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How do the Central Bank’s new mortgage rules affect you?

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    The first topic on our new website will look at the Central Bank’s new mortgage rules. Indeed, it has been over a year since these rules have taken effect. Following their introduction in February 2015, borrowers now face stricter criteria to get approval. In particular, these criteria comprise of two sets of limits.

    Firstly, applications are subject to a Loan-To-Income (LTI) limit. In other words, the applicant’s income has a role in capping the loan amount. This amount is equal to 3.5 times the gross annual income of an applicant or applicants. It applies in any case where borrowers seek approval for a private residential home. The limit also applies to Trading Up Mortgage applications while in negative equity.

    However, Buy-To-Let Mortgage applications are exempt from the limit. Besides income-based limits, changes to Loan-To-Value (LTV) limits are now in effect. Although LTV restrictions existed before, the newer limits reduce the amount people can borrow. This amount is a percentage of the home’s value. As an illustration, find below data outlining the new LTVs for all mortgage types:

    <table> <tbody> <tr> <td><strong>Mortgage Type</strong></td> <td><strong>Property Value</strong></td> <td><strong>Maximum LTV</strong></td> </tr> <tr> <td>First Time Buyer</td> <td>€220,000 or less</td> <td>90%</td> </tr> <tr> <td>First Time Buyer</td> <td>€220,000 +</td> <td>90% of €220,000 plus 80% of the balance over €220,000 </td> </tr> <tr> <td>First Time Self Build</td> <td>€220,000 or less</td> <td>90%</td> </tr> <tr> <td>First Time Self Build</td> <td>€220,000 +</td> <td>90% of €220,000 plus 80% of the balance over €220,000 </td> </tr> <tr> <td>Trading Up Mortgage</td> <td>Any Value</td> <td>80%</td> </tr> <tr> <td>Non First Time Self Build</td> <td>Any Value</td> <td>80%</td> </tr> <tr> <td>Remortgage with Negative Equity</td> <td>Any Value</td> <td>N/A: at lender’s discretion</td> </tr> <tr> <td>Buy To Let Mortgage</td> <td>Any Value</td> <td>75%</td> </tr> <tr> <td>Non Resident (Expat Mortgage)</td> <td>Any Value</td> <td>65%</td> </tr> </tbody> </table>

    One may think that mortgages have become harder to get all of a sudden. But despite these new rules, approval is still achievable once you have help. Good mortgage advisors work with applicants regardless of their situation. Are you one of these applicants right now? Do yourself a favour. Take the first step today. Talk to an advisor who knows how to get approval even with the new mortgage rules.

    Paul Quinlan

    Paul Quinlan

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    Last updated: 8th August 2016