With the rise in house construction and new properties hitting the market, the dream of owning your first home is becoming a reality once again. Leveraging a combination of available grants, equity release from family assets, and selecting the right mortgage lender, your new home might be closer than you think. Despite the challenges posed by rising prices and stringent lending regulations, there are avenues for First Time Buyers to step onto the property ladder.

Qualifying as a First Time Buyer in Ireland 2024

To qualify as a First Time Buyer, you must not have held a mortgage previously. This means that if you’ve never held a mortgage under your name, you’re still eligible. However, if you’ve owned a property through inheritance, outright purchase, or due to life events such as separation, divorce, or bankruptcy, you may still qualify. Importantly, if multiple individuals are applying for the mortgage, all parties must meet the First Time Buyer criteria.

Determining Your Borrowing Capacity

The amount you can borrow is determined by two factors: Central Bank lending limits and the credit policies of mortgage lenders.

Central Bank Lending Limits: These limits cap borrowing at 4.5 times your annual gross household income, with only 20% of mortgages allowed to exceed this threshold. The majority of First Time Buyers will find their borrowing capacity capped at 4.0 times their annual gross household income.

Typically lenders want any loans over 4.0 to go to what they see as the lowest risk customers. So these ‘exceptions’ go to people later in life who are the very highest earners and have lower living expenses than most First Time Buyers. For the vast majority of First Time Buyers then, the maximum you can lend will be 4.0 times your annual gross household income. This is how it usually works.

  • Jane earns €34,000 gross per annum, €24,000 basic and €10,000 last year in bonuses
  • James earns €30,000 gross per annum, €20,000 basic and €10,000 in commission last year

So their joint gross annual income is €64,000 per annum.

The Central Bank limit of 4.0 will allow them to borrow up to a maximum of €256,000.

Lender Credit Policy: Lenders also consider your financial history and commitments to assess your ability to repay the mortgage. Selecting the right lender and maximizing your savings in the months preceding your application can enhance your borrowing potential.

Minimum Deposit Requirement

As a First Time Buyer in Ireland, you’re required to provide a minimum deposit of 10% of the property’s purchase price. While this is lower than the requirement for second-time buyers, increasing your deposit can reduce your mortgage size and potentially open up more affordable property options.

Latest Help Schemes for First Time Buyers in Ireland 2024

The Help to Buy scheme enables First Time Buyers to claim 10% of the property value as a deposit on newly built homes, provided they’ve paid an equivalent amount in tax over the previous four years. The maximum claimable amount is €30,000 for properties valued at €300,000 or more.

Additionally, the First Home Scheme offers up to 30% of the property’s value in exchange for the scheme taking a share of ownership. Parents may also assist by releasing equity from their property, allowing them to gift tax-free funds for a deposit.

Mark Winters Insider Tips for First Time Buyers in Ireland 2024

  1. Work with a mortgage broker who can match you with a lender that aligns with your financial goals.
  2. Trim your expenses in the months leading up to your mortgage application to improve your borrowing potential.
  3. Save diligently for your deposit and consider supplementing it with help schemes like Help to Buy and the First Home Scheme.
  4. Explore equity release options from family assets to bolster your deposit and purchasing power.

Next Steps for First Time Buyers in Ireland 2024

Are you a First Time Buyer eager to secure a mortgage for your new home? Contact Mark Winters, Allied Financial Mortgage Advisor today for personalized guidance, free of charge! Allied Financial 096 60044