As interest rates rise house prices Ireland 2023 have come under pressure, but the Central Bank raising the mortgage limit from 3.5 to 4 times income from the 1st of January this year may open up significant new demand and prop up prices longer term.
This will cause concern for some but, are house prices Ireland 2023 the real issue or are policy makers and opposition parties missing the point?
A study published by economist Ronan Lyons earlier this year, throws new light on the link between building costs, house prices and supply.
Simply put, the larger the gap between house prices and costs the greater the new housing supply.
If a developer can make a tidy profit, then they will develop more units until eventually supply catches up with demand and prices fall.
Here are the key things you need to know about house prices Ireland 2023 and how they will change in future.
It’s the Economy Stupid – House Prices Ireland 2023
In a free market there are then just two ways to make more houses available.
Reduce building costs
Increase house prices
Lyon’s analysis suggests that for the country to hit anything like the 30,000 completions target in the government’s Housing for All strategy building costs would have to reduce by nearly 40%.
With rising energy costs recently sending material and labour costs spiraling out of control, this seems unlikely.
Sure the government can introduce tax reliefs on development to put a brake on rising costs, but putting them into reverse seems a very tall order.
They could nationalise house building, but the cost problem doesn’t go away and since when did the state being in charge make things more efficient?
So with reducing costs ruled out as an option, let’s turn instead to increasing house prices to get supply back on track.
Housing Affordability does not = Low House Prices – House Prices Ireland 2023
The real issue with the housing market isn’t house prices, it’s housing affordability and that’s not quite the same thing.
What if we could raise prices in the housing market without reducing affordability?
Although this sounds counter intuitive there are many ways to do this, one is to increase the effective income of house buyers through grants or tax reliefs. This is the thinking behind the First Home scheme.
Yet there is one other significant weapon to increase housing affordability.
Credit.
Simply loosening the current Central Bank mortgage lending rules increases house prices, increases developer profits and in turn is likely to increase the supply of new homes.
While also increasing housing affordability for many who previously couldn’t buy a home.
The reason for this is that the Central Bank mortgage rules have locked out thousands of potential homeowners and trapped them in the rental market.
This has driven monthly rents way above monthly mortgage repayments.
In fact, recent analysis by moneysherpa.test.inview.ie indicates that the average rental household would save over €1,000 a month if the Central Bank rules allowed them to apply for a long term fixed rate mortgage at current rates.
Central Banks Lending Limit – House Prices Ireland 2023
So by lifting the 3.5 times lending cap imposed by the Central Bank, three things are likely to happen.
Housing affordability will rise as currently trapped renters move to a monthly mortgage
House prices will also rise as renters can now compete with investors for property
Housing supply will increase as developers greenlight projects that didn’t make financial sense previously
Hang on a minute though, doesn’t that just create a credit fueled housing bubble with people buying houses they can’t afford just like back in 2008?
That seems unlikely for a couple of reasons.
Firstly, we already know people can afford to pay these mortgages as they are already paying way more every month in rent.
Secondly, even if you removed the Central Bank limits completely the barriers to getting a mortgage are still way higher than back in the day. That’s because the rules imposed on Irish bank’s by the European banking regulators post 2008 already stop Irish bank’s lending willy nilly.
That’s why the Central Bank lifting the lending limits is a move to be welcomed, but should also raise the question. Why on earth was one of the tightest restrictions on mortgage lending across Europe put in the first place?
In a Nutshell – House Prices Ireland 2023
Given the hames the Bank made regulating the Irish banking sector last time around it was only natural for it to take a safety first approach.
The issue with the limit is that it put the kibosh on many lower and middle income families owning their own home. Thereby trapping them into paying spiraling rent, making them poorer and increasing social inequality.
We should be glad to see the back of the 3.5 limit, property investors will welcome the increased purchasing power it creates in a time of rising interest rates and potential house buyers will welcome the inevitable result, more homes being built than there would be otherwise.
Congratulations you have your loan offer, but what happens next? Don’t worry we are going to guide you through the mortgage drawdown process with our Mortgage Drawdown Ultimate Guide Ireland 2022
For most people this is a once or twice in a lifetime transaction. It can be stressful but ultimately it will be worthwhile. Your solicitor needs to make sure that they cover all legal and planning issues before mortgage drawdown so that there won’t be any problems when and if you decide to sell in future.
The following guide will give you a better understanding of the mortgage drawdown process and how you draw down your mortgage.
How Long Will The Process Of A Mortgage Drawdown Take? Mortgage Drawdown Ultimate Guide Ireland 2022
First your own solicitor will need a copy of your loan offer, this should be sent directly to your solicitor by your lender, in what’s known as the loan pack.
Your solicitor will need the loan pack for the house you are purchasing before they can proceed, if it’s a switch they still need the loan offer pack. On average the loan offer takes 4/6 weeks to be issued by the lender.
Most solicitors will not look at any other documents until they have received the loan offer as they don’t want to spend time on a purchase that might not go through.
If you want to speed the mortgage drawdown process up though, you can either undertake to pay the costs in the event of the loan not being received or find a solicitor who will waive their fee if the transaction doesn’t go through.
This can speed up the process considerably, as you can be working on sale contracts whilst still waiting for your loan offer.
What Can Delay Mortgage Drawdown ? Mortgage Drawdown Ultimate Guide Ireland 2022
The issuing of contracts can be delayed if the Vendor’s Solicitor is getting deeds from a Bank (this takes between 10 and 14 days normally, but can take over a month) or if they are missing documents such as Certificates of Compliance.
Your solicitor will request these as they need to make sure that the house complies with all Planning and Title matters.
The house deeds are always needed so requesting these as early as possible is essential in getting your mortgage draw down complete as soon as possible.
It’s worth pushing your solicitor to act fast and move things along in parallel.
Most solicitors don’t specialise in property conveyancing so are only part time on your house purchase. You might want to look for a solicitor who is 100% dedicated to conveyancing and allows you to track your completion process on line.
moneysherpa recommend Jacob Law who specialise in conveyancing and have an online tool so you can upload your docs and track progress. If your switching they offer an all in price of €1350 including outlays and VAT.
Solicitors are also a particularly cautious breed and while this can be a good quality in their role, encouraging them to act faster rather than hang on for all the t’s to be crossed and i’s dotted usually pays off.
If your don’t move quickly vendors can pull out, lenders rates can change and your own circumstances may also shift, so it’s your job to push the solicitor as hard as you can to speed up the closing.
What Happens When You Get The Contracts- Mortgage Drawdown Ultimate Guide Ireland 2022
Once your solicitor has contracts and your loan pack, they read them and advise you about the property. They will also raise queries with the Vendor’s solicitor regarding the title.
They should send you a copy of any correspondence with the vendors solicitor.
What Happens After You Get The Advice Letter- Mortgage Drawdown Ultimate Guide Ireland 2022
Once you get the advice letter from your solicitor you should make sure that you are happy with the advice given and your solicitor will chase for replies to the queries/questions they have sent to the vendor’s Solicitor.
Once they reply and if the replies are ok, your solicitor will call you to arrange an appointment to go through the contracts and sign them if appropriate.
On average it takes two weeks to get replies and arrange to get contracts signed.
What Do You Need When You Sign- Mortgage Drawdown Ultimate Guide Ireland 2022
You need to pay the balance of the deposit on signing contracts and the cheque is payable to the Vendor’s solicitor. If you have not given your solicitor a copy of your driving licence or utility bills, as proof of identity and address, you will need to provide these at this point.
Your solicitor will then go through the contracts and loan offer and if you are happy then you sign the contracts. At this point you should get a definite idea as to the closing date from your solicitor.
Are You Committed When You Sign? – Mortgage Drawdown Ultimate Guide Ireland 2022
Once you sign the contracts, they are sent to the Vendor’s solicitor for signing by the vendor. The contract is not binding until they sign and return one copy.
This normally takes a week or two but it may be longer if the Vendor is buying another property or if there is a chain of transactions.
When Do You Close And When Do You Pay? – Mortgage Drawdown Ultimate Guide Ireland 2022
Once your solicitors have a copy of the contract back and know the closing date, your solicitor will email you details of what balance is required to close.
You also need to make sure that all the documents necessary for drawdown of your loan are with your mortgage provider.
Once your solicitor has all the monies they will arrange the mortgage draw down.
The Vendor’s solicitor then sends your solicitor all the Title documents on trust and the purchaser’s solicitor will transfer monies on trust then carry out searches to make sure there are no judgements against the property or the vendors.
If everything is ok and you confirm that the house is vacant and cleared out, your solicitor will authorise the release of the monies and you can collect keys from the Auctioneer.
What Happens After Closing – Mortgage Drawdown Ultimate Guide Ireland 2022
Your solicitor will arrange to stamp the deed and register the property. If you have an existing mortgage, they send your deeds to the Bank after the registration completes. If you do not have a mortgage, they will write to you to collect your deeds when they are registered.
Summary – Mortgage Drawdown 2022, Ultimate Guide
Mortgage draw down is a complex process so to summarise the steps that you need
Review your loan offer conditions with your solicitor
Request the house deeds from your current lender (if you are also selling or switching)
Review the property contracts with your solicitor and sign
Pay the outstanding deposit balance (if a new house purchase)
Supply lender with any outstanding documents (mortgage protection etc..)
Drawdown Mortgage
The key tip is chase, chase, chase. Don’t let your solicitor drive the process, make sure you are pushing and getting all your docs in on time.
The longer things take, the more that can go wrong.
That’s why getting partners that know the process inside out makes a lot of sense. moneysherpa advisors work with the best completions and solicitors in the country to make sure you get the best and fastest route to mortgage drawdown.
Next Steps – Mortgage Drawdown Ultimate Guide Ireland 2022
The Central Bank announced as series of changes to the mortgage rules ireland this week, starting on the 1st of January next year, aimed at helping with the housing crisis:
The Loan to Income ratio for First Time Buyers is to be increased from 3.5 X Income to 4 X Income
The definition of First Time Buyers is to be extended to include those who have been divorced, separated or bankrupt to give them a ‘fresh start’.
The Loan to Value ratio for 2nd Time Buyers is to be reduced from 20% to 10%. Meaning you will only need a 10% deposit although the lending limit remains at 3.5 X income.
Is this a good thing? Mortgage Rules Ireland 2022
This mortgage rule change is a welcome move, this summer moneysherpa analysed rents and repayments nationwide and found the average renter would save over €1,000 a month by buying instead of renting.
The 3.5 X Cap froze our renters, who are typically lower income, from buying. This led to the less wealthy becoming even less wealthy, trapped paying rents instead of building up family wealth.
Increased social inequality and was therefore an unintended consequence of the limit.
The 3.5 limit made sense for the Central Bank after making a hames of the housing market back in 2008, they wanted to cover themselves from ever happening again.
But, and it’s a big but, the social cost of baking in intergenerational inequalities was massive. It’s great to see the 3.5 X mortgage rule go, but it’s one of many short sighted and ill judged housing measures currently in place that need reforming.
Will This Increase House Prices? Mortgage Rules Ireland 2022
There is some concern that this move may lead to increased house prices by letting renters into the market. It may well do, but that’s because it makes houses more affordable by giving more people access to credit, it’s a little perverse to say this is not a good thing.
To the worry that this is a return to the bad old days of the 2008 credit bubble, there are a number of significant differences between now and 2008 in play.
The LTI limit has not gone, it’s just gone up to 4 times income which just brings us in line with others in Europe
Lender rules are much tighter, with proper due diligence on affordability. Back in 2008 it was the wild west and we all have stories of brokers and banks making up the numbers as they went along.
The banks cost of credit is much higher due to increased capital requirements, which makes them a lot pickier about who they lend to.
Are Higher House Prices A Bad Thing? Mortgage Rules Ireland 2022
My last point on this, which may seem counterintuitive is that higher house prices may not in fact be a bad thing.
If more support through looser credit and grants being available, prices can be higher without affordability actually being lower.
Because our building costs are so high, developers aren’t actually making that much on building houses right now, with margins often below 10%.
As a result they ‘cherry pick’ which areas they want to build in and what type of customer they want to buy for.
That’s why we have a supply shortage particularly in rural or lower income areas. If prices rise, profits for developers will rise, which means supply will also rise.
This is a point many seem to miss entirely. I know it requires using a bit more using the grey matter to understand this, but people who are making housing policy or who will potentially be making policy really need to avoid saying daft things like lowering house prices is the objective.
Making more houses affordable is the objective and that’s a completely different thing.
The process of applying for a mortgage can often be very daunting and filled with uncertainty, but not if you get the right mortgage adviser. Find out what to look for with our mortgage adviser ultimate guide Ireland 2022.
In this article, we aim to outline what a mortgage adviser is, why you should consider going to one, and how to find the best one for you.
