How do mortgages work in Ireland?
A mortgage is a loan that you use to buy a property.
Mortgages can last much longer than other personal loans and you can borrow larger sums because they’re secured against the property’s value.
You can get a mortgage on your own, or you can apply for a joint mortgage with someone else.
You’ll then need to pay for part of the property yourself, this is known as your deposit.
How much deposit do you need?
The amount you’ll need to fund depends on what type of buyer you are:
- First time buyer: If you’re buying your first property, you’ll need a 10% deposit.
- Second or subsequent buyer: If you’re looking to move home or buy another property, you’ll need a 20% deposit.
- Buy to let buyer: If you’re buying an investment property to rent out, you’ll need a 30% deposit.
Find out more about how mortgage deposits work and get tips to help you save for a deposit.
If you already own a property and your equity has increased, you can use some of this towards your deposit.
Types of mortgages
There are different types of mortgage that suit different circumstances, and your needs may change over the duration of the mortgage term.
Interest only or repayment mortgage
First, you’ll need to decide on an interest only or repayment mortgage.
This affects how the loan is paid back and whether you’ll need a separate plan to pay off the mortgage balance.
Our guide: Should you get an interest only mortgage? compares the two mortgage types.
Types of interest rates
A standard variable rate is the lender’s variable rate that you’ll switch over to when your fixed rate period ends. It’s usually very expensive, so shop around and switch to a cheaper deal.
Other types of mortgages
If you’re building your own home, our self build mortgage guide is a good place to start.
Where can you get a mortgage in Ireland?
You can go to your current bank or another bank or building society. It’s best to compare mortgages with a wide range of lenders, using our comparisons, to find the best deal.
You could also get help from a mortgage broker (mortgage credit intermediary), but you may be charged for their services.
Ask for any fees upfront, and check they can access deals from a wide range of lenders, so you don’t miss out on a good deal.
How much can you borrow?
The amount you could borrow depends on several factors, including:
- Your income: or combined income if you’re getting a mortgage with someone.
- The type of buyer you are: e.g. first time buyer.
- The value of the property: in relation to your income and loan size.
- Your existing financial commitments: e.g. personal loans and childcare.
- Your credit history: here’s how to check your credit record.
- Your age: Being older can affect the amount you can pay back over the term allowed.
Our guide: How much can you borrow with a mortgage? explains more on this, and the exceptions.
How much does a mortgage cost?
This depends on several things, including:
- The property price: The higher the price, the more you’re likely to have to borrow which will cost more.
- How much you can borrow: This will be worked out from your income, outgoings and credit history. Make sure you can afford what you borrow.
- How much deposit you pay: The more you can save for a deposit the better, as this will reduce what you borrow and lower your repayments. Here’s more on deposits.
- The term you choose: The longer the term, the less you’ll pay each month, but you’ll pay more interest overall.
- The interest rate you pay: Finding a low interest rate is the key to lower repayments, and less interest to pay overall.
- The type of mortgage: Interest only may be cheaper but you’ll have to pay the balance off later. A repayment mortgage means you won’t owe anything at the end of the term.
- Insurance costs: How much it costs depends on on things like the amount of cover you need, your health, and what insurance you get. Check what insurance you need with your mortgage.
- Fees: These depend on whether you’re buying a property or just remortgaging. Some of what to expect is outlined in the section below.
The lower the interest rate and longer the term, the lower your repayments will be. You’ll need to make sure you can sustain the repayments long term, alongside all your other financial commitments.
What fees do you have to pay?
- Stamp duty: is a tax due if you’re buying a property.
- Solicitor fees: are paid if you’re switching lenders or buying a property.
- Valuation fee: is paid if you’re switching lenders, changing the terms of your current mortgage, or buying a property.
- Survey fees: are due if you’re buying a new property.
- Arrangement fee: is charged by some lenders to arrange the loan, but not all.
- Mortgage broker (mortgage credit intermediary) fee: is sometimes charged, check before you go ahead.
How to apply for a mortgage
To help you be in the best possible position to apply for a mortgage, our guide: How to prepare for a mortgage application is well worth a read.
There are some circumstances that can make the process of applying for a mortgage a bit more tricky, so we’ve dedicated a guide each to them:
- Self employment: How to get a mortgage if you’re self employed
- Poor credit history: How to get a mortgage if you have bad credit
- Building your own property: A guide to self build mortgages in Ireland
Approval in Principle
Once you’re ready to apply, getting a mortgage Approval in Principle (AIP) is usually the starting point.
This will give you a good indication of what the lender could lend to you, but isn’t a guarantee.
