First Time Buyer Ireland

Understanding the Irish First-Time Buyer Market

With 20 years experience working in the Irish mortgage market here at JC Mortgage Brokers we make it our business to stay current on mortgage interest rates issued by the European Central Bank (ECB) that affect our market. We can advise on the challenges, opportunities and current trends to the property market in Ireland. More on the types of mortgages offered by us.

The Irish housing market

The most expensive property market in Ireland is obviously the Dublin market. As Dublin is the capital and where most of the population is based with the highest gap between housing supply and demand. This is resulting in the prices of properties having gone up by over 10% in the year ending September 2024.

The Dublin property market had stalled the year before but when I say stalled only gone up by 2%. This was due to a big gap in demand and supply. This has been there for almost 16 years dating back to the crash in 2008 where banks stopped lending money and a generation of people were left unable to get a property in Dublin. This has led to prices consistently going up as the number of properties being built to cater for new generation demand for homes was not enough let alone to fill the backlog of pent-up demand. More on the Irish property and mortgage market.

Variations between the Dublin property market, Cork and Galway

The Galway property market and Cork property market have experienced very similar characteristics to Dublin. This has made getting a home in Dublin, Cork, or Galway as well as across Ireland very challenging. This is now and has been for several years a political issue and has seen the introduction of the Help to Buy Scheme, First Home Scheme and Affordable Housing Scheme. These can help first time buyers get their own home and as things stand just for new properties, except if you are buying a home you are living in. More on Mortgages in Ireland

Initial steps to become a First-Time Homeowner

For a personalised assessment of how much you can borrow, how much mortgage deposit you need and securing mortgage pre-approval contact the team at JC Mortgage Brokersfor a free consultation.

How much can I borrow for a mortgage in Ireland?

Banks typically cap mortgages at 4 times your income, but this can vary based on factors like age, other debts, and family size. While each bank has its own specific criteria, they generally assess your basic income, this may differ for pay-as-you-earn (PAYE) income vs income for self-employed borrowers. More on How much can I borrow?

Mortgage deposit Ireland

The Central Bank mandates that first-time buyers can receive no more than 90% financing. This means they must put down a 10% deposit. For a €300,000 property, that’s a €30,000 deposit. However, additional funds will be needed to cover other fees and costs associated with buying a home. More on Mortgage deposits

Mortgage approval in principle | Mortgage pre-approval

Before purchasing a property, you need mortgage approval in principle from the bank. It’s wise to start this process early, as estate agents typically won’t assist you without it. Secure your mortgage before house hunting to ensure a smoother experience. More on Mortgage approval in principle

Securing your mortgage for First-time Buyers

Mortgage interest rates Ireland

Fixed rate: Fixed loans provide stability as your interest rate and payments are locked in for a set period, typically one, three, five, or ten years, with some banks even offering 20-year fixed loans. However, this security can make it harder to make extra payments or pay off the loan in large sums. More on Fixed rate mortgage

Variable rate: With a variable rate loan, the interest rate and payments can fluctuate based on market conditions and factors like European rates and Irish banks. While it can save you money, it comes with risks. It’s ideal if you expect rates to drop, plan to earn more, want to pay off the loan in one lump sum, or need flexibility. More on Variable rate mortgage

Mortgage language simplified

Loan term: A mortgage loan term is simply the amount of time you have to pay back your mortgage. It can range from 10 to 30 years, or sometimes even longer. The length of the term affects your monthly payments and the total interest you’ll pay. A longer term means lower monthly payments but more interest over time, while a shorter term means higher monthly payments but less interest overall.

Interest rate: A mortgage interest rate is the cost you pay to borrow money for buying a house. It’s a percentage of the loan amount that you pay to the lender, usually added to your monthly mortgage payments. For example, if you have a 3% interest rate on a €100,000 loan, you’ll pay €3,000 per year in interest. The rate can be fixed (stays the same) or variable (can change over time).