What is a Mortgage Adviser? Ultimate Guide Ireland 2022
A mortgage advisor is a qualified professional who aims to find the best mortgage deal for you given your personal circumstances.
With over 250 mortgage products offered by 9 different lenders in Ireland, it’s no wonder so many struggle to find the best mortgage for them, and end up going with a mortgage that could lose them thousands in the long run.
A mortgage adviser will help you work out how much you can afford to borrow and use their knowledge of the market to find the best deal available.
When looking for the best deal out there, a good mortgage adviser will;
Talk with you to figure out what you can afford to borrow given your financial situation
Search the market for the best deals available
Compare deals offered by lenders
Tell you about different deals to help you find one that best suits you
Why should I go to a Mortgage Adviser? Ultimate Guide Ireland 2022
There are many benefits to seeing a mortgage adviser, as a good mortgage adviser will;
Look at your financial circumstances to find a deal that best suits you
Use their knowledge of lenders to find ones that are right for you
Access exclusive deals not available directly
Help you with the paperwork that comes with applying for a mortgage
Help you find a deal that you are likely to get
A mortgage advisor can help lift the burden that comes with applying for a mortgage.
By using their connections and knowledge of the market, mortgage advisers can help find a deal that is affordable and right for you.
Finding a deal yourself can be a long and difficult process. Mortgage advisers are there to save you time and effort, and may even be able to find you a deal you can’t on your own.
How do I find the right Mortgage Adviser for me? Ultimate Guide Ireland 2022
There are many factors you should take into consideration when looking for a mortgage adviser, such as;
Type of mortgage adviser
Mortgage advisers can either act independent or work on behalf of a lender. It’s important to know if you’re mortgage advisers is working for a financial institution, as this can impact their advice.
It’s also important to see how many lenders your mortgage adviser works with, as mortgage advisers who only work with a certain amount of lenders can only offer you a limited amount of deals.
An independent mortgage adviser will show you deals from many different lenders as they are not tied to only one, meaning you can choose from a wider range of lenders and deals.
Fees
Some mortgage advisers will not charge their clients, as they’re paid a commission based on the value of their clients mortgage once it has gone through.
Yet some mortgage advisers may charge their clients a flat fee of €100-€150. Other advisers may charge their clients a commission based on a percentage of their mortgage. This can be a problem if you are looking to take out a large mortgage.
Always ask mortgage advisers about their fees before deciding who to go with.
Qualifications
It’s important to find out what qualifications your potential mortgage adviser has. Before going with a certain advisor, check that they;
Are a Qualified Financial Adviser (QFA)
Are an Accredited Product Adviser (APA)
Are registered with the Central Bank of Ireland
It’s vital that the advisor you go to has the right qualifications to give you accurate financial advice when it comes to your mortgage.
Find out more on how the Central Bank regulates mortgage advisers here.
In short, mortgage advisors are professional financial advisers who are there to act in your best interests and find the best mortgage for you.
Mortgage advisers help ease the stress of applying for a mortgage by figuring out what you can afford to lend, getting and comparing deals from lenders and finding the best one for you.
Next Steps – Mortgage Adviser Ireland 2022, Ultimate Guide
We at moneysherpa have qualified financial advisors on hand to help you find the best mortgage deal for you. If choose moneysherpa as your mortgage adviser, you will;
Get our expert opinion free of charge
Have a wide range of options from a wide range of lenders, as we act independent from financial institutions
Have your paperwork dealt with digitally in one of our free online calls
Get comprehensive advice on all your options to find the best deal to suit your personal circumstances
Get our lifetime best rate guarantee, meaning our sherpas will always check the market to switch if we find a better deal for you
Have all your questions or queries answered by our team of professional mortgage advisers
The European Central Bank (ECB) base rate drives lender mortgage interest rates, when it goes up or down then ultimately so do the mortgage rates in Ireland.
The latest ECB survey of professional forecasters expect the ECB interest rate to stay at 4.5% in the first half of 2024 and then fall back to just over 4% by the end of 2024.
That means the average ECB interest rate across the year in 2024 will actually be 0.5% higher than the rate was in 2023. In worse news they expect rates to stay above 3.5% in 2025 as underlying inflation is proving hard to tackle.
So does this mean mortgage interest rates in Ireland will go up and what does it mean for you?
In a nutshell, mortgage rates Ireland will stay higher for longer and the impact on your monthly repayments is likely to be significant. If you are on a tracker, variable or are one of the 70,000 households on a fixed rate of less than one year you could be looking at rates staying around 5%-6% into 2025.
Don’t panic though, by switching to the best fixed rate you can probably still reduce your monthly repayments as there are still fixed rates available below 4%. If you need advice on your options talk to a mortgage broker who has access to all the rates on the market, you can book a free advice call with a broker now using the button below or read on to get our in depth analysis of the market for each mortgage type.
Check out moneysherpa’s analysis for RTE news below or read on to understand what the mortgage rate increases mean for you (including our new simple tool for calculating the impact of rate changes for you) and to get the inside track on what to do about it.
ECB Interest Rate Increases – Mortgage Interest Rates Go Up Ireland 2024
The latest ECB Survey of Professional Forecasters came out this Autumn.
The survey uses forecasting data from finance experts across Europe to predict the likely direction of interest rates.
The average prediction is that ECB interest rates will stay at 4.5% until the second half of 2024 and drop slightly to 4.25%, before falling back to 3.25% in 2025. This sounds pretty realistic with UK interest rates are already over 6% with US rates over 5%.
Some of the European experts surveyed though see interest rates climbing toward 5% as the ECB struggles to tamp down inflation.
It’s worth remembering that back in the nineties interest rates hit over 10%, so although many believe rates will come down from the current peak, no one really knows how high they might get this time around or how long rates will stay high.
If you are one of the 300,000 tracker mortgage holders in Ireland, these mortgage rate increases will be passed directly onto you. A tracker mortgage ‘tracks’ the ECB interest rate and range between 0.5% above the base rate to 2.25%, with the average tracker in Ireland having a rate of 1.15%.
If ECB interest rates stay at 4.5% then,
1.15% tracker = 1.15% + 4.5% = 5.65%
Every 0.25% increase adds around €18 a month on average and mounts up because mortgages are usually taken out over a long period. Each 0.25% is actually an increase of €2,000 across the average mortgage term remaining of 11 years.
Variable Mortgage Rate Holders
The 175,000 variable rate mortgage holders have gotten a temporary stay of execution as the main Irish lenders have held off passing on ECB interest rate increases to customers. It is still possible though that these rates will be passed on over the next six months as the banks seek to catch up.
In a recent report the Irish Central bank assumed that 60% of the ECB interest rate increases will ultimately be passed on to variable rate customers. At a 4.5% ECB interest rate that would make the rate passed on around 2.7%.
0.7% of the ECB increase has already been passed through by lenders making the average mortgage variable rate in Ireland 4.0% according to the latest data available from the Central Bank of Ireland [1].
At an ECB interest rate of 4.5%,
4.0% variable mortgage rate = 4.0% + 2% = 6.0%
Average Monthly Increase = c€120
Fixed Rate Mortgage Holders
The remaining 235,000 mortgage holders are on fixed mortgage interest rates, this means that lenders can’t pass on the ECB rate increases to these customers. Yet these customers can’t rest easy either.
The average duration of fixed mortgage rate interest deals in Ireland is less than 3 years. This means that many of these customers will emerge out of their fixed rate periods onto the highest rates in a decade.
The average fixed mortgage interest rate is currently around 2.5%,
2.5% Fixed will go to 6% variable
Average Monthly Increase = €400+
Many of these customers believe that they will be able to re-fix at around 2.5% when they come off their current fixed mortgage interest rate deals, but average available fixed rates are already at 4.0% and set to rise further.
The good news is though that all 710,000 mortgage holders are able to act now to protect themselves from these increases. Read on to use our calculator and get the inside track on how to dodge the impending lender mortgage interest rates hike.
All of the above mortgage repayment calculations are based on an average outstanding mortgage of €200,000, but what does the hike in mortgage interest rates mean for your own mortgage?
Your actual increase will vary slightly from the calculator depending on your current mortgage interest rates.
What Can You Do To Dodge The Mortgage Rate Hikes? – Mortgage Interest Rates Ireland 2024
Without taking action over 710,000 mortgage holders face an average monthly increase ranging from around €180 to over €300 depending on where ECB rates actually land.
If you take action now by fixing your mortgage rate for 5 years or more, you can avoid the hikes completely.
There are two options open to you.
Fix with your current lender
Switch to a new lender and fix
If you are still in your fixed period, you may think that you will have to pay a ‘break fee’ for breaking out of your existing deal. Actually, due to recent EU legislation that’s unlikely to be the case, so call you bank to double check straight away.
Almost everyone, can fix or switch without penalty.
The best rates are with the ‘non bank lenders’ Avant Money and Haven, who are over 1% cheaper than Bank of Ireland or Permanent TSB, so if you want to get the lowest repayments possible that’s the way to go.
That means switching your lender for the vast majority of people.
See the comparison of the average mortgage interest rates across the term below.
[mortgage_rates]
you can add text here…
In fact the Avant Money 5 year fixed rate above, is €17,387 cheaper over the full mortgage term than Bank of Ireland’s 5 year rate for the average mortgage.
It should take you about 8-10 weeks to complete a switch to Avant.
Bear in mind though that if you are switching lender, you will need to invest about €1,500 to cover your valuer and solicitor costs, unless you switch to Haven who will give you €2,000 to cover these.
In A Nutshell – Mortgage Interest Rates Ireland 2024
So if you have a mortgage and you don’t act now, you may be looking at a €180-€300 hole in your monthly finances this time next year.
That said, you still have options to dodge these mortgage interest rate hikes completely.
You should look to fix in the next few months.
Call your current lender and confirm there are no break fees, then get in touch with a broker and see if you should switch to a new lender or fix with your current one.
Make sure the broker has all the lenders on board though, so you get the best deal.
A self-build mortgage Ireland is a mortgage for people building their own home.
Building your own home can be a long and difficult process, but can be very rewarding in the long-run. Many chose to build their own home as it can turn out to be cheaper than already built homes on the market.
What you need to know before applying for a Self Build Mortgage Ireland
One of the key differences between a self build mortgage and your standard mortgage is that the funds for a self build mortgage are given out in stages of your home being built.
As your funds are in stages, you only have to pay interest on the funds you have already drawn down, not the whole amount of the mortgage.
How much can I borrow for my Self Build Mortgage Ireland?
Generally, lenders will allow you to borrow 3.5 times your gross income for your self-build.
You need 10% of the total build and site cost for a deposit.
It’s also important you have around 10% of the value of your build saved on top of your deposit to cover any unforeseen costs. The lenders will look for proof of this contingency fund.
What do I need before applying for a Self Build Mortgage Ireland?
Before applying for a self build mortgage Ireland, you will need to;
Find a site to build your property
Get planning permission for both;
The property itself
Construction of the property
Note that lenders will not give you the funds until you’ve obtained planning permission. They will also not help fund the cost of getting planning permission.
How much of a deposit do I need for my Self Build Mortgage Ireland?
First time buyers need a 10% deposit, with a maximum Loan to Value (LTV) of 90%.
Loan to Value: Value of your mortgage compared to the value of your build.
This LTV is based on the cost of the site along with the cost of construction, or 90% of the site value once it has been completed, whichever is lower.
Second time buyers need a 20% deposit, with a maximum LTV of 80%.
However, many lenders allow you to use the site as a deposit if you already own it.
If you are gifted the site, this can count toward your deposit, so for example if your site is worth over 10% of the combined build and site cost, then you can borrow a 100% for your build.
How do I get started on my Self Build Mortgage Ireland Application?
Once you have a site and planning permission, you can get started on your self build mortgage application.
Only certain lenders offer self build mortgages, Haven, Permanent TSB and Bank of Ireland.
Rates are the same as for first time buyers or movers, check out the comparison below for all the lenders who currently offer self builds.
[mortgage_rates_self_build]
You should talk to a mortgage broker to help you choose which lender is best for your particular build.
You will need the following documents to get started;
Evidence of contribution
Full Planning permission
Map of site
Estimates of building plans and costs
Fixed Price Contract
Once you have these documents in order, you will get an initial offer from a lender.
After your self build mortgage Ireland is approved, you will begin to receive funds that correspond with the stages of your property being built.
There are generally 4-6 stages depending on your build, which can include;
Buying the site
Substructure
Completion of roof
Completion of floor
First and Second fix
Certified completion
Depending the length of your building period, these stage payments are generally spread out over 18 months.
Advantages and Disadvantages of a Self Build Mortgage Ireland
Advantages
Government Incentives
Self Builds are included in the Help to Buy scheme offered by the Irish Government. If you are a first time buyer and plan on building your home by December 2022, you may be eligible to benefit from this scheme.
Unfortunately the new First Home Equity scheme is not currently available for self builds.
