Securing a mortgage in Ireland can be challenging as most major banks require you to show a connection with the state. You’ll generally need a very large deposit – almost certainly upwards of 30% of the purchase price of the property – and a good income.
If you are a tax resident in the UK, Irish Banks will consider you as a non-resident for mortgage purposes, which means you may be classified as a buy-to-let investor even if you plan to live in the property.
Your age will also have a significant impact on the terms of your mortgage. Many providers impose a cut-off point for repayments of 70-75 years, meaning those older than 30 may have to opt for shorter – and therefore more expensive – repayment periods.
The options of fixed or variable rate, annuity or interest repayment only should be discussed at length with your provider, and it may be worth considering using a broker for the purposes of your application.
The following link will provide you with the Register of Mortgage Intermediaries, available on the Central Bank of Ireland website:
http://registers.centralbank.ie/DownloadsPage.aspx
For an Irish mortgage, a minimum deposit of 10% of the property’s purchase price is usually required, with borrowing rates currently starting from around 4%. In most cases, better terms are offered where the mortgage is less than 70%.
With banks in Ireland now adopting greater caution following the recent Irish property crash, some lenders only offer home loans on a repayment basis – including both interest and payment towards the capital loan amount – so there aren’t currently many interest-only deals available.
Although some lenders will allow the choice of either a fixed or a variable interest rate, most Irish mortgages are available on a variable-rate basis, often (but not always) with a maximum term of 35 years. A variable rate generally means that your mortgage payments go up or down as interest rates change. With a fixed-rate mortgage, changes in interest rates don’t impact your monthly repayments.
Each has its advantages and disadvantages. A flexible rate mortgage can become cheaper over time if interest rates fall, but can become more expensive if rates rise. Meanwhile, fixed rate mortgages offer more stability, but typically involve a higher premium to account for the risk of the lender losing money if interest rates are increased.
It’s also worth noting that having home and life insurance is usually compulsory for anyone looking to secure an Irish mortgage (although some brokers can arrange mortgages where this is not the case).
Mortgage protection may be insisted upon by your provider, except in the following circumstances:
Mortgage protection can be quite inexpensive as it decreases in line with an annuity facility. It’s sensible, regardless of your circumstances, to put this protection in place – even if on a life-only basis (serious illness options are also available).
Again, a broker can prove very useful in helping you access the best options as they can supply you with comparison quotations from all the major providers. They may also have access to special discounts that you wouldn’t be able to secure on your own.
Brokers must provide you with a ‘Statement of Suitability’ for the policy they feel best fits your needs and justify their recommendation. This will give you the comfort of knowing that you’re getting the best advice. It’s worth noting that you must have an insurable interest before you can take out this type of protection, so you may need to provide proof of ownership or a copy of your mortgage approval to get this cover.
The following link will take you to the Register of Investment Business firms (who can provide life policies), available on the Central Bank of Ireland website:
http://registers.centralbank.ie/DownloadsPage.aspx
When you’ve bought your home, you’ll want to protect it. Home insurance is relatively low cost and is worth it for the peace of mind it provides. Most people tend to over-insure their buildings and underinsure its contents, so take the time to inventory your possessions and provide a realistic figure for replacing them!
You need to understand the protection your policy will provide, so if you don’t understand the terminology being used by the provider, ask them to explain. Making a claim will increase your premium, so work out what you’d be prepared to pay out yourself in the event of a claim. The higher the excess figure (the amount you pay yourself in the event of a claim), the lower the premium.
There are many companies in Ireland providing quality home insurance, so do a bit of shopping around.
Continue to section 5: Retirement in Ireland
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