Buying a home or investment property is a huge personal and financial decision and you will want to ensure that you have all the information that you need when embarking on this journey.

One of the key pieces of information you will require is how much deposit you will need as this is the first step in determining how you can get on the property ladder.

MortgageOne has a longstanding tradition of providing excellent personal finance advice. Let us simplify the mortgage process for you with our fully online mortgage process. Our mortgage advisors are always on hand to guide you at all stages of your mortgage journey.

Table of content

Central Bank lending rules

Mortgage lending in Ireland is governed by the Central Bank’s Mortgage Measures Framework which is intended to ensure responsible mortgage lending and maintain financial stability. All mortgage lenders in Ireland must abide by these rules.

These Central Bank lending rules mean that you must abide by certain conditions in purchasing a property and are slightly different for different types of buyer, depending on your

How much deposit do I need?

For first time buyers buying their own home, a minimum 10% deposit will be required, this is also the case for second and subsequent home purchasers.

A Loan to Value (LTV) limit of 90% means that up to 90% of the home’s purchase price can be financed with a mortgage. You must provide the additional 10% of the purchase price as a deposit.

For buy to let property purchasers, a 30% deposit will be the minimum required. This means that the LTV limit will be 70% of the property’s purchase price.

For larger house purchases, your prospective mortgage lender may require you to have a higher deposit, possibly 20%. This can vary by lender, so it’s a really good idea to discuss this with a mortgage expert, such as a MortgageOne mortgage advisor, as their expertise can help you in applying to mortgage lenders.

If you can manage to save a deposit that is more than 10% of the property’s purchase price, you may also benefit by being eligible for a lower mortgage rate which will save you money over the term of the mortgage.

When you apply for a mortgage, having a 10% deposit is only one part of the picture. You will also need to be aware of the Central Bank’s loan to income (LTI) lending rules.

These state that, as a first time buyer, you may not borrow more than 4 times your gross income to purchase your home. As a second or subsequent home buyer, the LTI is 3.5 times your gross income. Lenders are allowed a limited number of exemptions to these limits per year.

You will also need to demonstrate a good credit rating to any mortgage lender as well as the capacity to make your mortgage repayments along with any other regular financial commitments you may have.

Government schemes

There are state backed schemes which can help you to realise your dream of home ownership, especially if you are a first time buyer buying a new home.

The help to buy scheme is, essentially, a refund or rebate of the income tax and deposit interest retention tax (DIRT), up to €30,000, that you have paid in Ireland for the last 4 years before the year in which you apply for the scheme.

To qualify for the scheme, you must be a first time buyer and buying or self building a new property valued at €500,000 or less.

If you are buying or building with another person, they must also be a first time buyer.

You must take out a mortgage with a qualifying lender of at least 70% of the property’s purchase price and you must live in the property for the first 5 years.

The first home scheme is a shared equity scheme to enable first time buyers to buy or self build a new property.

Under the scheme, the government or participating banks buy an up to 30% share of the property, which they then own. If you want you can buy back the stake but you don’t have to.

The property you purchase must be within the price limits for your local authority area, with various limits depending on the area up to a maximum of €500,000 for a house or apartment.

You must get a mortgage from a participating lender, for the maximum amount you are eligible for and you must have a 10% deposit. You can avail of the Help to Buy scheme for your deposit.

Getting your deposit together

There is no easy way to get that magical 10% deposit together and it can be very challenging to save if you are already paying a high rent.

Making savings where you can, saving on rent by moving home, and/or the ‘bank of mum and dad’ are all ways to gather together the funds to pay your 10% deposit, especially if you are a first time buyer.

Every year, mortgage lenders are permitted to lend to a limited number of borrowers who do not have a 10% deposit, provided they meet other lending criteria.

This is not a sure fire way to get on the housing ladder, and is generally reserved for very strong mortgage candidates, so it is not a good idea to rely on getting an exemption to purchase your home.

Some lenders wish to attract first time buyers by offering cashback mortgages where a certain proportion of the mortgage is offered as a lump sum when the mortgage is drawn down.

This can be a useful way to get over the hurdle if you are struggling to save a full deposit but bear in mind that you will likely have to accept a mortgage with a higher rate which may be more expensive in the longer term.

MortgageOne

At MortgageOne we want to put our expertise and knowledge of the Irish mortgage market to work for you.

We can advise you on how much deposit you will need, as well as how much you can borrow and which mortgage option would suit you best.

Whether you are a first time buyer, a mortgage switcher, or are thinking of trading up, we have access to multiple mortgage lenders and can search the market to get you the best mortgage deal for your circumstances.

Avoid unnecessary hassle, paperwork, and, delays with our fully online mortgage application and benefit from out personalised advice with a dedicated mortgage advisor who will guide you at each stage of the mortgage process.