New Central Bank Mortgage Lending Rules
New Central Bank
Mortgage Lending Rules
The Central Bank has made changes to lending rules which are designed to ease the affordability issues which currently affect movers and first-time buyers. Although these lending rules are reviewed every year, it’s the first time since 2015 the Central Bank has intervened with such changes, and they come into effect in January. But how exactly might this impact future borrowers?
Let’s take a look at the new Central Bank lending rules.
Balancing Financial
Resilience and Affordability
Mortgage lending rules are set by the Central Bank to help regulate the health of the property market, while ensuring borrowers can sustain their monthly repayments over time. One of the ways in which they do this is by setting limits on the amount of money people can borrow and then changing these limits should the need arise. With this in mind, these recent changes are to protect the financial system and ensure people can actually afford what they borrow.
After all, the Central Bank needs to establish a set of rules that take economic benefits into account just as much as any means of affordability. It is essential for these rules to dictate the relationship between house prices and credit and the risks associated with a gap between these two that continues to widen.
However, as with any intervention, there will be costs and benefits to the move that will be sure to impact home buyers and movers. This was evidenced in comments by the governor of the Central Bank who conceded this policy intervention may lead to a short term rise in house prices.
Mortgages up to Four times Household Income are now available for First Time Buyers
Balancing Financial
Resilience and Affordability
Mortgage lending rules are set by the Central Bank to help regulate the health of the property market, while ensuring borrowers can sustain their monthly repayments over time. One of the ways in which they do this is by setting limits on the amount of money people can borrow and then changing these limits should the need arise. With this in mind, these recent changes are to protect the financial system and ensure people can actually afford what they borrow.
After all, the Central Bank needs to establish a set of rules that take economic benefits into account just as much as any means of affordability. It is essential for these rules to dictate the relationship between house prices and credit and the risks associated with a gap between these two that continues to widen.
Mortgages up to Four times Household Income are now available for First Time Buyers
However, as with any intervention, there will be costs and benefits to the move that will be sure to impact home buyers and movers. This was evidenced in comments by the governor of the Central Bank who conceded this policy intervention may lead to a short term rise in house prices.
The Recent Changes to
Central Bank Lending Rules
First time buyers
can borrow up to four times their salary from January 1st which is up from the three-and-a-half times that was established back in 2015. Limits for movers and subsequent buyers will remain at three-and-a-half times their income but no longer need to produce a 20% deposit with the application.
Second-time buyers
will now instead need to produce a 10% deposit which will align with the loan-to-value limit for first-time buyers. Meanwhile, there is no change to the 30% deposit requirement for those wanting to buy-to-let.
The Central Bank has also made some changes with regard to the definition of first-time buyers. Borrowers who are either separated, divorced or who have gone through bankruptcy can now potentially be considered as first-time buyers. Those wanting to re-mortgage or get a top-up loan might also be treated as “first-time” on the provision that the property is their main residence.
You also have exemptions related to macroprudential policies which are designed to prevent disruptions due to bad credit etc and help stabilise the wide financial system. Mortgage lenders can lend over the states limits and the proportion at which they lend above depends on the type of borrower. For instance, 15% of first-time buyers or subsequent buyers can borrow above the limits and 10% of buy-to-let mortgages can take place above the stated limits.
The Recent Changes to
Central Bank Lending Rules
First time buyers
can borrow up to four times their salary from January 1st which is up from the three-and-a-half times that was established back in 2015. Limits for movers and subsequent buyers will remain at three-and-a-half times their income but no longer need to produce a 20% deposit with the application.
Second-time buyers
will now instead need to produce a 10% deposit which will align with the loan-to-value limit for first-time buyers. Meanwhile, there is no change to the 30% deposit requirement for those wanting to buy-to-let.
The Central Bank has also made some changes with regard to the definition of first-time buyers. Borrowers who are either separated, divorced or who have gone through bankruptcy can now potentially be considered as first-time buyers. Those wanting to re-mortgage or get a top-up loan might also be treated as “first-time” on the provision that the property is their main residence.
