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What are the Central Bank’s mortgage lending rules?

What are the Central Bank’s mortgage lending rules?

The Central Bank’s mortgage lending rules were introduced in early 2015 and have fundamentally changed the mortgage market in Ireland. The rules dictate how much you’re allowed borrow for a mortgage in relation to your income, as well as how much you’re obliged to save and provide in the form of a deposit, and are designed to ensure that banks and other lenders lend money sensibly.

Whether you’re a first-time buyer or otherwise, if you’re looking to get a mortgage, the very first thing you need to do is get up-to-speed with the Central Bank’s mortgage lending rules. In short these rules dictate how much money you’re allowed to borrow in relation to your income and how much money you need to provide upfront for a deposit.

Despite political pressure from both the banks and Government for the rules to be loosened, they’ve remained largely the same since they were first introduced.

On 4th December 2019, f ollowing a review, the Central Bank announced that the rules would remain the same for at least another year.

What are the Central Bank’s mortgage lending rules?

There are two main rules that you need to be aware of:

1. Loan-to-income limit

The Central Bank’s rules limit the maximum amount someone can borrow to 3.5 times their annual income, regardless of how much they earn.

So let’s say, for example, that you earn €50,000 a year. This means you’re allowed borrow a maximum of €175,000 under the Central Bank’s rules. If you’re buying with a partner who also earns €50,000, that amount doubles to €350,000. (more…)