• Repayment Mortgage: Your monthly payments cover both interest and principal, ensuring the entire loan is paid off by the end of the loan term.
• Interest-Only Mortgage: You only pay the interest each month, leaving the principal unchanged, which must be repaid in full at the end of the term. This can be riskier as it requires a plan to pay off the principal.
• Flexible Mortgage: Lets you make overpayments, underpayments, or take payment holidays, offering more financial flexibility.

Early repayment charges: Mortgage early repayment charges (ERCs) are fees for paying off your mortgage early, compensating the lender for lost interest. They usually apply to fixed-rate mortgages and can range from 1% to 5% of the remaining loan balance. ERCs can occur if you remortgage, sell your property, or make large overpayments before the term ends.

If you find yourself struggling with the mortgage industry terminology try our Mortgage FAQs or reach out to our team of mortgage advisors for a free personalised assessment.

Government Schemes and Grants for First-Time Buyers

Help to Buy Scheme

The Help to Buy (HTB) scheme helps first-time buyers with the deposit for newly-built homes or self-builds. It refunds some of the income tax and DIRT paid in the last four years. The property must cost €500,000 or less, and you need to meet certain criteria to qualify with a maximum relief of €30,000. More on Help to Buy Scheme

First Home Scheme

The First Home scheme was created to help first-time buyers bridge the gap between the amount they can borrow under the Central Bank of Ireland’s mortgage lending guidelines and the amount they need to purchase a home. It provides insights on eligibility criteria and the mortgage application process for first-time buyers. More on First home scheme or if you prefer watch this video on Ireland’s first home scheme

Local Authority Housing Schemes

Affordable housing under the Affordable Housing Fund, County Councils will offer homes at reduced prices for buyers needing to bridge the gap between their mortgage and deposit. These homes will be provided on Council-owned land and through advance purchases from private developers. More on Affordable Housing

First-Time Buyer Common Mistakes to Avoid

Rushing the process: Taking your time and making informed decisions

Before starting to look for a home, the first thing we advise is to get an understanding of where you stand and what you may need to do to get the home you want. You don’t wake up one morning and be ready. What we advise strongly is to get a roadmap as to where you are and what you need to do to get the home you want. Arming yourself with that information will help you avoid disappointment or waste time. You will understand where you are now and you either work with that or wait until you get to where you need to be to get a mortgage and buy the home that you want. We offer a free roadmap on the journey to buying your own property. This will show you where you stand and what you may need to do to get mortgage approval. More on JC Mortgages mortgage roadmap

The important points to note are what the bank will lend to you, so thinking the bank will lend you more will lead to a lot of disappointment. Not having enough money to bring to purchase or not having your bank accounts look like they need to look so can be presented to the banks in the best possible way.

Overstretching your budget: Borrowing too much and the importance of realistic budgeting.

What we believe is very important and even if the bank will lend you the money, is being sure that you can meet the mortgage repayments that you are looking to take on. Most banks look for you to demonstrate over the last 6 months you can prove you can do  this. The central bank also wants us to highlight to you what your repayments would be if rates were to go up by 2% . Obviously if you are confident that your income is going up this is one factor to take into consideration. Then will your family be extended, another factor to take into consideration. We strongly recommend making any decisions weighing all these factors up. Buying your dream home is fantastic but we all have a life to live as well

Ignoring hidden costs: Additional expenses like legal fees, property taxes, home insurance and mortgage protection insurance

Our clients often start the process by thinking they only need 10% of the cost price to buy a home.

What sometimes gets forgotten in advance is that firstly the banks may not lend them the 90% of cost price or the help to buy scheme not pay out the full €30,000.  On top of this what often gets forgotten is stamp duty and legal fees.

Stamp duty is 1% of the cost price so for a €400,000 property you are looking at €4,000. Legal fees are broken up in parts. I tell my clients to budget approx. €3,500 for this and includes solicitor professional fee, then a registration fee and searches and then unfortunately VAT. With either new or second-hand homes they will need furnishing, a budget needs to be considered for these as well.

For more personalised advice for ‘First Time Buyers Ireland’ contact JC Mortgages Brokers, based in Dublin, servicing Ireland, you may also want to read why choose a mortgage broker to secure your dream home.