Frequently Asked Questions
Who can apply for a Rebuilding Ireland Home Loan?
The Rebuilding Ireland Home Loan is available to first-time buyers who meet all of the following conditions:
- Aged 18 years - 70 years.
- For single applicants:
- is earning a gross income of less than €50,000, and
- is in 2 years continuous employment (including self-employment) prior to application.
- For joint applicants:
- are earning a combined gross income of less than €75,000, and
- where both applicants are working, the primary applicant is in 2 years continuous employment (including self-employment), and the second applicant is in 1 year continuous employment (includes self-employment) prior to application.
- Applicant(s) must have received insufficient offers of finance from two mortgage lenders.
- Applicants must satisfy any other conditions and/or requirements, as stipulated by the local authority.
Am I eligible if I am not a first-time borrower?
What is the maximum loan amount I can borrow?
The maximum loan amount under the Rebuilding Ireland Home Loan is limited to 90% of the market value of the property or, in the case of self-build properties, 90% of the total build costs.
For properties in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow, the maximum loan amount is €288,000.
For the rest of the country, the maximum loan amount is €225,000.
Borrowing limits are higher in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow, to reflect the more expensive property markets in those areas.
The maximum loan amount is also limited by a Net Income Ratio.
What is the maximum term of loan I can borrow?
The maximum term over which the Rebuilding Ireland Home Loan can be borrowed is 30 years.
This will be shorter as determined by the age of the oldest applicant.
This means a single applicant aged 35 years may borrow over 30 years but a single applicant aged 45 years may borrow over a maximum term of 25 years.
In the case of a joint application, one applicant aged 35 years and the other aged 45 years, the couple may borrow over a maximum term of 25 years.
What is continuous employment?
To be eligible for a Rebuilding Ireland Home Loan you must be in continuous employment for a minimum of two years, as the primary earner or be in continuous employment for a minimum of one year, as a secondary earner.
Continuous employment does not need to be permanent, but continuous in nature. This means you may be in the same employment or in more than one employment for that period, where a break in employment has lasted no more than 4 weeks.
Multiple casual employments will not be considered eligible.
In a situation of self-employment, a minimum of two full years accounts for that employment must be provided.
What evidence of insufficient offers of finance is acceptable?
Applicant(s) must have received insufficient offers of finance from two mortgage lenders to apply for a Rebuilding Ireland Home Loan. Examples of acceptable evidence of this are:
- A letter of inadequate loan offer from a bank or building society
- A letter stating that your application is outside the lending criteria of the bank or building society
- An on-line lender calculator output sheet showing inadequate borrowing capacity for the amount sought from your local authority
In all instances, the evidence must be dated within four weeks of submitting a Rebuilding Ireland Home Loan application.
What is an Irish Credit Bureau check?
Most lenders in Ireland send information about borrowers and their repayments to a central agency, the Irish Credit Bureau (ICB). ICB holds information about borrowers and their loans for 5 years after the loan is closed. This information is held in an individual credit ‘report’ that is kept by the ICB about each borrower.
What is Mortgage Protection Insurance?
Mortgage Protection Insurance (MPI) is a requirement of borrowing.
The Local Authority MPI scheme is a group scheme. It is obligatory for all borrowers who meet the eligibility criteria to join the scheme.
The benefits include:
- the payment of mortgage repayments if there is a valid claim as a result of disability;
- an additional payment of €3,000 in the event of a member’s death, separate to life cover; and
- members are also covered for death up to age 75.
Full terms and conditions of the scheme are available from your local authority.
Will my rent be taken into account in my application?
A verifiable record of rent payment may be considered the equivalent of savings. This means that the amount of monthly rent that you pay will be taken into account in determining your capacity to repay a loan.
The full deposit must be raised to complete the purchase/self-build.
How much deposit do I need?
The maximum loan amount under the Rebuilding Ireland Home Loan is limited to 90% of the market value of the property or, in the case of self-build properties, 90% of the total build costs. This means you must raise 10% from your own resources.