You also have exemptions related to macroprudential policies which are designed to prevent disruptions due to bad credit etc and help stabilise the wide financial system. Mortgage lenders can lend over the states limits and the proportion at which they lend above depends on the type of borrower. For instance, 15% of first-time buyers or subsequent buyers can borrow above the limits and 10% of buy-to-let mortgages can take place above the stated limits.
How Will Central Bank
Rule Changes Impact Borrowers?
These changes to mortgage lending policy will enable some people to buy a home that might not have been eligible under the outgoing rules. It’s not a case that the Central Bank is encouraging people to borrow four-times their salary but rather they want to set more proportionate and targeted parameters for credit assessment. Such changes will also make sense for many because under the current rules, some individuals are unable to buy a home in spite of affording a higher amount for rent than they might repay on a mortgage.
At the same time, experts are quick to point out that none of these changes will make any difference to a lot of prospective buyers. One reason cited in this respect is that bank mortgage calculators take factors such as number of dependent children into account which means that many still won’t be able to qualify for a mortgage even with the increase in salary multiple.
It’s still a rather complicated landscape for most people and a good example of why more mortgage customers should speak with a qualified mortgage advisor to get their advice on what the best mortgage for them.
Final Thoughts,
Access to housing is a big talking point right now and affordability is a key challenge for most people in Ireland.
While the supply of housing is an altogether different conversation, these new measures for lending are designed to make life easier for both movers and first-time buyers. The impact of this decision may not be felt straight away but as pointed out by the Central Bank Governor, short-term pain might be needed to make way for the long-term benefits that will strengthen the resilience of lenders and borrowers alike.
How Will Central Bank
Rule Changes Impact Borrowers?
These changes to mortgage lending policy will enable some people to buy a home that might not have been eligible under the outgoing rules. It’s not a case that the Central Bank is encouraging people to borrow four-times their salary but rather they want to set more proportionate and targeted parameters for credit assessment. Such changes will also make sense for many because under the current rules, some individuals are unable to buy a home in spite of affording a higher amount for rent than they might repay on a mortgage.
At the same time, experts are quick to point out that none of these changes will make any difference to a lot of prospective buyers. One reason cited in this respect is that bank mortgage calculators take factors such as number of dependent children into account which means that many still won’t be able to qualify for a mortgage even with the increase in salary multiple.
It’s still a rather complicated landscape for most people and a good example of why more mortgage customers should speak with a qualified mortgage advisor to get their advice on what the best mortgage for them.
Final Thoughts,
Access to housing is a big talking point right now and affordability is a key challenge for most people in Ireland.
While the supply of housing is an altogether different conversation, these new measures for lending are designed to make life easier for both movers and first-time buyers. The impact of this decision may not be felt straight away but as pointed out by the Central Bank Governor, short-term pain might be needed to make way for the long-term benefits that will strengthen the resilience of lenders and borrowers alike.
HAVE QUESTIONS
Read our FAQ
You're called Switcheroo.ie but do you help First Time Buyers and Home movers?
Yes, we absolutely do. As long as you are looking to buy a residential property we stand ready to help. We like the name Switcheroo as you are switching home if you are a mover and even if you are a buyer you are switching from tenant to homeowner!!!
What’s the best mortgage I can get?
That’s a question we hear a lot but there is no simple answer to this. There are a number of factors to this which both you and we need to consider when you are thinking of getting a mortgage.
Mortgages come with different terms and banks use different criteria to establish who they lend to, how much and at what rate. Don’t stress too much! You can find out pretty quickly to see if it’s worth your while. From there we will guide you through the process and make sure you get the right mortgage for you and make the process as simple as possible.
If I am a switcher how much can I save?