Lower costs
Usually building your own home will turn out to be cheaper in the long run, as it can cost less than many already built homes on the market.
Disadvantages
Time and effort required
Building your home takes much more time and effort than finding an already built home.
It requires a serious amount of planning and can be a very long process.
You have to plan out all aspects of the build such as finding an architect, getting planning permission, finding a site, finding a mortgage that best suits you, etc.
Risks attached
There are many risks that come with building your own home, such as construction taking longer than expected or going over budget.
In a Nutshell, Self Build Mortgage Ireland
In short, the process of building your own home can be exciting and very rewarding in the long run, with self build mortgages there to help you get started on your self build journey.
However it’s important to consider the risks attached with building your own home, and make sure you carefully plan your expenses to avoid going over budget.
We recommend speaking to a mortgage advisor before starting your self build journey, so you can plan ahead and make this process as stress-free as possible.
With runaway inflation across the continent the European Central Bank looks set to hike interest rates with the cost of Irish mortgages set to continue to rise as a result.
So the question your probably asking is should i fix my mortgage in Ireland 2023?
ECB rates have risen by a staggering 4.0% in the last year and are due to rise again when the ECB rate gurus next meet.
The financial markets are expecting rates to have risen by at least 0.5% in the next 12 months, which would add a further €100 a month to the average Irish mortgage.
The good news is that by fixing your mortgage rate now you can dodge the coming rate hike and probably cut your current repayments at the same time.
The Irish mortgage market is almost unique in having fixed mortgage rates priced well below variable rates and over 140,000 variable, 240,000 tracker and around 200,000 fixed rate mortgage holders could save big by switching now and fixing on a lower rate, read on or check out our video explainer to see how much you could save and how.
How much you could save by fixing? – Should I Fix My Mortgage Ireland 2023
According to the latest Irish Central Bank figures available, the average variable rate in Ireland is around 3.8%, this is probably what you are on if you are with Bank of Ireland, AIB, Ulster, KBC and PTSB and not on a tracker which now average at 4.65%.
If you are with any of these banks then you should look into switching to a fixed rate. If you’re not sure about what rate you’re on dig out your annual mortgage statement, or take a gander at the table below.
[mortgage_rates_var_followon_ltv_compare]
So let’s run the numbers on an average outstanding loan of €200,000 and average outstanding term of 15 years. This is the case for Joe Average based on data from the Irish banking and payments federation.
Total monthly at variable rate of 3.8% = €1,459
Total monthly at a fixed rate of 2.96% = €1,372
That’s a saving of €87 a month or €15,660 over the full term and that’s not even an extreme case, that’s just Mr Joe Average.
However, that’s not even the biggest reason for you to switch.
The no 1 reason to switch is that you will cap your repayments, protecting yourself from further rises.
The Pro’s and Con’s of Fixed v Variable – Should I Fix My Mortgage Ireland 2023
The bizarre thing is that fixed rates are usually a better choice for mortgage holders, even before you compare fixed versus variable rates savings, because they are less risk.
For most people the certainty of knowing the payment at the end of the month won’t rise for 5, 10 or even 20 years far outweighs the risk that they might end up paying more than the going rate at some point.
In fact that’s why fixed rates in other countries are usually more expensive than variable, they are effectively ‘insurance’ that your repayments can’t rise.
Let’s take Mr Joe Average again who is on a variable rate of 3.8% paying €1,459 a month.
Remember that expected ECB rate increase of 2%? The banks will pass that straight through to Joe increasing his variable rate to 5.8%.
Total monthly at variable rate of 3.8% = €1,459
Total monthly at variable rate of 5.8% = €1,666 Total monthly at a fixed rate of 2.96% = €1,372
If the ECB hike rates by 2% as expected, Joe’s monthly repayments on his variable rate will go up by €207 a month. Making his monthly repayments €294 more a month than if he had fixed for 15 years with Avant Money.
There are still a couple of things to watch out for though with fixed rates. As well as the chance you could end up paying more if rates fall, you can also be penalised if you want to payback early.
That said on rates falling, most experts expect interest rates to stay high for years to come and never to fall back to the super low rates seen between 2008-2022.
Plus you might not have to pay a ‘breakout’ fee to get our of your fixed period. Under EU legislation the banks can only charge you the difference between the rate when you originally fixed and the rate when you look to repay.
Who Should I Fix With? – Should I Fix My Mortgage Ireland 2023
For most people we advise switching to the non bank lenders. As new entrants these lenders offer attractive long term rates, but also the best variable rates once you come off your fixed rate period.
This gives these mortgages a much lower average rate across the whole mortgage term, known as the APRC [1].
We would also encourage you to fix for as long as you’re comfortable with. Although this may cost you more in the short term, the benefit of capping your repayments will out weight the extra cost for most people.
The best fixed deals in the market across all 7 lenders and 290 mortgage products are shown below.
How to fix your mortgage rate – Should I Fix My Mortgage Ireland 2023
The simplest way to fix is to get in touch with your existing lender and get them to move you to their fixed rate.
This option, although hassle free, is unlikely to deliver big savings as many of the fixed rates are reserved for new customers only and the best fixed rates in the market are with the non bank lenders like Avant Money.
So the best way to fix your mortgage and save big is to switch your mortgage to one of these ‘non bank’ lenders. With regulation and new online platforms emerging in the last few years switching is now quite straightforward, most brokers will handle it for free as they are paid a commission by the lenders.
In a Nutshell – Should I Fix My Mortgage Ireland 2023
So should I fix my mortgage?
Probably.
With such uncertainty about interest rates right now almost everyone should look into fixing. Being able to cap your repayments against future potential interest rate rises, makes sense for almost anyone with a mortgage.
Even those with trackers or on shorter term fixed rates need to think about if they can afford not to.
If your on a variable though it really is a no brainer, you will save thousands and remove the worry around rising repayments.
Next Steps – Should I Fix My Mortgage Ireland 2023
The Buy to Let market and property investment has huge potential in Ireland. That’s why there’s lots of interest in getting a Buy to Let Mortgage Ireland 2023 for those looking to invest. But, what’s needed and how do you get the best deal? Check out our Buy to Let Mortgage Ireland Ultimate Guide 2023.
In this article, we discuss what a Buy to Let Mortgage also known as a Buy to Rent Mortgage is, how it works, how to apply, and some more investment property points you should know before deciding to apply for one.
What is a Buy to Let Mortgage? Ireland Ultimate Guide 2023
A Buy to Let Mortgage is a mortgage for people who are looking to purchase a property to rent out to others. Usually as an investment property to give a steady income. Ireland’s approach to other asset classes makes property one of the few options offering steady returns that are relatively tax efficient.
How does a Buy to Let Mortgage Work? Ireland Ultimate Guide 2023
Unlike your standard mortgage, with a Buy to Let Mortgage you can opt for your monthly repayments to pay off just your interest instead of your capital.
Capital: The money you borrowed from a lender
Interest: What you pay a lender for borrowing money
With this kind of Buy to Let Mortgage, your monthly repayments pay for the interest on your loan. This means you will have more money in the short-term, as you’re only paying off your interest instead of your capital on the investment property.
However once your mortgage has reached the end of its term, you must pay off the mortgage capital in full. This is why many choose to remortgage or sell their investment property once the mortgage has reached the end of its agreed term. The hope is that the capital will have appreciated during the term so it can be used to pay off the mortgage leaving a profit left over.
Alternatively you can decide to use your repayments to pay both the interest and the capital so you are reducing the risk of you not being able to recoup the capital due to a fall in the property market.
The value of your Buy to Let Mortgage depends on how much you plan on charging the residents living in your investment property. If you’re planning on renting out a decent sized property in a good location and are able to charge a higher rent, you can apply for a larger Buy to Let Mortgage.
How much will my deposit be on a Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023
The deposit on a Buy to Let Mortgage Ireland is around 25%-30% of your investment properties value. Deposits on Buy to Let Mortgages Ireland are high, as lenders consider them more high risk.
Whilst 25%-30% is a large sum of money, the bigger your deposit is the more likely you are to be approved for a Buy to Let Mortgage and get a better rate.
It’s important to take the cost of your deposit into account when applying for a Buy to Let Mortgage Ireland.
How do I apply for a Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023
After putting down your deposit, your lender may ask you to provide;
Evidence of income
Credit history
There are a few extra details needed for a Buy to Let Mortgage Ireland. Your bank may ask how much you’re planning on making from rent, as well as the details of the investment property you’re planning on purchasing.
Ultimately, lenders are looking to see if you are able to repay the Buy to Let Mortgage by taking all these factors into consideration.
Only certain lenders provide Buy to Let or Investment property mortgages and rates are higher than for standard mortgages. This is because the banks see investment property mortgages as a higher risk than a standard residential mortgage.
You can get both variable and fixed Buy to Let mortgages, to make things simpler though we have shown a comparison of just variable rates below. Even if you are fixing for a few years the variable rate is still important as it is the rate you will go onto at the end of your fixed period.
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Will I be charged Stamp Duty on my Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023
According to the Revenue Commission, the current Stamp Duty rates as of 2022 are;
1% up to €1,000,000
2% on anything after €1,000,000
However if you buy more than 10 Buy to Let investment properties, you will be charged 10% Stamp Duty on the total amount of your investment properties. This rate was introduced to put off the so called ‘cuckoo funds’ buying up large amounts of properties to rent.
You can read more about the Revenue Commission Stamp Duty rates here.
Advantages and Disadvantages of a Buy to Let Mortgage Ireland – Ultimate Guide 2023
If you are considering getting a Buy to Let or Buy to Rent Mortgage, it’s important to consider some of the advantages and disadvantages.
Advantages
Investing in the right property can lead to a high return on investment if the property increases in value, making a Buy to Let Mortgage very worthwhile in the long run.
Disadvantages
There is an increased Stamp Duty rate for people looking to buy investment properties to rent.
There are many potential issues that come with renting out an investment property, such as;
Periods of rental lost between tenants
Damage to the property
Tenants failing to pay rent
If you have to sell the investment property and the sale price doesn’t cover the mortgage capital, you will have to cover the rest yourself. This is why it’s important that you don’t rely on selling the property to pay off the mortgage capital.
Summary: Buy to Let Mortgage Ireland Ultimate Guide 2023
In short, purchasing a Buy to Let investment property to rent out can be a great way to make money, and can lead to a major return on investment.
However, it’s important to consider the risks attached with becoming a landlord and renting out your investment property to others.
It’s important to take all the expenses and ongoing costs of a Buy to Let Mortgage into consideration. Always be as financially prepared as possible, as rent is not always guaranteed and neither is your investment property going up in value.
This is why we recommend you seek advice from a professional before applying for a Buy to Let Mortgage Ireland.
Next Steps Ireland Ultimate Guide 2023
If you’re thinking about becoming a landlord and looking to get started on your Buy to Let Mortgage application, you can contact one of our QFA money sherpas and get an online consultation free of charge.
The process of applying for a mortgage can often be very daunting and filled with uncertainty, but not if you get the right mortgage advisor. Find out what to look for with our mortgage advisor ultimate guide Ireland 2022.
In this article, we aim to outline what a mortgage advisor is, why you should consider going to one, and how to find the best one for you.
What is a Mortgage Advisor? Ultimate Guide Ireland 2022
A mortgage advisor is a qualified professional who aims to find the best mortgage deal for you given your personal circumstances.
With over 250 mortgage products offered by 9 different lenders in Ireland, it’s no wonder so many struggle to find the best mortgage for them, and end up going with a mortgage that could lose them thousands in the long run.
A mortgage advisor will help you work out how much you can afford to borrow and use their knowledge of the market to find the best deal available.
When looking for the best deal out there, a good mortgage advisor will;
Talk with you to figure out what you can afford to borrow given your financial situation
Search the market for the best deals available
Compare deals offered by lenders
Tell you about different deals to help you find one that best suits you
Why should I go to a Mortgage Advisor? Ultimate Guide Ireland 2022
There are many benefits to seeing a mortgage advisor, as a good mortgage advisor will;
Look at your financial circumstances to find a deal that best suits you
Use their knowledge of lenders to find ones that are right for you
Access exclusive deals not available directly
Help you with the paperwork that comes with applying for a mortgage
Help you find a deal that you are likely to get
A mortgage advisor can help lift the burden that comes with applying for a mortgage.
By using their connections and knowledge of the market, mortgage advisors can help find a deal that is affordable and right for you.
Finding a deal yourself can be a long and difficult process. Mortgage advisors are there to save you time and effort, and may even be able to find you a deal you can’t on your own.
How do I find the right Mortgage Advisor for me? Ultimate Guide Ireland 2022
There are many factors you should take into consideration when looking for a mortgage advisor, such as;
Type of mortgage advisor
Mortgage advisors can either act independent or work on behalf of a lender. It’s important to know if you’re mortgage advisors is working for a financial institution, as this can impact their advice.
