Central Bank Restrictions

There are certain regulations set out by the Central Bank of Ireland which place a limit on the amount of money you are allowed to borrow to finance the purchase of your home.

These are as follows:

• Loan-to-value (LTV) limits: Based on the ratio of the size of the loan to the value of the property
• Loan-to-income (LTI) limits: Based on the ratio of the size of the loan to the size of your income

Most mortgages have to comply with these restrictions although in the case of switcher mortgages or the restructuring of mortgages, the above limits are not applicable.

Loan-to-value (LTV) limits:

Based on the category of buyer you are, different LTV limits:

• A purchaser of a property that will be his/her primary residence: A 90% LTV limit applies on the full market value of the property. This means that you must provide a 10% deposit in advance
• A purchaser of a property that will not be his/her primary residence: A 70% LTV limit applies on the full market value of the property. This means that you must provide a 30% deposit in advance. This is also applicable in the case of buy-to-let properties

Note that the LTV limits do not apply to borrowers in negative equity and switcher mortgages

Loan-to-income (LTI) limits:

Based on the category of buyer you are, different LTI limits:

• A first-time buyer of a property that will be his/her primary residence: You can borrow 4x your gross annual income
• A non-first time buyer of a property: You can borrow 3.5x your gross annual income

Note that LTI limits do not apply in the case of buy-to-let properties, switcher and lifetime mortgages

In general, you must satisfy both these conditions in order for your mortgage application to be valid.

However, the Central Bank does permit lenders to allow for some flexibility:

• LTI and LTV limits can be exceeded up to 15% of the borrowed amount for first-time buyers and second or subsequent buyers of a property
• LTI and LTV limits can be exceeded up to 10% of the borrowed amount for buyers of buy-to-let properties

Finally, note that the valuation of the property you wish to purchase must have been carried out no later than 4 months before the date of the mortgage agreement

More information is available on the Central Bank’s website: Mortgage Measures | Central Bank of Ireland