What are the new mortgage lending rules for 2023?
The Central Bank has confirmed that it will ease mortgage lending rules for first-time property buyers to allow them to borrow up to four times their income.
The decision comes on the back of the Central Bank's review of their mortgage lending rules which were put in place to prevent another lending bubble. The existing rules have been in place since 2015 with the aim to prevent a credit fuelled property bubble which resulted in the financial crash in Ireland in 2008.
The aim of these measures is to ensure borrowers are able to make their mortgage repayments and also to prevent the property market overheating.
At present lenders can only give loans of up to 3.5 times income for first-time buyers. Come January 2023, this will rise to 4 times income.
The current 3.5 times limit will remain in place for other buyers
What is the loan to value limit for getting a mortgage?
The loan-to-value (LTV) limit for those buying for the second time will increase to 90% from 80%. This will put them in line with current limits for first time buyers. The LTV limit for buy-to-let buyers will remain at 70%.
How much of a deposit do you need to have as a second time buyer?
There was a previous requirement for second time and subsequent buyers to have a 20% deposit against a property to secure a loan. This has been reduced to 10%, which is in line with its current requirement for first-time buyers.
The Central Bank also said that a number of changes are being made to the criteria required for a borrower to be considered a first time buyer for the purposes of mortgage lending. They have broadened their definition of a first-time buyer to include borrowers who are separated or divorced or have undergone insolvency or bankruptcy and who no longer have an interest in their previous property.
Can you get an exception on mortgage lending rules?
The Central Bank also said today that the use of exceptions - which allows lenders to issue a certain amount of lending over the limits - has been important to provide flexibility to cater for individual circumstances. Lenders will be permitted to have 15% of their lending above these limits.
While an increase in lending limits is welcome, it is clear that affordability and access to housing are issues facing many people in Ireland.
The expert team here at Citywide Financial can provide clients with Expert mortgage advice on all types of mortgages. Contact Citywide Financial today for the best mortgage solutions.
(01) 513 8710
Note: Whilst the Central Bank rules will be changing, each lender has its own calculations of net disposable income.