It’s also important to see how many lenders your mortgage advisor works with, as mortgage advisors who only work with a certain amount of lenders can only offer you a limited amount of deals.
An independent mortgage advisor will show you deals from many different lenders as they are not tied to only one, meaning you can choose from a wider range of lenders and deals.
Fees
Some mortgage advisors will not charge their clients, as they’re paid a commission based on the value of their clients mortgage once it has gone through.
Yet some mortgage advisors may charge their clients a flat fee of €100-€150. Other advisors may charge their clients a commission based on a percentage of their mortgage. This can be a problem if you are looking to take out a large mortgage.
Always ask mortgage advisors about their fees before deciding who to go with.
Qualifications
It’s important to find out what qualifications your potential mortgage advisor has. Before going with a certain advisor, check that they;
Are a Qualified Financial Advisor (QFA)
Are an Accredited Product Adviser (APA)
Are registered with the Central Bank of Ireland
It’s vital that the advisor you go to has the right qualifications to give you accurate financial advice when it comes to your mortgage.
Find out more on how the Central Bank regulates mortgage advisors here.
In short, mortgage advisors are professional financial advisors who are there to act in your best interests and find the best mortgage for you.
Mortgage advisors help ease the stress of applying for a mortgage by figuring out what you can afford to lend, getting and comparing deals from lenders and finding the best one for you.
Next Steps – Mortgage Advisor Ultimate Guide Ireland 2022
We at moneysherpa have qualified financial advisors on hand to help you find the best mortgage deal for you. If choose moneysherpa as your mortgage advisor, you will;
Get our expert opinion free of charge
Have a wide range of options from a wide range of lenders, as we act independent from financial institutions
Have your paperwork dealt with digitally in one of our free online calls
Get comprehensive advice on all your options to find the best deal to suit your personal circumstances
Get our lifetime best rate guarantee, meaning our sherpas will always check the market to switch if we find a better deal for you
Have all your questions or queries answered by our team of professional mortgage advisors
Our Approval In Principle tool uses the sherpa’s own algorithm to assess if you are likely to be approved by the lenders.
The first hurdle to clear to get Approval In Principle is the central bank guidelines, all lenders have to conform to these [1]. If the central bank computer says no, then you probably need to do some more work getting mortgage ready.
First is the deposit to loan ratio, only 80% of the purchase price can be funded through loans. If you are a first time buyer the good news is this is increased to 90% to help get you on the property ladder.
Second is the loan to income ratio, your loan can be no more than 3.5 times your joint income per year. So if your household earns €100,000 a year, your maximum mortgage would be €350,000.
Don’t despair though, if these limits put your dream home out of reach. The Central Bank also allows lenders a quota of exceptions outside the rules above, read on to find out more.
Exceptions – Approval In Principle
As the lenders only have a limited amount of exceptions, they want to parcel them out to the ‘best’ customers. If you are a lender this means customers with higher disposable income, as that generally means a larger mortgages that have very high odds of being paid back.
To get an exception then the secret is to maximise the gap between your income after tax and your financial commitments. We give you the inside track as to how the banks measure this below.
Watch out though, exceptions are a double edged sword. As well as stretching your finances to the limit. They often run out early in the year and can be withdrawn leaving your home purchase stranded.
Our algorithm factors exceptions as an extra risk to your approval in principle, but if you income is high enough this doesn’t need always to be a barrier to approval.
Credit policy – Approval In Principle
Above and beyond the central bank limits, each lender has their own credit policy, which they use to approve both exceptions and loan applications.
These policies though boil down to the same thing. How likely are you to pay back the mortgage?
The way the lenders assess this is to look at how much cash you have over after you have made your repayment. This gives them an idea of how much wriggle room you have if interest rates rise or your financial circumstances change.
In general only regular income after tax is counted, although some lenders factor in bonuses and overtime etc.. at a discount.
The secret though is cutting back your committed outgoings. These are loans, childcare or if you are divorced or separated your monthly maintenance.
Also the more family members you have the higher the level of disposable income you will need.
To pass the lender limits after taking into account your outgoings our mortgage approval calculator will have to see a healthy amount left over at the end of the month.
This is to take into account what might happen if mortgage interest rates rise in the future.
Mortgage calculators – Approval In Principle
You can also use our other mortgage tools to help you get approval in principle and mortgage ready. Check out our
With interest rates peaking, you’re probably wondering should I fix my tracker mortgage? The answer used to be a flat out no, but now the answer depends on two things.
What type of tracker mortgage are you on?
How much can you afford your repayments to rise by?
Check out our Tracker Mortgage Ultimate Guide Ireland 2024 to find out more.
Tracker mortgages come in different flavours based on how much extra interest they charge over the European Central Banks (ECB) base interest rate.
The average tracker in Ireland charges 1.15% above the ECB base rate based on the latest data from the Irish Central Bank. If you are on a tracker mortgage that charges over 1% above the ECB rate you should think about fixing your tracker as you are already paying more than you could on a fixed rate.
If you are on a tracker mortgage that charges less than 1% above the ECB rate, it still might make sense for you to fix your tracker mortgage.
Why? With experts predicting ECB rates will stay around 4.5% well into 2024 and rates to only come down slowly, most trackers could remain more expensive than current fixed rates.
Based on the average outstanding tracker value of €81,322 and a term of 15 years we have calculated the average savings by fixing at the best rate on the market against the forecast ECB rate for 2025 of 3%-3.5%.
Tracker to Fixed Rate Example Savings Average
Current APRC
Current Repayment
Monthly Saving
Total Saving
ECB 3.0% +1.15% Tracker (Best Case)
4.15%
€608
€39
€7,091
ECB 3.5% +1.15% Tracker (Mid case)
4.65%
€628
€60
€10,817
Savings for Average €81,322 15 year tracker switching to 3.17% APRC
The numbers above assumes the ECB rate does not come down below these rates for the remaining term. The latest ECB survey of expert forecasters indicated that most experts expect ECB rates to stay high until 2024 and then level off between 3-4% from 2025. It is very unlikely that rates will ever return to the levels seen after the 2008 financial crisis.
Unfortunately waiting to see which way things pan out isn’t really an option as lenders are likely to withdraw the ultra low fixed rate deals currently available at any moment.
So, should you fix your tracker mortgage?
Fixing your tracker is a big decision, once you fix there is no going back to your tracker rate. If you don’t fix however you are at risk of significant increases in your monthly repayments. Every case is different, so getting advice from a qualified mortgage advisor before making the final decision is crucial.
Check out us sharing our advice for tracker mortgage holders on Ireland AM or read on to find out more.
A tracker mortgage is a mortgage that follows or ‘tracks’ the ECB base rate. These mortgages were introduced by banks in the Celtic Tiger years in an attempt to cash in on the Irish housing boom.
Depending on the lender and when you signed up, rates ranged from 2.5% above the ECB base rate down to as low as 0.5% above the rate. The average tracker rate is 1.15% over the ECB base rate.
After the financial crash of 2008 ECB interest rates plummeted to 0%, this made tracker mortgages very attractive for consumers and loss making for the banks.
As a result Irish banks withdrew all tracker mortgages from the market and attempt to move a number of customers off tracker mortgages to try to reduce their losses. This is known as the ‘tracker mortgage scandal’ [1] resulting in customers losing homes and millions of euros in both costs and fines levied on the Irish banks.
How Does Fixing Compare to Sticking with My Tracker Mortgage?
In 2022 the European Central Bank raised the ECB base rate that tracker mortgage rates follow from 0% to 0.5% in July, added a further 0.75% in September and 0.75% in November, then 0.5% in December.
Most recently in February this year the ECB added a further 0.5% and announced it will hike rates by 0.5% again in March and 0.25% in June. All this takes the ECB rate to a record 3.75%.
That means the average tracker rate has gone from 1.15% to 4.95% in just 8 months, adding over €24,000 in total to the cost of the average tracker mortgage of a 15 year term. Depending on which tracker rate you are on then, tracker mortgage rates will rise to around 4.0%-6.0%.
They are doing this to try to reduce inflation by making credit more expensive to consumers.
But, markets indicate the ECB may put through even more increases before the summer’s out.
Most now expect to see a further 0.25% hike before July.
The average outstanding tracker mortgage in Ireland is €81,322 and the average term people have left is 15 years. By fixing onto the best rate on the market the average tracker customer will save €10,817 at an ECB rate of 3.5%.
You can calculate your own potential savings with our handy tracker calculator here.
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The average savings based on switching to the best rate in the market are below.
Tracker to Fixed Rate Example Savings Average
Current APRC
Current Repayment
Monthly Saving
Total Saving
ECB 3.0% +1.15% Tracker (Best)
4.15%
€608
€39
€7,091
ECB 3.5% +1.15% Tracker (Medium)
4.65%
€628
€60
€10,817
Savings for Average €81,322 15 year tracker switching to 3.17% APRC
Here’s the savings range from the highest tracker to the lowest as well, just in case you need it.
Tracker to Fixed Rate Example Savings High & Low
Current APRC
Current Repayment
Monthly Saving
Total Saving
ECB 3.0% +2.25% Tracker (Best)
5.25%
€654
€85
€15,383
ECB 3.5% +2.25% Tracker (Medium)
5.75%
€675
€107
€19,267
ECB 3.0% +0.75% Tracker (Best)
3.75%
€591
€23
€4,162
ECB 3.5% +0.75% Tracker (Medium)
4.25%
€612
€44
€7,830
Savings for Average €81,322 15 year tracker switching to 3.17% APRC
You can check out our explainer video here or read on to use our handy tracker calculator and get the full lowdown on the pro’s and con’s of fixing.
But, there is no reason that rates won’t go higher.
In the early 2000’s for example Central Bank interest rates were around 4.5%, that’s 1% higher than now, so would add €100 to the average monthly repayment.
If increases of that order may potentially cause issues with making your mortgage repayments, then you should think about fixing.
Should I Fix My Tracker Mortgage Ireland 2024?
So should I fix my tracker mortgage? A tracker mortgage is a variable rate mortgage so is exposed to interest rate hikes. The average tracker rate is now 4.65%, increasing the average repayment by 28% or €24,000 over a 15 year term.
With inflation across Europe still on the rise it’s not clear how high rates might go or when they might come back down again.
In fact, the near zero interest rates we have had since 2008 have been historically unprecedented and may believe that rates may never return to the levels we have seen for the last decade. Most analysts now predict that if ECB rates fall in future a level of around 2.5%-3.0% would be the most likely scenario.
Most experts agree that ECB rates are unlikely to return to previous rates for many years if at all.
The good news is that fixed rates are still available from as low as 3.5%, for most tracker mortgage customers this would keep their mortgage repayments at similar levels to today while capping any potential rises in future.
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The catch is that these low fixed rates are only available for 5 years or less and so when you come off them you still could be vulnerable to higher ECB base rates.
If you really want certainty then you can fix for up to 30 years right now with some lenders.
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This would cap your repayments for the rest of your mortgage.
If you go to a broker 15-30 year fixed mortgages are still available for around 4.2%.
Obviously if tracker mortgage rates go down below the rate you fix at you will miss out on any savings, but you have to trade this off against the certainty you will get by fixing.
For most people we think these long term fixed rates offer great value as you are paying a low premium for the certainty they provide by capping future repayments.
How Do I Fix My Tracker Mortgage? Tracker Mortgage Ireland 2024
There are two ways to fix
Fix with your current lender
Switch and fix with a new lender
The best fixed rates are those with the newest lenders in the market Avant Money and Haven. So the chances are if you fix with your current bank you will end up paying more than you should. The table below shows how the different lenders stack up.
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Every 0.1% = €1,800 on the cost of the average mortgage over the full term, so not fixing onto the best rate could end up costing you tens of thousands in the long term.
So fixing with Bank of Ireland would cost you almost €25,000 more than if you were to fix with Avant Money.
That’s why we strongly advise that you talk to a broker to see what options you have.
Make sure the broker has access to all the lenders, will switch you for free and has experience of switching tracker mortgages. You can book a call with a broker now below.
We wouldn’t hang around having that first conversation with your broker for two reasons.
It’s not certain how long these low long term fixed rates will be available.
There is a rush to fix nationwide which is causing backlogs right now.
The good news is that you may be able to fix with your current lender while you are in the process of switching to a better fixed rate without being charged any breakage fees. This is because under EU law lenders can’t charge breakage fees when rates are on the rise.
This means you can ensure your rates don’t rise while you are waiting to complete your switch to a new lower cost lender.
In A Nutshell – Tracker Mortgage Ireland 2024
Although tracker mortgages have been fantastic value since 2008 as a variable mortgage they are exposed to rate rises. With ECB rate rises the average tracker rate is now 4.95%, much higher than current fixed rates.