The Central Bank of Ireland published research that showed that many existing mortgage holders can save over €10,000 euros by switching their mortgage. It will depend on your specific circumstances but just 20 seconds on our calculator will show you what its worth for you to switcheroo.
What documents will you need from me?
Initially, none. The first step is for you to take our Financial Health Check in your secure customer portal. This will help us understand your circumstances and see if you are mortgage fit but we don’t need documentation at that stage. Only later when we move on to preparing your submission to a lender, will we need to make sure that your information is accurate, and we’ll need documentation from you then. Those include proof of your identity, income, utility bills with proof of address, as well as things like visa status where it applies. We’ll always make it clear exactly what we need and why.
Do you perform credit checks?
Our job is to make sure that you have the best possible chance of being accepted. So, we perform our own affordability check before sending anything to a lender. This leaves no footprint on your credit history.
I want to switcheroo, what’s next?
On our website there are calculators that will help you figure out what you can save or what your mortgage would cost. From there you’ll need to register into your customer portal so we can perform a Financial Health Check on you to assess what you can afford.
If all is well, we will then ask for more details on your current circumstances and the specifics of the house you want to mortgage.
Usually, this shouldn’t take more than 60 minutes, and you’ll be one step closer to a mortgage. At this point, you can have a phone call with one of our mortgage experts. They will answer any questions you have and tell you exactly what documents you’re going to need. From there, the expert team will guide you through the application process and keep you updated on progress. You can check progress online and we will keep you updated along the way.
What does Switcheroo.ie do with my data?
It’s all explained in our privacy policy, but basically: we won’t spam you and we won’t pass on your data to other companies so that they can spam you. We hate that.
How does Switcheroo.ie make money?
Yep, we don’t charge any commission. If you get a mortgage using Switcheroo.ie, the lender you use pays us a commission. Some intermediaries charge you an additional commission but not us, we are free forever. These commission never affect our advice. Our reputation and livelihood depend on us always giving our customers the best possible advice. The important bit is we’ll never charge you a penny.
HAVE QUESTIONS
Read our FAQ
You're called Switcheroo.ie but do you help First Time Buyers and Home movers?
Yes, we absolutely do. As long as you are looking to buy a residential property we stand ready to help. We like the name Switcheroo as you are switching home if you are a mover and even if you are a buyer you are switching from tenant to homeowner!!!
What’s the best mortgage I can get?
That’s a question we hear a lot but there is no simple answer to this. There are a number of factors to this which both you and we need to consider when you are thinking of getting a mortgage.
Mortgages come with different terms and banks use different criteria to establish who they lend to, how much and at what rate. Don’t stress too much! You can find out pretty quickly to see if it’s worth your while. From there we will guide you through the process and make sure you get the right mortgage for you and make the process as simple as possible.
If I am a switcher how much can I save?
The Central Bank of Ireland published research that showed that many existing mortgage holders can save over €10,000 euros by switching their mortgage. It will depend on your specific circumstances but just 20 seconds on our calculator will show you what its worth for you to switcheroo.
What documents will you need from me?
Initially, none. The first step is for you to take our Financial Health Check in your secure customer portal. This will help us understand your circumstances and see if you are mortgage fit but we don’t need documentation at that stage. Only later when we move on to preparing your submission to a lender, will we need to make sure that your information is accurate, and we’ll need documentation from you then. Those include proof of your identity, income, utility bills with proof of address, as well as things like visa status where it applies. We’ll always make it clear exactly what we need and why.
Do you perform credit checks?
Our job is to make sure that you have the best possible chance of being accepted. So, we perform our own affordability check before sending anything to a lender. This leaves no footprint on your credit history.
I want to switcheroo, what’s next?
On our website there are calculators that will help you figure out what you can save or what your mortgage would cost. From there you’ll need to register into your customer portal so we can perform a Financial Health Check on you to assess what you can afford.
If all is well, we will then ask for more details on your current circumstances and the specifics of the house you want to mortgage.