A minimum of 30% of this deposit amount must come from consistent and regular savings.
A verifiable record of rent payment may be considered the equivalent of savings, but the full deposit must be raised to complete the purchase/self-build.
For a property with a market value of €200,000 you will need a deposit of at least €20,000.
This must be evidenced by way of:
- €6,000 (30%) from your personal savings (consistent, regular and gathered over a minimum of 12 months); and
- €14,000 (70%) from any unborrowed source (i.e. not another loan) such as a parental gift, inheritance, insurance settlement or the Help-To-Buy (HTB) scheme or a combination of these.
Can the Help-To-Buy scheme be used towards a deposit?
Yes, the Help-To-Buy (HTB) scheme can be used towards a deposit. The HTB Application Number and HTB Access Code must be provided as part of the loan application. Full details on the Help-To-Buy scheme are available from www.revenue.ie
What type of property can I purchase?
The Rebuilding Ireland Home Loan is only available for financing a Principal Private Residence (PPR) for the following purposes:
- To purchase a new, second-hand or self-build property.
- Where the gross internal floor area of the property does not exceed 175 square metres.
- The property complies with planning and building regulations.
- The property is located in the Republic of Ireland.
What is a fixed rate mortgage?
A fixed rate mortgage is a loan where the interest rate stays the same throughout the agreed period. With a fixed rate Rebuilding Ireland Home Loan this means that your mortgage repayments are the same every month for the life of the mortgage. This should making budgeting easier - but during the fixed rate period, you may be liable for a breakage fee if you switch to a variable rate or pay off all or part of your mortgage early.
Can I repay a fixed rate mortgage early?
You can repay a fixed rate mortgage early but you may be liable for a breakage fee.
What is a breakage fee?
During the period of a fixed rate mortgage, you may be liable for a breakage fee if you switch to a variable rate or pay off all or part of your mortgage early. A breakage fee will only apply if the local authority cost of funds rate, applicable on the date of breaking the mortgage agreement, is LESS than the original local authority cost of funds rate on drawdown of your loan.
In the example below, a borrower takes out a 25-year fixed mortgage at a rate of 2.00% on 1st February 2018. On 1st February 2033 (with 10 years remaining), the mortgage outstanding is €90,000 and the borrower opts to break out of the fixed rate. The breakage cost calculation is:
- Amount [A] = €90,000
- Original local authority cost of funds on 1 February 2018 [B] = 1.50%
- Interest rate for local authority cost of funds for remaining term of 10 years on 1 February 2033 [C] = see examples below
- Remaining term in days [T] = 3,652 days
- Breakage Calculation = (A x (B-C)) x T divided by 365
If the local authority cost of funds rate has reduced since drawdown to 1.25%, the borrower would be charged a breakage fee of €2,251.23, i.e. (€90,000 x (1.50% - 1.25%)) x 3,652/365.
If the local authority cost of funds rate has increased since drawdown to 1.75%, the borrower would not be charged a breakage fee as the local authority has the ability to lend the underlying fixed rate finance at a higher rate to another borrower without incurring any losses. The same principle applies if the cost of funds rate remains unchanged since drawdown.
Examples of when a borrower might opt to break out of a fixed rate include:
- selling the property
- paying off the mortgage early
- making a partial repayment on the mortgage
How is a decision made on my application?
The decision on your Rebuilding Ireland Home Loan application is made by your local authority in accordance with a national credit policy. The credit policy contains written guidelines for local authorities which set out the terms and conditions of the Rebuilding Ireland Home Loan, including eligibility criteria and supporting documentation required. Details from the credit policy are available here.
How long will it take to get a decision on my application?
Processing of your complete and valid application will take approximately 6-8 weeks. This period may vary depending on your local authority.
How long is a Rebuilding Ireland Home Loan provisional letter of offer valid for?
A provisional letter of loan offer is valid for a period of 6 months from date of issue, subject to the terms and conditions contained therein. However, the interest rate is determined by the date of draw down of the loan and this may change within the 6-month validity period.