These rates may go even higher and most analysts believe that tracker rates are unlikely to ever return to the rates seen since the 2008 crash.
That’s why fixing your rate to cap your repayments is the right option for most people and they should talk to a broker as soon as possible to get the best fixed rate, before fixed rates rise.
A tracker ‘tracks’ the European Central Bank (ECB) base rate, this means that if the ECB rate goes up your mortgage repayments will also rise. You should fix your tracker if you want to be certain what your monthly repayment will be.
Is now a good time to fix your mortgage in Ireland?
As rates are currently on the rise, fixing makes a lot of sense right now. The ECB base rate will be 3.5% by March 2023, this is 3.5% higher than it was in June 2022. Increasing the average cost of a tracker mortgage by €24,000 over a 15 year term, that’s 28% more. Fixing will cap the impact of these rises on your mortgage repayments.
What are the disadvantages of fixed rate mortgages?
Obviously if rates fall in the future, you may be locked into your fixed rate and be payment more. However, the certainty of capping repayments outweighs this disadvantage for most mortgage holders. Break fees may also apply if you want to move house, switch or pay your mortgage off early. Some lenders are more flexible than others, so you should talk to a mortgage broker about which lender will suit you best.
Is it better to go with a fixed or variable mortgage?
For most people a fixed mortgage is a much better option as it will cap your repayments. With a variable mortgage may be at risk if you are unable to make repayments due to rising interest rates. Fixed rates are also generally lower than variable rates in Ireland due to the amount of competition for new business making them doubly attractive. Fixed rates may not be the best option however, if you are looking to change your mortgage within the fixed term.
Will interest rates go up in 2023 Ireland?
ECB Interest rates have already increased by 0.5% so far this year, with tracker mortgages rising by the same amount. The ECB has already announced a further 0.5% in March with another increase possible before the summer. This would bring the ECB lending rate to 4% and the average tracker to 5.15%. New fixed rate deals have also been on the rise and variable rate mortgages are likely to rise, by the end of the year also. Further ECB rate increases, which drive all other rates in the market, are expected. However, fixed rates are currently available at 3.19% APRC almost 2% lower than the predicted average Tracker rate.
Will interest rates come back down?
Most experts agree that interest rates are unlikely to fall to previous levels for many years and possibly never. The near zero interest rates seen post the 2008 banking crisis were unprecedented and are unlikely to return. As Central Banks continue to battle stubbornly high inflation into 2023 most expect interest rates to continue to rise.
The First Home Scheme Ireland 2024 is a first time buyers support that allows first time buyers to borrow up to 30% of the value of their property directly from the government created scheme.
The FHS scheme can help you boost your buying budget and what you are able to borrow from the lenders making it easier to get a foot on the property ladder.
In this article, I will be going into detail about how the First Home Scheme Ireland 2024 works, what you have to do to qualify, how much can be available to you and finally how to apply. If you are thinking of buying and need more information about the First Home Scheme you can book a free advice call using the button below.
How does the First Home Scheme Ireland 2024 Work as a First Time Buyers Grant?
The First Home Scheme Ireland 2024 is a First Buyers Grant that works as an equity scheme, while the Help to Buy Scheme is a tax refund scheme.
It allows first time buyers purchasing newly built homes or those self building to receive from 2.5% up to 30% of their property value as a deposit to help reduce the mortgage amount needed.
In return the Irish Banks and Government retains a share of ownership of your home through a private company they have created to administer the scheme.
When you sell your home the FHS company will get a share of the sale price depending on how much share they took.
For example,
Home purchased @ €300,000
First Home Scheme Deposit @ 30% = €90,000
Home sold @ €400,000
Government owed 30% = €120,000
The government also has the right to interest payments on the amount advanced after 5 years, first at 1.75% then rising to 2.15% after 15 years and 2.85% after 29 years.
So for a typical mortgage of 20 years
10 years €90,000 @ 1.75%
10 years €90,000 @ 2.15%
Total additional interest of €18,760
So in the example above the government would ultimately receive €138,760 for the €90,000 you receive under the First Home Scheme.
How do I know if I qualify for the First Home Scheme Ireland 2024?
The First Home Scheme Ireland 2024 is targeted at First Time Buyers who can’t get a large enough mortgage to afford to buy a new home. One recent tweak to the scheme allows also anyone who has been served notice of eviction and self builds to also apply for the FHS scheme.
It aims to bridge the gap between how much money you need and how much money the lender will give you.
For that reason the First Home Scheme requires you to have a mortgage of at least 70% of the properties value to qualify. If you can afford to buy without maximising your loan, then by definition you don’t need the scheme.
The First Home Scheme Ireland 2024 is available to all First Time Buyers purchasing a newly built property or self building a home under €500,000 in Dublin or Cork and down to €250,000 in some parts of the country.
Local Authority Area
House Price Ceilings*
Self BuildCeilings
Apartment Price Ceilings
Cork City, Dublin City, Dún Laoghaire-Rathdown, Fingal, South Dublin
€475,000
€475,000
€500,000
Galway City
€450,000
€450,000
€450,000
Limerick City and County
€400,000
€400,000
€450,000
Waterford City and County
€375,000
€375,000
€450,000
updated 6/01/2024
*For the purposes of the First Home Scheme, duplexes fall within house price ceilings.
A First Time Buyer is anyone who hasn’t previously taken purchased a property in or outside of Ireland.
Due to the governments ‘fresh start’ policy the scheme is also available to anyone who has been made bankrupt or is divorced and no longer has a share of a property.
In order to qualify, you must-
Be a first time buyer both in Ireland and outside of Ireland
Be moving in with an applicant who is also a first time buyer if more than one person will be purchasing the home
Be moving into a newly built home in a private development
Be using the property as your principal private residence for 5 years
The government has indicated that the FHS scheme will be extended to also include self build properties.
How much is available to me from the First Home Scheme Ireland 2024?
Under the First Home Scheme Ireland 2024, first time buyers can claim,
Up to 30% of the purchase price of their new home, for example a home worth €200,000 can claim €60,000
If you avail of the Help to Buy Scheme however the First Home Scheme is capped at 20%
As the Help to Buy Scheme is a grant it is not subject to being reclaimed or to future interest payments.
This means that a combination of funding the purchase through a 10% Help to Buy Scheme grant and a 20% First Home Scheme equity option is the best approach for most cases.
The FHS scheme is not means tested so is available for all income levels.
How can I apply to the First Home Scheme Ireland 2024?
If you think you qualify for the First Home Scheme Ireland 2024, then you should talk to a mortgage broker who can advise you on the best approach and which lenders work with the scheme.
There is also a web site dedicated to the scheme. [1]
In a Nutshell – First Home Scheme Ireland 2024
With monthly rents now often costing more than monthly mortgage repayments on the exact same property, buying a home can be an essential step in creating better financial and life outcomes.
The First Home Scheme Ireland 2024 used in conjunction with the current Help to Buy scheme may help renters trapped by these rules escape, by reducing the size of mortgages required to buy a home by a further 20%.
There are some catches to the FHS scheme bear in mind though, the only lenders in the scheme currently are PTSB, Bank of Ireland and AIB Group (which includes EBS and Haven). These lenders have the most expensive mortgages on the market.
If you wanted to switch mortgage to a cheaper lender, you would have to buy out your 20% equity stake to do so. This could severely limit your options and leave you paying through the nose on your interest repayments.
Also if you are looking to trade up a few years down the line, your equity for the trade will be worth less as you will have to take the scheme’s stake in your property into account. This could make getting the 20% deposit required for a second time buyer an impossible hurdle in some cases.
There is no doubt also that this will put further upward pressure on house prices, a similar scheme in the UK is said to have added 6% to property prices, but for those wasting thousands every month in rent, it at least offers some hope at last.
Next Steps – First Home Scheme Ireland 2024
You can find out more about the other major government support scheme, the help to buy scheme here.
Wanting to find a mortgage for your new property? Contact one of our mortgage sherpas today free of charge or you get provisional approval in 5 minutes with our instant approval calculator, so you can get going and view some properties!
With house building ramping up and new homes starting to come on stream, many are starting to dream of owning their first home once again.
By using a combination of the grants available to you, equity release from the family home and the right mortgage lender, that new home might be closer than you think.
Times are still tough for First Time Buyers due to rising prices and some of the tightest lending rules in Europe.
Don’t despair though, with the right approach First Time Buyers may still be able to get a foot on the property ladder.
By using the Help to Buy grant, the First Home Scheme, plus a gift from your parents funded through equity release you can increase the size of your deposit and steal a march on other would be buyers.
In our First Time Buyer Ultimate Guide Ireland 2024, we’ll give you the full run down on everything you need to know if you are a first time buyer, plus some insider tips to help you get your dream home.
Who qualifies as a First Time Buyer? First Time Buyers Ireland 2024
To qualify as a First Time Buyer you can’t have had a mortgage before.
If you have taken out a mortgage under your name either in Ireland or overseas, you are no longer a First Time Buyer.
The good news though is you still count as a First Time Buyer if you previously inherited a house or bought outright or if you have been separated/divorced or bankrupted since you previously bought a property.
Importantly if there are two people going on the mortgage, both must never had a mortgage before to qualify as a First Time Buyer.
How much can I borrow? First Time Buyers Ireland 2024?
The amount you can borrow is set by two things. First the Central Bank lending limits and secondly your mortgage lender’s credit policy.
Central Bank Lending Limits
The Irish Central Bank’s lending limits are some of the tightest in the world, so these are usually the biggest hurdle that needs to be overcome. [1]
The absolute maximum you can borrow under Central bank limits is 4.5 times your annual gross household income, however lenders are only allowed to go this high on 20% of mortgages. These are known as exceptions, 80% of mortgages must be under 4.0 times 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.
Kate earns €34,000 gross per annum, €24,000 basic and €10,000 last year in bonuses
Liam 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
On top of the Central Bank limits lenders apply a second set of rules to assess if you will be able to repay the mortgage.
These differ significantly from lender to lender. For example some lenders discount bonus and commission payments completely and others bump up salary contributions if you are in the public sector.
More generally the lender looks at your earning and spending history in the last 6 months to work out how much income will you have left over after you have covered your commitments.
The more money they think you will have left over the more they are likely to lend you.
This makes picking the lender who maximises your potential mortgage and maximising how much you put by in the 6 months before applying for a mortgage really important.
It can even help you get hold of one of those precious mortgage exceptions.
Look for a mortgage broker who has access to all the lenders in the market as some lenders are only available via a broker.
What Deposit do I need for a First Time Buyer mortgage? Ireland 2024
The minimum amount of deposit you need to buy is also set by the Central Bank of Ireland.
The good news is that as a First Time Buyer you only need to put down 10% of the properties purchase price upfront. Second time buyers also have to stump up 10% for the deposit, but can only borrow 3.5 times their gross income.
That said it still makes sense to maximise your deposit if you can.
Ramping up the deposit reduces the mortgage size, which can knock thousands off the interest you will pay or may even help you afford a property that the Central Bank rules may have put out of reach.
With spiralling rents eating into your savings additional support schemes are often essential to make the numbers add up correctly.
What are the latest help schemes for First Time Buyers? First Time Buyers Ireland 2024
The Help to Buy scheme allows first time buyers to claim 10% of their property value to help them pay a deposit on newly built homes.
It’s a Government tax refund scheme and in order to claim, you must have paid the equivalent amount of 10% of your property value in tax in the previous 4 years before moving into your new home.
In order to claim from this scheme, your home must be valued at €500,000 or less.
The most you can claim is €30,000, so if your home is valued at more than €300,000, you still can only receive €30,000 max.
There is also the First Home scheme, which provides up to 30% of the properties value in return for the scheme taking a share of your home. You can find out more about the First Home Scheme here.
You may be able to bump up your deposit further with a gift from friends or relatives. The usual route for first time buyers is through their parents, commonly known as the ‘bank of mum and dad’.
It’s unlikely that your parents have fifty grand lying about the house, but they may have equity tied up in the family home that they can access to provide cash for a deposit via a process known as equity release. Equity release allows homeowners who have paid down part of their mortgage to get a tax free cash lump some to fund a deposit for their family members or others.
By releasing equity on the family home parents can gifts their kids up to €330,000 tax free, this may be an attractive option for them if the kids are still taking up room on the family couch or wasting thousand of euro’s in rent.
Insider Tips for First Time Buyers Ireland 2024
Work with a mortgage broker who will match you with a lender that maximises your mortgage
Reduce your outgoings in the 6 months before applying for a mortgage to maximise your loan
Consider equity release as an option to further increase your deposit and purchasing power
By maximising your deposit and working with a broker with access to all potential lenders, first time buyers will make the most of their chances of securing their dream home.
Next Steps – First Time Buyers Ireland 2024
Are you a first time buyer wanting to find a mortgage for your new property? Contact one of our mortgage sherpas today free of charge!
