How much can I borrow on a mortgage?

Person at a desk using calculator, counting property prices with a model of a house beside them.

If there’s one question that pops up all the time about mortgages, it’s how much can I borrow?

It’s a question that there is no quick, one-size-fits-all answer to. The Central Bank of Ireland has specific mortgage lending criteria however each lender will have their own approach to mortgage lending. You need the best mortgage for you and your situation. It’s what all those meetings with your mortgage advisor are for!

A guideline limit of 3.5 times your gross income is the maximum borrowing capacity for most people, though there are exceptions. In certain cases, you can borrow up to 4.25 times your gross income, but that’s subject to things like age, employment, and your credit history.

So you see: there is no quick answer.

How much can First Time Buyers borrow?

Another term that crops up a lot when discussing mortgages is Loan To Value or LTV. One of the rules set out by the Central Bank states that First Time Buyers can get an LTV of 90% on a property that costs up to €220,000. Once you go above that, the LTV is 80% of the balance.

Next up is everyone’s favourite topic: the deposit. LTV and deposits are closely related. Your LTV makes up a chunk of the property, and the last 10 or 20% is where your deposit comes into play. First Time Buyers will need to save up 10% on properties up to €220k, and 20% on anything above that.

Those are the basics, but other financial details matter too. These details include your gross annual salary, your net monthly income, and any and all monthly incoming and outgoing expenses or income.

Your lender will need this information so they can figure out a loan amount with monthly repayments that you’ll be able to meet. They’ll take all these factors into account and work out how much you’ll be able to borrow.

Once you’ve figured out what you can afford, and the paperwork is out of the way you can start on the proper hunt with mortgage approval in principle already in the bag.

Are the rules different for First Time Buyers or Home Movers?

The rules aren’t hugely different. Home Movers will need a 20% deposit to buy a home, though their application can be complicated by any equity attached to their property.

For Home Movers in negative equity, there are options. Don’t worry: being in negative equity doesn’t mean you can’t move. A Negative Equity Mortgage might be exactly what you’re looking for. You can sell your home and transfer the remaining balance over to the mortgage on the new property.

Essentially, your negative equity moves with you.

Your mortgage advisor can help you with the sums to figure out how much you can afford. As for the deposit, Home Movers will need to save at least 20%. The maximum LTV for Home Movers is 80% or 75% on a one bed apartment. However, with the property market improving some movers may have the 20% covered through the equity in their current home.

Your LTV, deposit, any equity, and the nitty-gritty of income and expenses will be taken into consideration and your lender will work out how much you can borrow. Deep breaths, you’ve nearly got it sorted!

The house of your dreams is waiting for you

No matter what stage of life you’re at, AIB can give you all the information and help you need to secure a mortgage. Why not try our handy mortgage calculator to see how much you can borrow or make an appointment with an AIB mortgage advisor today?

Allied Irish Banks, p.l.c. is an authorised agent and servicer of AIB Mortgage Bank in relation to origination and servicing of mortgage loans and mortgages. AIB Mortgage Bank and Allied Irish Banks, p.l.c. are regulated by the Central Bank of Ireland.