Usually, this shouldn’t take more than 60 minutes, and you’ll be one step closer to a mortgage. At this point, you can have a phone call with one of our mortgage experts. They will answer any questions you have and tell you exactly what documents you’re going to need. From there, the expert team will guide you through the application process and keep you updated on progress. You can check progress online and we will keep you updated along the way.
What does Switcheroo.ie do with my data?
It’s all explained in our privacy policy, but basically: we won’t spam you and we won’t pass on your data to other companies so that they can spam you. We hate that.
How does Switcheroo.ie make money?
Yep, we don’t charge any commission. If you get a mortgage using Switcheroo.ie, the lender you use pays us a commission. Some intermediaries charge you an additional commission but not us, we are free forever. These commission never affect our advice. Our reputation and livelihood depend on us always giving our customers the best possible advice. The important bit is we’ll never charge you a penny.
THE SWITCHEROO.IE DIGITAL MORTGAGE PLATFORM
We focus on great customer experience to
support you through your application
Don’t take our word for it, read what our customers think of us
THE SWITCHEROO.IE DIGITAL MORTGAGE PLATFORM
We focus on great customer experience to
support you through your application
Don’t take our word for it, read what our customers think of us
THE SWITCHEROO.IE DIGITAL MORTGAGE PLATFORM
We focus on great customer experience to support you through your application
Don’t take our word for it, read what our customers think of us
Really happy with the advice and service provided by Switcheroo!! I was looking to switch to a better rate which they helped me with and having gone through this I will save thousands off the cost of my mortgage, and there are no charges for Switcheroo’s service. Definitely would recommend them and will come back to them when my fixed term ends.
Jairo
Switcher – CORK
Switcheroo people helped us through the process of the purchase of our new home, they have been extremely professional and very helping throughout all the phases, and even when the timeframe was tight for use they have been able to put us through the final stages. We couldn’t recommend anything better than their service, and if we ever need another mortgage we will know where to reach first.
Connie Robertson
Switcher – Galway
We would highly recommend working with this team! The online portal made everything really straightforward, and, in the end, we knocked 6 years off the term of our mortgage thanks to the great rate they secured for us
Ciaran and Denise
Switchers – Dublin
Switching our mortgage with Dylan as our agent has saved us thousands of euros. Dylan’s attention to detail, prompt replies, regular contact and friendly professionalism enabled us to negotiate our way through the process.
Kathleen
Switcher – Wexford
Very happy with our switching process with Alison from Switcheroo, everything carried out in a quick efficient manner. Even when additional information was required everything was handled very smoothly. Would highly recommend to anyone considering switching
Janice
Switcher – kildare
We switched our mortgage with Alison who helped us through the process step by step very efficiently. They have been very helpful, efficient and are excellent at their work. We saved thousands and I would recommend their services to anyone.
Niall
Switcher – Wicklow
Alison and the Switcheroo team were a great help in assisting us process our mortgage. Instead of having to deal with different customer service officials within the bank we had one point of contact in Switcheroo who kept us updated and kept the process moving.
Susan
First Time Buyer – Dublin
Switcheroo and especially Alison made the whole process as painless as possible. Her diligence and help in explaining and guiding us through the process was invaluable. I would have no hesitation in recommending Switcheroo
Gary and MJ
Switchers – Dublin
Alison and her team made a very daunting task of switching mortgage into something stress free. She supported us entirely throughout the whole process, and her advice was clear, concise and professional. We would have no issue recommending Alison and her team.
Andrea and Ian
Switchers – Meath
As first time home buyers, we found the online process of securing a mortgage very straightforward. It was easy to upload the documents and they responded to any queries we had immediately. We would definitely recommend them and will be using them again when the time comes to switch after the fixed rate expires.
Michael and Kate
First Time Buyers – Meath
We would highly recommend using the Switcheroo Team! The online portal made everything really transparent and straightforward. The team in Switcheroo successfully helped us get credit approval after we were turned down by another bank due to a minor credit issue. Luke and Dylan were so helpful and communication was brilliant.
