How much can I borrow & mortgage affordability?

The Central Bank has relaxed the guidelines as of 1^st Jan 2023 allowing first-time buyers to borrow up to a maximum of 4x their income (combined for joint applicants) with a maximum loan-to-value (LTV) of 90%.

Second-time buyers can secure a mortgage of 3.5x income with a maximum LTV of 90%, an increase from the previous cap of 80%. This has been a positive step for any potential buyer as they can now borrow more than under the previous rules. With inflation driving property prices up over the last few years, many buyers were simply being priced out of the market. The ability to access a larger mortgage has been needed to support future buyers get onto the property ladder.

When assessing your affordability, the banks will want to understand your income and outgoings; your deposit and your repayment capacity. (you can find out more about this by visiting ‘Getting mortgage ready? This to consider’)

The Central Bank rules have been adopted by all lenders, but that doesn’t always mean you will be able to get the maximum with every bank. Each lender operated their own criteria and may assess certain types of income in a different way.

For example, an applicant who is single, no dependents and has no financial commitments is more likely to be approved for the maximum mortgage available as their income can be solely put towards covering the mortgage. In comparison, an applicant with financial dependants, childcare costs and loan repayments may be offered a lower loan amount as their income is being stretched across a few different areas.

The tolerances for outgoings will also be viewed differently by each bank based on their own tolerance. The role of your broker is to understand your personal circumstances and marry your requirements to the best bank, on the best terms.