to value
* Obviously, the exchange rate from £ to € will verify.
All the usual terms and condition to mortgage lending apply. If you have any existing loans this may reduce the amount of lending offered.
The message is always to speak with a Broker, who knows the Cross Border lending criteria of the different lenders and who can shop around to find you the best available option for you.
Example 2: Joint Application 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 €230,000. If both are first time buyers. How this is worked calculated.
- Reduce both incomes by 20%, so, £60,000*1.15*/120%=€57,500
- Use 4 times income, if both are first-time buyers, to establish the amount they can borrow. = €230,000 of 90% loan to value
* Obviously, the exchange rate from £ to € will verify.
All the usual terms and condition to mortgage lending apply. If you have any existing loans this may reduce the amount of lending offered.
The message is always speak with a Broker, who knows the Cross Border 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 4 times and an exchange rate of 1.15% to work out the amount of available lending. Other lending terms, conditions, and criteria apply. This is not a guarantee of lending.
Border Mortgage Services Conclusion
Lending criteria differ between lenders, and the amount of lending available can differ greatly between lenders, so, it is important to speak to a Mortgage Advice, like Advice First Financial, who knows the Cross Border Mortgage market and who has access to lenders who are willing to lend when earning in sterling.
Take Action on your Cross Border Mortgage
Our advice is, if you are thinking of applying for a cross-border 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 the first place to start.
If you want help, we are happy to advise.
Call us today in Letterkenny: 074 910 3938
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Cross Border Mortgages Donegal FAQs
I live in Northern Ireland can I get a mortgage to buy a house in Donegal
Yes, you sure can. The mortgage process for cross border mortgage is the same as any other mortgage application.
How much can I borrow
The amount you can borrow will be based on your income, age, repayment capacity etc. All the usual criteria apply. If you are buying a property to live as you home, you can borrow up to 90% loan to value (LTV). If you are buying a holiday home, you can borrow up to 70% loan to value. Obviously, terms and conditions do apply as with any mortgage application.
Are the interest rates different for cross border mortgages?
No, lender can’t offer different rate to you if you are earning in sterling and or living in Northern Ireland. The same rates are offered to everyone regardless.
The rates do differ though for buying a home verus buying investment property or holiday home.
As with any mortgage application we recommend you shop around though, because different lenders offer different rates anyway.
We are ahppy to help in this matter.
Can I borrow in the North for a house in the South of Ireland
No, lenders on either side of the border will not lend if the proposed property is across the border on either side.
I have a house in Donegal with no Mortgage, can I take a mortgage on it?
Yes, you possibly could but it would greatly depend on the purpose of the equity release. It will also depend on whether it is a family home or a holiday home. If the property is a family home, there are only certain allowable reasons for an equity release.
You definitely need to get advice on this one. Give us a shout. 074 910 3938
Can I use a Solicitor in the North of Ireland for the purchase in the South?
Yes, you can use a Solicitor who is based in Northern Ireland provided they are licenced to provide conveyancing services in the South. If they are not licenced in the South, then you can’t use them. We are happy to recommend a solicitor if you need.
Does loans I have in the North matter?
Oh, yes they do matter, all lending in the North and or UK is taking in account. You will be asked to provide a UK credit history report, and this will detail all your lending. Infact, if you have a live account or a loan in any country in the world, you will be asked to provided a credit history report from that country.
Does having adverse credit in the North matter for a mortgage application in the South?
Oh, yes it very much does, as with any adverse credit history it will influence whether lender will accept you or not, so lending may not be possibe. Obviously, this greatly depends on the detail of the adverse credit history. You need to speak with us on this one.
I live in the North but earn in the South, is this different?
Yes, it is, if you are earning in Euro, then you will be classed the same as if you are living in the South. So, your income will not be reduced. You will have to provide same additional paperwork but everything else is the same.
Can I hold the deposit in a Sterling Account?
For the application, yes, you can get approved in principle (AIP) and hold the deposit in your NI account. When you find the house you wish to buy, you will have to transfer the deposit into a Euro account, or trasnfer the funds to your solicitor, when going for loan offer. Either way prove will have to be provided.
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.
Warning: If you do not keep up your repayments you may lose your home