Cannot thank the team in Switcheroo enough. We are now owners of our dream home.
Karen and Shane
Movers – Dublin
Switcheroo helps us switch our mortgage to a cheaper rate. I have to say that both Luke and Dylan were brilliant, they were the best that I have worked with in any financial institution! They were so prompt and pro active with any query I had and Dylan’s help over the last 2 weeks to hit our target date of today was exceptional. I got several updates per day and even when I called him on his day off, I got a text back within minutes. I will definitely be recommending to my family, friends and work colleagues to look at switching their mortgage with this team
Mark
Switchers – Galway
Really happy with the advice and service provided by Switcheroo!! I was looking to switch to a better rate which they helped me with and having gone through this I will save thousands off the cost of my mortgage, and there are no charges for Switcheroo’s service. Definitely would recommend them and will come back to them when my fixed term ends.
Jairo
Switcher – CORK
Switcheroo people helped us through the process of the purchase of our new home, they have been extremely professional and very helping throughout all the phases, and even when the timeframe was tight for use they have been able to put us through the final stages. We couldn’t recommend anything better than their service, and if we ever need another mortgage we will know where to reach first.
Connie Robertson
Switcher – Galway
We would highly recommend working with this team! The online portal made everything really straightforward, and, in the end, we knocked 6 years off the term of our mortgage thanks to the great rate they secured for us
Ciaran and Denise
Switchers – Dublin
Switching our mortgage with Dylan as our agent has saved us thousands of euros. Dylan’s attention to detail, prompt replies, regular contact and friendly professionalism enabled us to negotiate our way through the process.
Kathleen
Switcher – Wexford
Very happy with our switching process with Alison from Switcheroo, everything carried out in a quick efficient manner. Even when additional information was required everything was handled very smoothly. Would highly recommend to anyone considering switching
Janice
Switcher – kildare
We switched our mortgage with Alison who helped us through the process step by step very efficiently. They have been very helpful, efficient and are excellent at their work. We saved thousands and I would recommend their services to anyone.
Niall
Switcher – Wicklow
Alison and the Switcheroo team were a great help in assisting us process our mortgage. Instead of having to deal with different customer service officials within the bank we had one point of contact in Switcheroo who kept us updated and kept the process moving.
Susan
First Time Buyer – Dublin
Switcheroo and especially Alison made the whole process as painless as possible. Her diligence and help in explaining and guiding us through the process was invaluable. I would have no hesitation in recommending Switcheroo
Gary and MJ
Switchers – Dublin
Alison and her team made a very daunting task of switching mortgage into something stress free. She supported us entirely throughout the whole process, and her advice was clear, concise and professional. We would have no issue recommending Alison and her team.
Andrea and Ian
Switchers – Meath
As first time home buyers, we found the online process of securing a mortgage very straightforward. It was easy to upload the documents and they responded to any queries we had immediately. We would definitely recommend them and will be using them again when the time comes to switch after the fixed rate expires.
Michael and Kate
First Time Buyers – Meath
We would highly recommend using the Switcheroo Team! The online portal made everything really transparent and straightforward. The team in Switcheroo successfully helped us get credit approval after we were turned down by another bank due to a minor credit issue. Luke and Dylan were so helpful and communication was brilliant.
Cannot thank the team in Switcheroo enough. We are now owners of our dream home.
Karen and Shane
Movers – Dublin
Switcheroo helps us switch our mortgage to a cheaper rate. I have to say that both Luke and Dylan were brilliant, they were the best that I have worked with in any financial institution! They were so prompt and pro active with any query I had and Dylan’s help over the last 2 weeks to hit our target date of today was exceptional. I got several updates per day and even when I called him on his day off, I got a text back within minutes. I will definitely be recommending to my family, friends and work colleagues to look at switching their mortgage with this team
Mark
Switchers – Galway
