The Central Bank have announced new rules that will allow First Time Buyers some relief from the 80% loan to value (LTV) limit. First time buyers can now borrow up to 90% on a property purchased up to €220,000 which will make it possible for more people to get on the property ladder.
The Central Bank of Ireland has abandoned the rules to phase out 90% funding for First time buyers, over concerns it would have for First time buyers. A typical example for a first time buyer purchasing a house for €350,00 means that they will need a deposit of €48,000 as opposed to €35,000 under the old rules.
This has made it virtually impossible for many to buy their first home so after extensive lobbying against the initial decision it appears that the Central Bank has reversed its decision on a cap of 80% on all purchases.
The Central bank has insisted that all applicants should not exceed the 3.5 times income, for example if you earn €60,000 per years the maximum you can borrow is €210,000, which also falls below the threshold of the €220,000 rule that allow you borrow at 90%.
With so many home owners in negative equity, any potential purchasers that fall into this category will be assessed separately. The customers may not fall into the new loan to value category.
If you are an existing homeowner looking to restructure or switch to another lender you are not covered by the new regulations.
Central Bank Governor Mr Patrick Honan said the measures would reduce financial vulnerabilities for lenders and borrowers
The rules for non first time buyers or trading up is somewhat different because the maximum they can borrow is 80% irrespective of the property value, and for The Investor market 70% will apply to the buy to let customer.