The Central Bank of Ireland has set limits on what people can borrow by placing limits on the Loan to Value (the amount you can borrow against the value of a property) and the Loan to Income (the amount you can borrow relative to your income). These are often referred to as the Central Bank Mortgage Measures.
The LTV Limit requires you to have a minimum deposit before you can get a mortgage. The size of the deposit depends on what category of borrower you are:
So if you are a first-time buyer and want to buy a house for €450,000, the rule means that you will need a deposit of €45,000 before you can borrow €405,000.
Banks and lenders have the discretion to lend a certain amount outside these limits. These are often referred to as exemptions. In any one calendar year they are allowed to breach these limits in the following circumstances;
The Loan to Income restricts the amount of money you can borrow to a maximum of 3.5 times your gross income. So for example, a couple with a combined income of €100,000 can borrow up to a maximum of €350,000.
Similar to Loan to Value Limits, Banks and Lenders have the discretion to lend a certain amount outside these limits. In any one calendar year they are allowed to breach these limits;
Finally, it’s important to state that if you are thinking of switching your mortgage, the Central Bank’s rules don’t apply. However, most banks won’t let you switch if you are in negative equity and most will require you to have at least 10% equity in your home.