Trying to save money as a first time buyer? Check out our top ten saving tips in Ireland here!
The impending Ulster Bank closure and the pull out of KBC this year from the Irish market is set to cause significant customer disruption.
There are over 1 million accounts and an estimated 500,000 customers with Ulster Bank and a further 300,000 with KBC. Dwarfing the scale of previous bank closures from Anglo, Danke Bank etc..
Closure notices for Ulster Bank customers are drop through customer’s doors by the end of March 2022 giving Ulster bank customers 6 months to switch to another bank, before your account is closed.
If you don’t switch by then, you will be simply issued a cheque with your remaining balance.
If you a have a mortgage with Ulster Bank this is set to be transferred to PTSB, but with PTSB’s rates some of the highest in the market it probably makes sense to look at switching that as well.
So what options are left for best current account, savings and mortgage?
Don’t panic there are some better and less expensive options out there than Ulster Bank and switching may not be as difficult as you think.
Switching Current Account – Ulster Bank Closure Ireland 2022
Best Digital Only Bank
If you don’t need to lodge cash or cheques then the Digital only banks N26 or Revolut are great options.
They have no monthly fees, the lowest once off fees and the best apps on the market. With features from kids accounts to trading in bit coin already built in and a really slick user experience.
They are also both covered under the EU Deposit Guarantees up to €100,000 the same as the non Digital banks.
One thing to watch out for though is some employers on old payroll systems may struggle with the EU Iban. This will only be a minority of employers however as under EU law everyone should have upgraded their payroll systems a number of years ago to be SEPA compliant.
Revolut already has 1.7 million customers in Ireland and recently became a full bank, so that’s why they are our pick of the bunch.
However, if you still need to lodge cash or cheques you have two options. Get someone with a traditional bank account to do it to their account and then send you the money or get yourself a traditional account from one of the banks below.
Traditional Banks
If digital only isn’t an option for you there are now 5 other more traditional banks you can choose from for your current account. The interest on all these accounts is pretty much irrelevant as it is so low, so what you are looking for is low fees.
If you don’t use your ATM regularly An Post or your local Credit union may be a good options. Both of these come in at €60 a year in fees. However, An Post charge 60c per per withdrawal and your Credit Union will charge around around the same so this can mount up quickly if you head to the cash machine once a week.
In that case we would recommend PTSB’s current account. It’s slightly more pricey at €72 a month, but withdrawals are free.
Switching Saving Accounts – Ulster Bank Closure Ireland 2022
Deposit interest rates are at record lows of around 0.5% with inflation heading for 8% or more, you should probably look at talking to a financial advisor if you have €10K or more to invest.
Investments can yield 4% per annum or more depending on the risk level and can help take the edge of inflation.
If you still want the security of a guaranteed rate the best rates are to be found from banks outside of Ireland. You can access rates up to 1.15% from banks across Europe on raisin.ie or consider a state saving account with around 0.6% interest rates.
If you have less than €10,000 squirrelled away then you may be better off leaving it or transferring it to your current account. The Digital Banks offer the ability for you to separate from your daily account with ‘vaults’ or ‘money jar’ features on their apps.
Switching Mortgages – Ulster Bank Closure Ireland 2022
Ulster Bank have sold their existing mortgages to PTSB and KBC to Bank of Ireland. This means if you have a mortgage with either you and your mortgage will transfer.
PTSB and Bank of Ireland have the highest mortgage rates in the market so many Ulster and KBC customers are considering switching to a different lender. If you are in your fixed rate period then PTSB and Bank of Ireland will have to honour those rates, but after that they could choose to hike rates increasing your monthly repayments.
Ulster’s non tracker rates range from 3.5% to 3.9% which are already some of the highest in the market.
So a typical Ulster mortgage customer on their 3.5% variable rate, with €150,000 remaining over 15 years would save €106 a month by switching to the best deal on the market, that’s more than €19,000 over their remaining term and would avoid the risk of a future rate hike.
Avant Money are offering €1,500 upfront for anyone switching their mortgage from Ulster Bank or KBC. The offer is available until the 31st of March and targets customers thinking of switching from Ulster & KBC as both exit the Irish market this year.
Switching costs are usually around €1,500 for solicitor and valuation fees combined, so this offer will make switching from Ulster and KBC effectively free.
At moneysherpa for example we offer an all in legal package including all outlays for €1,200 including VAT, while estate agent valuation fees are typically around €200. So €1,400 all in.
The repayment calculation is based on switching to Avant Money’s 5 Year fixed rate and using the switching offer to cover their upfront costs.
If you are a tracker however, sit tight. Any new owner will have to honour your existing terms.
You can see how much higher PTSB and Bank of Ireland rates are in the table below.
[mortgage_rates_var_followon_ltv_compare]
Switching Next Steps – Ulster Bank Closure Ireland 2022
If you have an account with Ulster Bank you will have to switch it in the next month, so act now to beat the rush.
Best Current Account – Revolut
Best Savings Account – Raisin.ie
When it comes to mortgages Ulster didn’t have great rates to start with (3.5%-3.9%) and have now been bought out by one of the banks with the highest mortgage rates in the State, PTSB, so now is a good time to switch to save now and to avoid higher rates down the line.
This applies for anyone with with a variable rate around 50% of Ulster Bank mortgage holders. If you are still in your fixed rate period then sit tight until you are 3 months from the end then speak to a broker. If you are on a tracker don’t worry, the new owner will have to honour your existing terms.
Top Up Mortgage Ireland 2024. Looking to free up the cash locked up in your home? A top up mortgage or home improvement loan may be what you are looking for, allowing you to release some of the equity tied up in your home.
No matter what you want the money for, our tips will give you the inside track on whether a mortgage top up is right for you and the best way to go about it.
By switching mortgage to a better rate you can often borrow more and still pay less in repayments per month. That’s why the the number of people taking out a mortgage top up, also sometimes known as releasing equity or as a home improvement loan, is on the rise.
A mortgage top up is simply re-mortgaging your home for more than your current outstanding mortgage to allow you to access the amount you have ‘topped up’ by to spend now.
Use our mortgage top up calculator to see what your new monthly repayment will be. Select ‘new mortgage’ to see if your repayments on the topped up amount are less than you are paying today.
If you’re over 60 there are also some other equity release options know as a home reversion equity release or a lifetime loan equity release, which will also allow you to stay put and release some cash.
For most of us though the mortgage top up is the way to go. To find out more about how you can get a mortgage top up and whether it would suit you read on.
Should I Get A Mortgage Top Up? – Mortgage top up Pro’s & Con’s Ireland 2024
Before we go any further the first question you need to ask is
Should I Borrow More At All?
Even though relatively low mortgage rates mean you may be able to borrow more than you have today and still pay less in monthly repayments, it doesn’t mean you should.
If you can wait and save up instead, you could simply switch your current mortgage loan to the new lower rates reducing your mortgage repayments and giving you the option to reduce the term of your mortgage.
If that’s not an option for you, read on.
Why Are You Borrowing More?
Remember by topping up your mortgage you are securing the loan against your home and probably borrowing across a long period which means making higher interest payments overall.
So if you are thinking of borrowing more with a mortgage top up, long term investments for the future like home improvements, make more financial sense. A home improvement loan will let you get major or minor work done on your home potentially increasing the value of the home, that what makes these types of top ups easier to get than other types.
If you are borrowing to fund current spending or consolidating short term debts tread carefully. Interest payments really mount up over longer periods, so debt consolidation might seem smart, but you could end up paying more longer term.
Only a limited number of lenders will take these type of top ups for this reason, however most lenders will provide a home improvement loan without proof of what it is used for up to a limit, usually around €25,000, but if you plan to use for debt consolidation or any other reason you could get yourself into trouble with the lender as you are making an inaccurate application.
Use our mortgage top up calculator to see what your new monthly repayment will be if you top up your mortgage. Select new mortgage and if your repayments on the topped up amount are still less than you are paying today then you at least have some good options to work with.
3 Top Up Tips – Mortgage Top Up Ireland 2024
There are 3 things you need to consider when you are getting a top up mortgage.
Principal – the total amount you need to borrow
Purpose – what is the top up part of the loan going to be spent on
Process – how do you maximise your approval odds
These 3 p’s are your passport to releasing the maximum amount of cash from your home with a top up mortgage.
1) Mortgage Top Up Tips – Principle
The principle is the total amount you need to borrow.
Principle = outstanding mortgage + top up mortgage amount
In most cases under Central Bank limits the principle can not be bigger than 20% of the value of your home or 3.5 times your annual gross salary.
2) Mortgage Top Up Tips – Purpose
Different lenders have very different policies about what the mortgage top up part of your principle can be used for.
That’s why you should use a mortgage broker to match you with the right lender. Some lenders only allow mortgage top ups for home improvement, whilst others pretty much allow anything depending on the size of the top up you are looking for.
Assuming you engage a broker that works with all the lenders on the market here’s how the options break down by top up mortgage amount.
Top Up Mortgage Below €20,000, Includes debt consolidation, gifting to children, education, medical expenses depending on the lender. No proof required of use however.
Top Up Mortgage €20,000 – €70,000 , things are still pretty flexible. Includes debt consolidation, gifting to children, education, medical expenses depending on the lender. The only real change is you will need to produce the receipts/quotes.
Top Up Mortgage €70,000 up, at this point it’s home improvement loans only. All lenders offer home improvement top ups, but only some will let you lend up to 80% of the future rather than current value of your home.
Note from €70,000 up it’s likely you are conducting major structural works so you will need quotes in advance and planning permission.
3) Mortgage Top Up Tips – Process
The top up mortgage process works in pretty much the same way as any other mortgage.
Get a mortgage broker. They can help you navigate the process and match you with the right lender.
Get mortgage ready. As part of the application process the lenders will also run the rule over your ability to repay the loan. The 6 months before the application is critical as lenders will look at your bank statements in this period to assess your ability to repay the loan as part of the application.
Get a solicitor and valuer. Again a good broker can help you with this and some lenders will cover the costs.
Get your mortgage protection increased. If your increasing your mortgage you will need to increase your protection, this should be less than €5 more per month and you might even save by switching provider.
Once you receive your loan offer and meet any remaining conditions you will be able to drawdown the top up amount into your bank account and get spending.
In a Nutshell – Mortgage top up Ireland 2024
Mortgage top ups are on the rise with historically low rates giving the option for some of releasing cash now without having to increase their repayments.
That said, you should think about if you really need to borrow and why before you take the plunge.
For example for those looking to get their kids on the housing ladder or improve their home, a mortgage top up or home improvement loan can make a lot of sense.
Due to the wide range of lender policies though you should arrange your top up through a broker who has access to all the lenders in the market.
What’s next – Mortgage top up Ireland 2024
If you are thinking of getting a mortgage top up in Ireland in 2024 make sure all your documentation lines up and if needed clean house on your finances for the 6 months before you apply.
You should then engage with a broker who can guide you to the best lender and help take the pain out of the paperwork. You can check out moneysherpa’s own in house broker teams the mortgage sherpas here.
You might have heard that the average mortgage switcher in Ireland saves over €20,000, but that sounds too good to be true, right?
I mean if that was true everybody would be doing it surely and you’d be straight on google to get switched yourself, so there must be a catch?
Spoiler alert: There’s no catch.
That’s why record numbers are switching right now with more joining in everyday.
So we thought in this article we would share some real life examples of 3 of our recent mortgage switchers. That way you can see for yourself what people are actually saving and what’s actually involved in being a switcher.
Read on to see what switchers just like you have saved in the last few months and how much you could save by switching.
Noel & Naeiri Gavin have a home in Navan and switched their mortgage using online broker moneysherpa.test.inview.ie. Noel works in engineering and Naeiri is a stay at home mum.
Due to a combination of the strong property market in Navan and a number of home improvements they made to the house, the value of their home increased to over €500,000.
This reduced their loan to value to less than 60%, which is the size of the mortgage compared to the value of the property, allowing them to access better mortgage rates.
They originally took out their mortgage with Permanent TSB which has one of the highest rates in the market.
The fixed rate they were on was expiring in a few months so they contacted Moneysherpa for guidance on their next step.
If they did not take action the mortgage would revert to the general variable rate from PTSB, which was 3.7%.
[mortgage_rates_var_followon_ltv_compare]
moneysherpa advised them that they could save even more by switching provider to ICS mortgages, who’s fixed rate packages at 2.29% APRC recognise and reward the reduced risk from a low Loan to Value ratio when your property is worth more than your loan value.
Noel & Naeiri were able to reduce their mortgage payments and take 4 years off their mortgage saving over €38,000 in the process by completing the switch.
Murray and Jennifer, switched from AIB to Avant Money – Example
Murray and Jennifer living in Drogheda switched their mortgage from AIB to Avant Money with moneysherpa. They saved over €10,000 with Avant Money’s 7 year Fixed rate and were able to use the savings they made to pay off their mortgage earlier.
