Today, the Central Bank of Ireland announced that it will be implementing change to four of its mortgage rules. SYS Group Mortgage Manager Helen Slattery takes a look at the rule changes and what they might mean for you.
Mortgage Changes
Since 2015, mortgage applicants were restricted to borrowing just 3.5 times their household earned income. From January 2023, this will increase to four times the salary, for first-time-buyer applicants only. An example of this would be, if a person earns €50,000 per annum, the maximum they can borrow at the moment is €175,000. As of January 2023, they will be able to borrow €200,000.
First-Time-Buyers
The second rule to be changed is with regard to loan to value for non-first-time buyers. This is someone who has had a mortgage before. Up until now, that person needed 20% towards the house purchase. From January, this will decrease to just 10% deposit, which is the same as a first-time buyer. They will however, be restricted to borrowings of 3.5 times the household earned income. This will not increase to four times for second-time buyers.
The third rule to be implemented is with regard to mortgage lenders and the percentage of exceptions they can grant on an annual basis. Now, they can approve up to 20% of their annual lending to loan-to-income and loan-to-value exceptions. From January this is being reduced to 15%.
Re-Mortgaging
The final rule sees the Central Bank change what it considers a ‘first-time-buyer’. This is broadening. If the applicant is divorced, separated or undergone bankruptcy/insolvency they may now be deemed as a first-time buyer. This will be the case where they have no interest in the previously held property.
If a homeowner is re-mortgaging or requesting a top-up mortgage they can be considered a first-time buyer where the property remains their principal private residence.
Mortgage Broker
With the above in mind, as a mortgage broker, SYS Group will have to take all lending criteria and mortgage rules into consideration for each application.
If you would like to get more information about these rule changes, contact Helen at helen@sysmortgages.ie.
