Can a single person get a mortgage in Ireland?
2023-08-24Owning a home in Ireland is not exclusively reserved for couples or families. Single individuals can also secure a mortgage and make their homeownership aims come true. To shed light on this, we will discuss the eligibility criteria, borrowing limits, deposit requirements, government support initiatives, and essential tips for single mortgage applicants in Ireland.
Eligibility criteria for single mortgage applicants
The main requirement for obtaining a mortgage, whether as an individual or jointly, is affordability. Lenders assess your financial stability, credit history, income, and other factors to determine eligibility. As long as a single applicant meets these criteria and demonstrates an ability to afford mortgage repayments, they can secure a mortgage in Ireland.
Rules applying to single mortgage applicants
The Central Bank's mortgage measures also apply to individual applicants. These measures set limits based on your income (loan-to-income limit) and the property's value (loan-to-value limit).
- Borrowing limits for single applicants: Under the loan-to-income limit, first time buyers can borrow up to 4 times their gross annual income. For instance, if you are a single first time buyer earning €60,000 per annum, you can borrow a maximum of €240,000. Not all single applicants are first time buyers in the strict sense of the word because they may have previously owned a home but no longer have an interest in that property. If this is the case, then you still may be considered a first time buyer under the "Fresh Start" principle.
- Deposit requirements for single applicants: The loan-to-value limit requires first time buyers to have a minimum deposit equal to 10% of the value of the home in order to qualify for a mortgage. For example, if the home you wish to buy costs €300,000, you will be required to have a deposit of €30,000.
Government initiatives available to support mortgage applicants
As a single applicant, you're likely to be solely responsible for all your monthly expenses such as rent, which is a big expense to fund by yourself. This may limit the disposable income you have to save towards a deposit and it may lead to an affordability gap between your deposit and mortgage, and the price of the home you wish to buy. To overcome these challenges, you can benefit from the following government initiatives:
Help to Buy Scheme: This government initiative gives you a tax refund of up to €30,000 to enable you to raise your deposit. The refund amount depends on your income tax and Deposit Interest Retention Tax you paid in the previous 4 years. So, if that total is less than €30,000, the maximum refund you will receive will be the total amount of tax you have paid.
First Home Scheme: The First Home Scheme was introduced to support first time buyers with funding to buy newly built houses or apartments. It can fund up to 30% of the purchase price of your home and up to 20% if you are availing of the Help to Buy Scheme. In return for the funding, the government receives an equity share in your home equal to the funding percentage.
The "Fresh Start" principle also applies to the First Home Scheme in that if you have previously owned a home and no longer have an interest therein, you may also apply for this support.
In 2023, the First Home Scheme was extended to apply to tenants who have received a Notice of Termination and wish to purchase their rental property from their landlord. This is called the Tenant Home Purchase Scheme.
The "Fresh Start" principle also applies to the First Home Scheme in that if you have previously owned a home and no longer have an interest therein, you may also apply for this support.
In 2023, the First Home Scheme was extended to apply to tenants who have received a Notice of Termination and wish to purchase their rental property from their landlord. This is called the Tenant Home Purchase Scheme.
Mortgage-readiness as a single applicant
The first step to any mortgage application is getting mortgage-ready well before submitting your application. To prepare for your mortgage application, we recommend the following helpful tips:
- Save diligently. This is best achieved by sticking to your monthly budget and avoiding unnecessary expenses like daily takeaway coffees, dining out, impulse buying, etc.
- Prioritise paying off as much of your debt (e.g. bank term loans, credit union loans) as possible, and limit credit card or overdraft use.
- Avoid taking out new loans 6 to 12 months before submitting your mortgage application to maintain a healthy credit score.
- Consider adjusting your living situation, such as moving back home or house-sharing to free up additional money for saving.
- Avoid changing jobs shortly before applying for your mortgage. Lenders will generally look at your application more favourably if you can show that you have been in continuous and permanent employment for at least 12 months prior to submitting your application.
Securing a mortgage as a single applicant in Ireland is entirely possible. By adhering to eligibility criteria, understanding borrowing and deposit limits, exploring government supports, and following key tips for mortgage-readiness, you can confidently pursue homeownership as a single individual.
At Which Mortgage, we're here to assist you in achieving your homeownership aims. For personalised advice, book an appointment with us today.
At Which Mortgage, we're here to assist you in achieving your homeownership aims. For personalised advice, book an appointment with us today.
Robyn Jacobs
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