Avant Money have some of the lowest rates on the market, their 7 year fixed is one of our favourites starting from 1.95% and locking in your savings for 7 years.
AVANT MONEY RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40)
ICS Mortgages pip Avant at the post for the shorter fixed term products due to their more flexible credit policy. However if you have a sparkling credit history the Avant Money 3 year and 4 year fixed at 2.39% & 2.43% respectively are so close it makes no difference.
Sandra, Switching from PTSB to Avant Money – Example
Sandra Chubb from Ballyfermot switched her €110,000 mortgage from PTSB to Avant Money in January.
She saved over €10,000 by lowering her interest rate from 3.4% to 2.01% APRC with Avant Money’s 7 year fixed product.
By reducing her interest rate by over 40% she was able to afford to reduce her mortgage term from 21 years to just 12 saving thousands in interest payments.
“They were really friendly, gave me independent advice and helped me pull together the paperwork. Most people don’t realise they are in a position to save so much by switching”
That’s why we would recommend using a broker to help you switch to a fixed rate product with a low on-going rate from either Avant Money or ICS.
The lenders with the lowest rates can usually only be accessed by brokers, many brokers are free to use and they can take the pain out of the paperwork.
It makes more sense than ever to compare mortgage rates with massive savings available. There probably isn’t another financial decision that has as big an impact on your wallet.
A big thanks to Noel, Naeiri, Murray, Jennifer and Sandra for letting us share their stories.
The non bank lenders ICS, Avant Money and Finance Ireland have really leapt ahead of the pack this year with a 0.5% discount across all mortgage types. This has left the banks, who are weighed down with legacy costs, trailing in their dust.
Annual Percentage Rate Charge (APRC) calculated on a €100,000 loan over 20 years. APRC represents the average rate across the lifetime of a typical mortgage and is recommended as the best rate to use for comparisons by the CCPC. [1]
Ulster KBC switching. Avant Money are offering €1,500 upfront for anyone switching their mortgage from Ulster Bank or KBC. The offer is available until the 31st of March and targets customers thinking of switching from Ulster & KBC as both exit the Irish market this year.
Ulster Bank have sold their existing mortgages to PTSB and KBC to Bank of Ireland. This means if you have a mortgage with either you and your mortgage will transfer.
Higher Rates on the Way for Ulster and KBC customers? – Ulster KBC Switching
PTSB and Bank of Ireland have the highest mortgage rates in the market so many Ulster and KBC customers are considering switching to a different lender. If you are in your fixed rate period then PTSB and Bank of Ireland will have to honour those rates, but after that they could choose to hike rates increasing your monthly repayments.
You can see how much higher PTSB and Bank of Ireland rates are in the table below.
[mortgage_rates_var_followon_ltv_compare]
Free Switching Costs – Ulster KBC Switching
Switching costs are usually around €1,500 for solicitor and valuation fees combined, so this offer will make switching from Ulster and KBC effectively free.
At moneysherpa for example we offer an all in legal package including all outlays for €1,200 including VAT, while estate agent valuation fees are typically around €200. So €1,400 all in.
Example Switching Saving – Ulster KBC Switching
So a typical KBC mortgage customer on their 4.25% variable rate, with €172,000 remaining over 16 years would save €187 a month and €35,983 over their remaining term. The repayment calculation is based on switching to Avant Money’s 5 Year fixed rate and using the switching offer to cover their upfront costs.
[mortgage_rates_3yr_ltv_compare]
If you are with KBC or Ulster and not on a tracker, the new Avant Money €1,500 switching offer means you will probably save over €20,000 without having to pay any upfront fees.
Ulster and KBC have been bought out by the banks with the highest mortgage rates in the State, PTSB and Bank of Ireland, so now is a good time to switch to avoid higher rates down the line.
You can book a free appointment to check out if you would save here.
Buying a home is probably the biggest financial decision you will ever make and one of life’s most stressful times. So you are probably super keen to know how long does mortgage approval take and can you get pre-approval or approval in principle like yesterday.
Knowing how mortgage approval and pre-approval works in Ireland can help you secure your dream home and reduce your stress levels.
That’s because how you apply makes a big difference to how much you can borrow and how long the whole process will take.
With our Ultimate Guide to how to mortgage approval Ireland 2023, you could borrow up to 4.5 times your joint income and get the whole thing done and dusted in less than 3 months.
Here’s our top 3 how to get mortgage approval Ireland 2023 tips
Maximise your savings in the 6 months before you apply to maximise what you can borrow
Understand how best to navigate the mortgage approval process to minimise delay
Use a broker with a wide selection of lenders to maximise your mortgage approval odds
If you want to find out more before diving in read on to see understand how you can get mortgage approval and maximise how much you could borrow while minimising the hassle factor.
Work Out How Much You Can Borrow – How long does mortgage approval take Ireland 2023
The first step is to work out how much mortgage you can get, you might not need to borrow up to your limit, but it will help you to understand your maximum budget in case you find yourself in a bidding war for your new gaff.
To help avoid a credit bubble like the one that went pop back in 2008 the Central Bank sets some absolute maximum limits that no lender can go beyond.
If you are buying your home to live in, the limit is the lower of either
Income – 4.5 times your joint gross income per year
Deposit – 10 times your deposit
Wait a minute before you rush off and bid on that dream home, the Central Bank only allows 20% of all borrowers in any year borrow up to these limits.
The lenders are therefore very picky about who gets these ‘exceptions’ only putting forward people with squeaky clean credit histories and very high levels of disposable income.
If you fall outside the top 20% of applications then the limits are
Income – 3.5 times your joint gross income per year
Deposit – 10 times your deposit for first time buyers and 5 time for others
As part of the application process the lenders will also run the rule over your ability to repay the loan. Based on this they may lend you less than the limits above or indeed nothing at all.
For most people the 3.5 times salary limit is the one that applies and gives the best idea of your budget. However if you need an exception to make up the numbers or want to maximise your odds of approval you can use our instant Approval In Principle (AIP) tool below.
Our tool runs the numbers based on your income and expenditure and instantly spits out your odds of mortgage approval across the lenders. Even better we will then automatically email you with a provisional Approval In Principle that you can use to view property and start your house hunting!
Maximise My Approval Chances – How long does mortgage approval take Ireland 2023
Even if you have enough disposable income for mortgage approval on paper based on our provisional AIP calculator we then have to back this up with evidence.
Lenders try to work out, based on information on your application for what’s know as a full Approval In Principle, the likelihood of you not paying back the mortgage in full. If a loan goes south that’s a big hole in their profits, so the more risk they think you are the less they will lend.
This means you can maximise the mortgage you can get by knowing what they are looking for and getting your finances in shape in advance of mortgage approval.
This is why the question how long does mortgage approval take can have a different answer depending on your circumstances. A switcher can be done in 6 weeks as they have solid proof they can make the repayments, while someone who doesn’t have evidence of spare cash left over might have to wait up to 6 months before even applying.
The 6 months before the application is critical as lenders will look at your bank statements in this period to assess your ability to repay the loan as part of the application.
So what are the key things you can do to maximise your approval chances?
Maximise your Income – Many lenders include 50% of overtime, bonuses and commission, so maximising these can be a big help.
Clear your outstanding loans – These eat into your ability to repay and are usually higher interest than your mortgage will be.
Secure your employment – Make sure you have finished any probation period or have a long term contract.
Don’t splurge – Minimise your outgoings, so you show consistent evidence of saving some money at the end of every month.
Delete your Paddy Power app – Any major spend on online gambling is a big no no and don’t try to be smart by moving it to your Revolut account the lenders are wise to that and will ask for statements.
Keep your nose clean for 6 months and you will demonstrate to the lenders you can be trusted and will maximise your mortgage potential.
Get Some Help – How long does mortgage approval take Ireland 2023
So you have 6 months of sparkling clean bank statements and you are sick of living on your mates couch, what do you do next?
You have two choices to kick start the application process.
Apply to one of the lenders directly
Apply to a lender through a broker
Which lender you apply to can make a huge difference to your approval chances and what you will pay over the course of the mortgage. That’s why we recommend using a broker for your application.
A broker can look at your situation and match you with the best lender to maximise your approval chances and minimise your repayments. Brokers are often free to use and are impartial as they get paid the same commission 1% of the mortgage value by all the lenders.
Not all brokers are created equal though. Check out if your broker has:
Access to the best lenders for rate Avant Money, ICS, Haven and Finance Ireland
No fees or low fees for your type of application
An online application process to make the paperwork easier
A best rate guarantee
What Happens Next – How long does mortgage approval take Ireland 2023
Once you have chosen your broker you can get the application underway.
1. Apply Online
First up you will need to confirm your personal and financial details to get your instant Approval In Principle. You can jump right in below to start the process now.
Once you have your provisional approval you can upload supporting documents like your bank statements and proof of identity onto the brokers application platform.
These documents are needed to help prove you can repay the mortgage and also prove you are who you say you are.
2. Choose Mortgage & Lender
Your broker then reviews your details plus documents and recommends the best lender and mortgage product. As each lenders approval policy is different they will match you with the best one for you.
For example, ICS lend more to public servants and is good for short term fixed rates. Avant Money on the other hand don’t do exceptions above the 3.5 salary, but have the best long term fixed rates.
They will also run you through the other options and why they think they aren’t a fit for you at this point.
3. Get Full Approval In Principle (AIP)
Your broker will then use the documents and details you submitted to apply for approval with the rate and lender you picked. It can take 3 days to 3 weeks to get approval depending on the lender you choose (your broker will fill you in on this).
You can now go bid on a property knowing you have an approval in your back pocket!
4. Get Final Loan Offer
Once your offer has been accepted your broker will have it valued by an independent estate agent. This is so the lender can have confidence that the asset that they are securing the lending on (your new house), is worth what you say it is.
Once the lender has all the details on the property from the broker they issue the final offer, which includes any conditions before you can access or ‘drawdown’ the loan. These are usually things like you must have a life protection policy and home insurance in place, which your broker will help you arrange.
5. Complete House Purchase
Ta Da! The moment you have been waiting for, once the conditions are met the loan is released and you get the keys to your new home!
In a Nutshell – How long does mortgage approval take Ireland 2023
How you apply for a mortgage makes a big difference to how much you can lend, how long it takes and your approval chances.
Then you need to make sure all your documentation lines up and if needed clean house on your finances for the 6 months before you apply.
You should then engage with a broker who can guide you to the best lender and help take the pain out of the paperwork. You can check out moneysherpa’s own in house broker teams the mortgage sherpas here.
Finally, make sure you know the process and where you are in it, so you can reduce your stress and maximise your chances of getting your dream home.
The Help to Buy Scheme Ireland 2024 allows first time buyers in Ireland to claim 10% of the value of their property, which can be anywhere up to €30,000.
In this article, I will be going into detail about how the Help to Buy scheme (HTB scheme) works, what you have to do to qualify, how much can be available to you, how to get your taxes refunded, how to get up to date on your taxes so you can qualify, and finally how to apply.
How does the Help to Buy scheme Ireland 2024 work?
The Help to Buy scheme Ireland 2024 is a Government tax refund scheme.
The HTB scheme allows first time buyers to claim 10% of their property value to help them pay deposits on newly built homes.
This HTB incentive offered by the Irish Government lasts until the 31st of December, 2024.
In order to claim from the Help to Buy scheme Ireland 2024, you must have paid the equivalent amount of 10% of your property value in tax in the previous 4 years before moving into your new home.
This refers to Income Tax and DIRT. You cannot claim from USC or PRSI.
Don’t worry too much if you feel that you haven’t paid enough tax to qualify, as in actual fact most people in Ireland likely have paid 10% of their property tax within 4 years and can therefore apply to have their tax refunded for their new home under the Help to Buy scheme.
How do I know if I qualify for the Help to Buy scheme Ireland 2024?
Even if all your taxes are up to date, there are still some more conditions that you need to take into consideration before applying to the HTB scheme.
In order to qualify for the HTB scheme, you must-
Be a first time buyer in Ireland and outside of Ireland
Be moving in with an applicant who is also a first time buyer if more than one person will be purchasing the home, ie) if one applicant is not a first time buyer then you cannot qualify for this scheme
Be moving into a newly built or self built home
Be using the property as your principal private residence for 5 years
Be moving into a home that isn’t a conversion or restoration, however a conversion of a non-domestic home into a domestic home can qualify
Be moving into a home worth less than €500,000
Have a solicitor or contractor registered with the Revenue Commission
Have a mortgage with a loan to value of 70%. For example, if you are purchasing a home worth €200,000, your mortgage must be €175,000.
What rules you out
Don’t pay for home in cash.
Don’t be an investor or landlord.
Don’t use the property for investment purposes.
