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First Time Buyer Mortgage

What is the criteria for a First Time Buyer Mortgage?


In order to qualify for a first time buyer mortgage you can not have previously bought a property – either with a partner or on your own. If you are applying as a couple, if either applicant has purchased a property before, the couple will not qualify as first time buyers.

There is no age limit to qualify as a first time buyer. The Banks will want you to be in full time employment, not a have a poor credit track record (missed payments on any loans) and have sufficient repayment capacity to afford the mortgage. There are also criteria around the first time buyer deposit requirements that we will cover in the sections below.

Repayment capacity

That your income less expenditure still leaves enough each month to meet the proposed mortgage repayments. We look at your Nett (after tax) income each month and see what your outgoings are, and we can then assess how much of a mortgage you could afford to repay each month. Any rent that you are paying or savings that you have each month, will count towards this repayment capacity. Most first time buyers believe that paying high rent can count against you – but for repayment capacity, its actually beneficial.

Gross Income is 3.5x the mortgage amount

With the first time buyer scheme, your income (combined if applying with a partner) must be 3.5x the mortgage amount. Say for example you have two applicants, both earning €50k (combined €100k per year) – this would enable you to get a mortgage of €350k. The value of the property will need to be at least €385k to satisfy the additional first time buyer deposit requirements. Which we outline below.

First time buyer deposit

With a first time buyer mortgage you can borrow upto 90% of the value of the property. This means, as in the example above, you only need to have a 10% deposit saved. The Banks prefer to see these savings as consistent weekly/monthly build up over say 6 months. Be consistent. Don’t try and put in an amount say €1,000 in month one and then need to take out €200 of this to cover expenses the next month. We can work with you to plan out your cashflows to prepare for a first time buyer mortgage. Getting consistent Bank statements that meet the lenders requirements is very important in a first time buyer application. We will help you put your best foot forward.

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First-time buyer’s deposit

You will need 10% of the purchase price of the property in savings/cash. You can get this a number of different ways. The easiest way is that you simply save the money yourself from your own income. Show this being transferred from your current account to a specially designated deposit account. We can help you set this up. You can also get a gift from parents for the amount required. Once they sign a form that it’s a non-refundable gift, then the Banks will be satisfied.

The Help to Buy scheme is now very popular with first time buyers. This allows a first time buyer a grant of upto €30,000 from the government. This only applies for new build properties. The Help to Buy scheme is calculated on previous years income tax paid. To see how much you qualify for you need to contact the Revenue Commissioners directly.

As a result of the help to buy scheme, you may not need to put any of your own cash towards the price of the property. As an example, if you buy a property for €300k and have a €270k mortgage – the balance can come from the help to buy scheme. This counts as your first time buyer deposit.

Something to watch out for though is that as a large percentage of first time buyers now are approved for this grant, it is inflating the price of new builds. We are more than happy to help advise here and as Irelands first choice mortgage brokers, we can provide unique insight into the value of property in Ireland. Call us now on 0858600728.

Whilst the Central Bank rules have a standard 3.5x income limit, upto 1 in 5 mortgages can go beyond this in certain circumstances. The exemptions are allowed where borrowers can make a very strong case to the Banks as to why they can afford more than the 3.5x amount. With a first time buyer mortgage, we at Pangea Mortgages can help you to make this case. We will outline the criteria that you need to meet, we build your case and present it to the Banks for you and use our expertise to get your first time buyer mortgage approved. See our website calculator to work out your monthly repayments.

You will need to be in full time employment. You must not be in a probationary period. Its best to speak with a mortgage broker before even thinking about applying as they can run you through how best to present your application and what you will need to do to ensure you get approved. Get in touch with us now – john@pangeaireland.ie and we can walk you through the first time buyer mortgage process.

We deal with high street Banks, but we also have access to a number of other lenders that are not available to you directly. These are broker only institutions and often have lower rates or better products as they don’t have the large cost and administration base of the high street Banks.

Our job as a broker is to get the mortgage that’s right for you. We are uniquely positioned to give advice to ensure that you get that first time buyer mortgage – at the most suitable rates. We can also advise on your finances and how best to present them in an application. How much should I save each month? Should I pay off that personal loan? What is then maximum we can borrow? Do I qualify for the help to buy scheme? How much of a first time buyer deposit do I need? These are all the issues we deal with and advise on every day. We can walk you through each step of the process from start to finish. We provide solicitors and can even talk you through the legal jargon !! Not many brokers can do that- that’s why for so many customers we are now their first choice mortgage brokers.

There are a number of issues to be understood when trying to figure out where property prices will go in 2021. But the key one, as with most goods and services is supply and demand. Before Covid-19 there was a serious shortage of property in Ireland. The amount of units supplied in 2020 was lower than forecast and 2021 will be further impacted by lockdown restrictions. All this adds to a chronic shortage of Housing. Data from the property portals also shows that the number of units available for sale is at an all time low, whilst rent continues to rise.

When added to the demand side which continues to grow,  the falling interest rates and the additional government policies (such as help to buy) look set to boost demand further. Additionally , record household savings sitting at 0% interest in the Bank may well come into play in the property market later in the year. For those lookoreing for a First Time Buyer Mortgage, we would predict significant increases in property prices To find out more – contact us on 0858600728

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