Our guide: How to get a mortgage Approval in Principle in Ireland explains the process more fully and what to do if you’re not approved.
What happens after you have your approval in principle?
Once you have your AIP in place, there are several more steps to take before you’ll be ready to move into your new home:
1. Search for a new home
As well as your AIP, you’ll also need to have enough deposit saved for the property you buy.
You should also find a solicitor for the legal work involved in buying a house, and factor in their fees, plus surveyor’s fees and stamp duty, to work out your total costs.
2. Get insurance in place
It can take a while to sort out mortgage protection insurance - which is compulsory, so ideally you should apply for a policy before you’re at the offer stage on a property.
3. Make an offer on a property
Once your offer is accepted on a property, let your lender know. They’ll help you to arrange a valuation of the property and finalise your mortgage details.
Your solicitor will also arrange a structural survey of the property to check for any unseen damage. It’s not too late to pull out of the sale at this stage.
4. Get a letter of offer
You’ll need to provide your lender with any outstanding documentation shown in your AIP so they can then issue you with a formal letter of offer. This is likely to include:
- Six months of bank statements
- Three months of credit card statements
- Three recent payslips
- Stamped employment status report
- Most recent P60
Requirements are different if you’re self employed.
You should review the offer carefully which contains details of things like the mortgage rate, term, total balance, before signing it.
5. Exchange contracts
This is the stage where you pay your deposit and sign and exchange contracts.
You’ll need to buy buildings insurance if you haven’t already. It’s compulsory and you may have to prove you have it before the funds can be released.
6. Release your mortgage funds
Your solicitor will arrange to transfer the remaining balance on the property in exchange for the title deeds.
You can now move into your new home!
What insurance do you need?
There are other insurances that are well worth considering too as they can offer additional protection to you or your biggest financial asset.
Our guide: What insurance do you need with your mortgage? looks at each of them to help you decide which ones to get.
What about switching mortgages?
If you need to remortgage your property, you’ll need to decide whether to stay with your current lender or switch to a new one.
Keeping your current lender could mean avoiding additional checks (if you don’t want to increase your mortgage or term), but you could miss out on a lower interest rate.
Here’s how to switch to a better deal and save thousands of euro in interest.
What about overpaying?
The type of mortgage you get affects how much you can overpay and when. Our guide: Should you overpay your mortgage? has all you need to know on this.
Can I get a mortgage without the minimum deposit?
It’s likely that you’ll need some sort of deposit but you may not need the full minimum deposit, if you meet all the other lending criteria.
The Central Bank allocates a percentage of mortgages that can have a deposit lower than the minimum, at the lender’s discretion. The allocation is for the year, and once it’s been used up, no further exceptions can be made.
Find out more about these guidelines and exceptions in our guide: How much can you borrow with a mortgage?
How do I get a mortgage?
Next, you should:
- Prepare for a mortgage application
- Search for mortgages using our comparisons
- Apply for an Approval in Principle (AIP)
Having an AIP enables you to start your property search and offer on potential homes. Once your offer has been accepted, you can get a formal mortgage offer letter by providing the lender with all the documentation needed.
How long does it take to get a mortgage?
You can usually get an Approval in Principle (AIP) within 10 working days, but a mortgage offer will take longer, depending on the situation.
If you’re buying a property, it can take several months from when you apply for a mortgage, to when it’s finalised.
This is because you have to find a property to buy, and in that time, the interest rates available may have changed. You’ll also have to produce all the up to date documentation needed.
Reading our guide: How to prepare for a mortgage application could help to speed up the process.
How much can I get a mortgage for in Ireland?
Is there help for first time buyers to get on the property ladder?
Yes, there are some Government schemes available that could help to reduce costs. Details about each of them can be found on our first time buyer page.
Should I use a mortgage broker to get a mortgage?
You don’t have to use a mortgage broker (mortgage credit intermediary) but they can be useful in circumstances where it’s harder to get a mortgage, for example, if you have poor credit.
A mortgage broker will search the market for mortgages for you, but you can use our comparisons to compare them yourself. Plus, our mortgage guides have useful tips and advice to help you find the right mortgage.
If you do decide to use a mortgage broker, check if they charge a fee before you commit to using their services.
Will I be accepted for a mortgage?
It depends if you meet the lender’s lending criteria. Some of the things you’re likely to need are:
- A good credit history: Here’s how to check your credit record.
- Stable employment: A regular income is necessary, if you’re self employed, you’ll have to prove your income differently.
- Affordable outgoings: If your current outgoings are high, this will reduce what you can afford to borrow.
- A minimum deposit: If you’re buying a property, you’ll usually need at least the minimum deposit for the type of buyer you are.