While it may seem that there are many conditions to the HTB scheme, remember that this incentive is to help first time buyers get on the property ladder.
Therefore if you are a first time buyer and have been tax compliant in the 4 years before moving into your new property, you will most likely be able to qualify for the HTB scheme.
How much is available to me from the Help to Buy scheme Ireland 2024?
Under the Help to Buy scheme Ireland 2023, first time buyers can claim,
10% of the purchase price of their new build, for example a home worth €200,000 can claim €20,000.
The amount of Income Tax and DIRT paid in the previous 4 years before moving.
Or for self-builds,
10% completion value of their self-build home.
In order to claim from the Help to Buy scheme, your home must be valued at €500,000 or less.
The most you can claim from the HTB scheme is €30,000, meaning that even if your home is valued at more than €300,000, you still can only receive €30,000 max.
Value of property
Rates
Total claim received
€300,000
10%
€30,000
€400,000
10%
€30,000- cannot receive more than €30,000.
How will I receive my tax refund from the Help to Buy scheme 2024?
So if you qualify for the HTB scheme, your tax refund will be paid to you depending on your property.
If you buy a new build after 1 January 2017 (4 years ago), the refund is paid directly to the builder.
If you self-build the property after 1 January 2017, the refund is paid to a bank account you hold with your loan provider.
This money can be used to help first-time buyers cover the costs of their deposits.
How do I get my taxes up to date for the Help to Buy scheme Ireland 2024?
In order to claim from the Help to Buy scheme, you must be fully tax compliant and all your taxes must be up to date.
However if your taxes are not up to date, you must complete a Form 12 if you are a PAYE earner or a Form 11 if you are self-employed.
You must fill out these tax forms in the 4 year period before you move into your new home and pay any outstanding taxes.
How can I apply to the Help to Buy scheme Ireland 2024?
If you think you qualify for the help to buy scheme Ireland, then you should go to Revenues MyAccount service, where you will be told how much tax refund is available to you as well as apply.
In a Nutshell – Help to Buy Scheme Ireland 2024
In short, the Help to buy scheme 2024 is a great incentive for new first time buyers who are looking to find their way into today’s housing market.
If you are looking to buy a new home as a first time buyer then the Help to Buy scheme is designed to help you.
That is why we at moneysherpa believe you should check to see if you’re eligible for this scheme and apply as soon as you can before it ends on the 31st of December, 2024.
Next Steps – Help to Buy Scheme Ireland 2024
Wanting to find a mortgage for your new property? Contact one of our mortgage sherpas today free of charge or you get provisional approval in 5 minutes with our instant approval calculator, so you can get going and view some properties!
So what is stamp duty Ireland and do you need to pay it? Stamp duty is a tax that is paid when a property has been transferred from one person to another.
When someone transfers their property onto you, you become the property owner and are charged a stamp duty tax.
Stamp duty is a tax charged on written documents that transfer ownership of land from one person to another. Stamp duty applies to all residential and non-residential properties.
The amount of stamp duty you pay depends on how much your property is worth; so the more valuable your property, the more stamp duty you’ll pay.
In this article. I am going to be breaking down what stamp duty applies to, how it is calculated, the exemptions to stamp duty, will stamp duty be charged on new buildings, the new higher rate introduced in Ireland in 2022, the charges associated with stamp duty, stamp duty in regards to gifts and inheritance and an overall summary of stamp duty.
Stamp duty will be applied every time you become a property owner. It applies to all properties, whether they be brand new or second hand. However new builds will not be subject to VAT, I go into this in more detail here.
Stamp duty applies to all residential properties such as houses, apartments or sites that will be used for buildings .
It also applies to non-residential property, such as land or housing sites without residential buildings.
2. How do I calculate stamp duty? Stamp Duty Ireland 2023
In Ireland ,stamp duty is levied at 1% up to €1 million. Any property over €1 million is levied at 2%.
Here’s an example excluding VAT-
Lets say you have a property worth €2 million.
First €1 million
1%
€10,000
Remaining €1 million
2%
€20,000
Total stamp duty
€30,000
For non-residential properties, stamp duty is charged at 6%.
So what is the difference between residential and non-residential properties?
To put it simply, a residential property is one suitable for dwelling, such as a home or an apartment. Stamp duty is charged at 1-2% for residential properties.
Don’t worry too much about calculating the stamp duty of your own property, as your solicitor will do this for you.
However, it’s still good to know roughly how much stamp duty you will have to pay before purchasing a property.
3.What exemptions are there to stamp duty Ireland? Stamp Duty Ireland 2023
Of course there are a few exceptions where you don’t have to pay stamp duty.
There is no stamp duty charged on the transfer of property between-
Spouses and civil partners.
Former spouses (divorced).
One cohabitant to their other cohabitant.
If you are buying a home under the local authority tenant purchase scheme you will only be charged €100 worth of stamp duty.
4.Is stamp duty Ireland charged on new builds? Stamp Duty Ireland 2023
For new builds, stamp duty is still paid, however it is calculated differently. For new builds you will be charged stamp duty on the value of the home and VAT will not be included.
Here’s an example-
The standard rate of VAT is 23%. Let’s say we have a property worth €450,000. 23% of €450,000 is €103,500. This means that before VAT the value of the home was €346,500. Hence our 1% stamp duty tax will be charged on the €346,500, not the €450,000.
This only applies to new builds, not 2nd hand properties.
5.What is the higher stamp duty Ireland rate that has been introduced? Stamp Duty Ireland 2023
In July 2021, an act was introduced that charges 10% stamp duty on property owners who have bought 10 or more properties within one year after the 20th of May 2021.
This act was introduced to stop the bulk buying of homes in Ireland and to discourage investment funds from buying up housing estates, so first time buyers are given a chance to purchase a home.
This higher rate does NOT apply to apartments. It also does not apply to homes bought for social housing purposes.
6.What are the costs involved with stamp duty Ireland? Stamp Duty Ireland 2023
Your solicitor will calculate how much stamp duty is due for you before the sale is closed. This stamp duty is paid to the Revenue Commission and a stamp is placed on the deeds of the property.
Whilst having a solicitor to do all the hard paper work for you is a huge help, it does come at a price.
The price of a solicitor to guide you through this process will vary. Some solicitors will charge a flat fee, whilst some will ask for a % value of the property, such as 1 or 2%.
You should be prepared to spend between €1000-€3000 in legal fees along with VAT.
This is why it is important to research a good solicitor that will get the job done at a reasonable price before thinking about transferring properties. Check out more on solicitor fees here.
7. Do I have to pay stamp duty Ireland on a property I inherited or was gifted? Stamp Duty Ireland 2023
According to the Revenue Commission [1] , if you are given a property as a gift that is situated in Ireland and the property has been transferred to you then yes, you will still have to pay stamp duty
However you will NOT have to pay stamp duty on a property that you have inherited, such as a property left to you in a will.
In a Nutshell – Stamp duty Ireland 2023
So in summary, stamp duty is a major factor to take into consideration when you are planning on buying a property.
It is important to remember that between buying the property, solicitor fees as well as stamp duty, buying property requires a lot of money. Hence you should thoroughly research how much a property will cost you and put a lot of thought in before you start enquiring.
From this article, you should hopefully have a better understanding of how stamp duty is calculated and what factors you should keep in mind before looking about buying a new property.
If you want to get your savings started right now, set up a free no obligation video call with a mortgage sherpa here, covering not only the best rate, but also helping choose the lender most likely to approve you and helping take the pain out of the paperwork.
So what is Annual Percentage Rate of Change, (APRC) ? While it may seem confusing at first, APRC is a helpful tool that shows us the true cost of mortgages, so we can compare them to find the cheapest option. That’s why the CCPC [1] recommends using APRC to compare mortgages.
APRC is a really handy guide that tells us which mortgage is the best value for money if we see it through. APRC takes all costs involved in a mortgage and converts it into a percentage. This percentage shows us how much a mortgage costs after every factor is taken into consideration.
This is really helpful when trying to find the best mortgage available, as all you have to do is look at the APRC percentage. The lower the percentage, the cheaper the mortgage is if it’s paid off completely.
In this article, I will be discussing APRC in a bit more detail to help you better understand how it works, why it is useful to us, the difference between APR and APRC, how APRC is calculated and finally, how to get a loan with low APRC.
Annual Percentage Rate of Change (APRC) is a useful tool when comparing mortgages. It shows us the total cost of a mortgage when all factors are taken into consideration.
Factors such as fees and interest rates will greatly affect how much your mortgage will cost you overall.
APRC will take all these factors into consideration to show us in percentage form how much a mortgage with a particular lender will cost us if we see the mortgage through to the end.
It helps us see at a glance which mortgage provider offers the best mortgage to us after all costs have been taken into consideration. Remember; the lower the APRC rate, the cheaper the mortgage.
2.Why is APRC useful?
Marketers will often try to persuade homeowners into buying a specific mortgage with attractive offers such as low starting interest rates or cashback.
However, once you take the different factors into consideration, such as high variable rates introduced after the introductory period is over, you may soon discover that a once appealing mortgage is in reality quite expensive compared to other lenders.
APRC helps homeowners compare mortgages from different lenders and prevents them from being swayed by attractive starting rates and other misleading factors.
Let’s look at an example. Say a homeowner wants to mortgage a house worth €150000 and has a deposit down of €30000. APRC will help us see out of these 2 mortgages which is this best value for €120000.
Mortgage A
Mortgage B
Starting Rate
0.99% for 24 months
1.39% for 24 months
Standard Variable Rate
4.99% for 23 years
4.75% for 23 years
Fees up front
€160
0
At a glance, many may think that Mortgage A is the best option, as it offers a much cheaper starting rate.
However, as APRC will tell us, Mortgage B is in fact the better option, as it offers a lower standard variable rate than Mortgage A , as well as no fee up front.
Mortgage A
Mortgage B
Overall cost
€245,559
€238,332
APRC
4.5%
4.2%
Because Mortgage B’s APRC percentage is lower, it means that it is the cheaper option, saving you €7,227 over the lifetime of the mortgage.
3.What is the difference between APR and APRC ?
It’s very easy to get confused between APR and APRC, as they are similar in name and in meaning.
Annual Percentage Rate (APR) works in a similar way to APRC, as it helps us compare the total cost of loans and credit. APR shows a percentage of how much interest the borrower pays on a loan, such as a mortgage, per year.
Annual Percentage Rate of Change shows a percentage of the total cost of a loan such as a mortgage after all factors are considered.
In comparison to APR, APRC doesn’t just show us the cost of a loan after one year, instead it shows us how much the loan will cost us once it’s paid in full.
APRC takes a variety of different factors into consideration, such as broker fees and different interest rates, to calculate how much your mortgage will cost you for the full period of the loan.
One vital piece of information that you must remember when looking at different APRC percentages on loans is that APRC takes all factors into consideration assuming that you will see this loan out until it has been PAID IN FULL.
APRC shows how much you will pay over the full term of the mortgage, meaning APRC is not useful if you are considering moving house or switching lenders.
So before you decide to look at different APRC percentages to help decide what the best mortgage for you is, consider certain factors, such as how long will I stay in this property? What life events are likely to happen in the near future that will affect my living situation?
If you think that you may be switching mortgages or moving property in the near future, APRC therefore might not be as important. This is because as you are planning to pay off the mortgage early and get a new one when you switch or move the introductory rate will apply for a larger proportion of the loan than shown in the APRC which assumes you will have the mortgage for the full term.
This is why although not making sense for everybody cashback and low introductory rates are a good option for those looking to switch regularly.
5. How do I get a loan with a low APRC?
Getting your loan with APRC is influenced by a variety of factors like:
The amount of available equity in your property– If you have a lot of available equity in your property and apply for a smaller loan, you are less of a risk to your lender, therefore earning a better interest rate bringing your APRC percentage down.
How much you want to borrow– The more you borrow, the lower rate you’ll be paying which again affects your APRC, as APRC assumes you will stay with this mortgage until it is paid in full.
The length of the mortgage- The longer your mortgage is the less you will pay per month, as the payments are stretched across a longer period of time.
Size of deposit– The more money you have in your deposit on a house, the lower the interest rate, as you are not seen as a risk to the lender.
Here’s the current APRC’s for a 4 year fixed rate compare.
[mortgage_rates_4yr_ltv_compare]
6.Summary – APRC
So to summarise, when you think APRC, remember-
APRC is a tool to help you compare mortgages and find the best mortgage available.
The lower the percentage, the cheaper the mortgage is once it’s paid full term.
APRC shows percentages assuming you will stick with one particular mortgage to the end.
Always predict changes in your living situation in the near future before thinking about using APRC to find the best mortgage.
If you want to get your savings started right now, set up a free no obligation video call with a mortgage sherpa here, covering not only the best rate, but also helping choose the lender most likely to approve you and helping take the pain out of the paperwork.
