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Our Guide For First-Time Buyers In Ireland
First-time buyers haven’t had it easy in recent years. From a cost-of-living crisis to a severe shortage of building supplies (and everything in between) the road to home ownership has been a rocky one for many people hoping to hop on the property ladder.
But it’s not all doom and gloom.
Against the odds, 2022 proved to be a successful year for first-time buyers. Banking & Payments Federation Ireland figures show that in the first nine months of the year alone, FTBs bought 2,100 more homes and borrowed €957 million more than they did over the same time frame in 2021.
These new figures are undoubtedly music to the ears of those desperate to secure the home of their dreams. Despite numerous obstacles, it is possible to make that life-changing leap very shortly – and our ultimate guide will help you do so with ease and confidence.
First things first – what are “first-time buyers”?
As the name suggests, a “first-time buyer” is someone who is obtaining a mortgage for the very first time.
The mortgage element here is important to note; you may already own a house through inheritance and in this instance, you are still considered a first-time buyer as you did not require a loan to acquire the property. Similarly, if you own a property that was paid for in cash, you will still be eligible for FTB status.
In instances where two or more people are applying for a joint mortgage, all parties must pass the above criteria to qualify for a first-time buyer mortgage.
While the above still stands, there are exceptions to the rules set out by the Central Bank, namely:
- From a “fresh start” perspective, borrowers who are divorced or separated or have undergone bankruptcy or insolvency may be considered FTBs for the mortgage measures (where they no longer have an interest in the previous property).
- FTBs who get a top-up loan or remortgage with an increase in the principal may be considered “first time”, provided the property remains their primary home.
How much will my deposit be as a first-time buyer?
At a minimum, a first-time buyer is required to hand over 10% of their desired property price.
However, this doesn’t mean FTBs are stuck to this amount. If a buyer has excess savings and they are in a position to put this towards a deposit, this is a highly advisable move. Not only will this potentially reduce the mortgage period but it will also save big bucks on interest.
How much can first-time buyers borrow under the new mortgage rules?
With a perfect storm continuing to rage through the housing sector, the Central Bank’s new lending limits, implemented as part of the Mortgage Measures Framework, are sure to ease the pressure on first-time buyers.
As of the 1st of January 2023, first-time buyers are entitled to borrow up to four times their income, in contrast to the 3.5-times rule, which was in operation up until the end of last year. Within the new rule framework however, there is some wiggle room, with the Central Bank stating that “lenders will continue to be able to lend a certain amount above these limits, in line with their own credit policies”.
This loophole will come in handy for those on the cusp of affording their dream home, offering hope of getting that all-important sale over the line.
What grants or schemes are currently available to first-time buyers?
Help to Buy Scheme
The Help to Buy Scheme, which has been active since 2017, has now been extended until the end of 2024 in a bid to continue to provide financial aid to first-time buyers on the house hunt. The government-funded initiative is available to people who plan to either buy or self-build their first home (up to a maximum property value of €500,000).
First Home Scheme
Introduced in July 2022, the First Home Scheme was designed to bridge the gap between a first-time buyer’s deposit and mortgage, by providing up to 30% of a property’s market value in return for a stake in it. This scheme is only applicable in the case of newly built houses and apartments, and the property must serve as the buyer’s principal private residence.
Our top tips for first-time buyers
It’s vital to get all your ducks in a row as you begin the process of becoming a first-time buyer. Here are our top tips to ensure there are no unwelcome surprises along the way!
Get organised
Get all of your necessary documentation in order (account statements, payslips, salary cert, and so on) at least six months in advance.
Don’t make sudden career moves
Don’t change your job until after you’ve received mortgage approval, as many lenders will require you to have held your current professional position for at least six months.
Monitor your outgoings
Cut down on your spending as much as possible and avoid any questionable transactions that will show up on your account statement.
Reduce your debts
Where possible, reduce or pay off any outstanding loans.
Keep additional funds aside for hidden extras
Make sure that aside from your deposit, you have enough money saved to cover “hidden costs”, such as solicitors’ fees, stamp duty, surveyor costs, mortgage protection, and more.
First-time buyers should seek advice from the professionals
Contact an impartial mortgage broker to find out how much you will be eligible to borrow. Once you have a ballpark figure, you can begin window shopping.
The importance of seeking expert mortgage advice
With so much to wrap your head around, buying your first home can be a daunting process – not to mention a huge, life-changing milestone. The importance of leaning on the experts to simplify the process and ensure you get value for your hard-earned money cannot be stressed enough.
Symmetry Financial Management is here to do just that. We have a proven track record of providing first-time buyers with expert, impartial advice to ensure a seamless transition from browser to buyer. Contact our team today to find out how we can give you a helping hand up the property ladder.
Be sure to also check out our blog and resources for more financial advice!
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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