Getting a mortgage as an expat or non-resident involves some complexity (not all of it necessary!). But the right Mortgage Broker, with the right experience and expertise, can streamline the process,
A family Christmas in Ireland can make returning to your ‘home away from home’ all the more difficult. For Irish citizens employed abroad, but hankering to return, buying a property in Ireland for holidays, or to move home here, is not as complex as it can seem.
To qualify for a non-resident mortgage, you have to be a PAYE (pay as you earn) worker. You must be employed by an employer, as opposed to being self-employed.
This product is not available to a contractor or self-employed individual living abroad.
Being deemed ‘non-resident’, or otherwise, applies to where the mortgage applicant is tax resident. You are tax resident, and must pay tax in Ireland, if you are present here for 183 days or more in a tax year. If taxed abroad, you are non-resident.
You need to show you can afford the repayments on the mortgage you are taking out in Ireland, as well as your rent/mortgage payments, where you are living.
The property you want to buy can only be a future private domestic home or a holiday home.
An expat mortgage is not an investment product, so repayment capacity cannot be based on any intention to rent it out.
Lenders adhere to Central Bank of Ireland criteria. This allows maximum borrowing of 4 times gross earned basic income for first-time buyers (3.5 times for others) or 3.5 times the combined income for joint applicants.
Basically the loan amount, and whether or not a mortgage is actually approved, relates to bank criteria on your income, debt service ratio, net disposable income, and proven repayment ability.
Subject to a percentage of the house purchase price, maximum borrowing is around 70% of the purchase price, depending on the lender. You also need to demonstrate you have a deposit and associated fees, like the solicitor, stamp duty etc.
Stamp Duty is payable at 1% on the property cost, up to €1 million, and 2% on any excess over €1 million. The average legal cost of buying a home here is €2,500.
If a buyer’s income is non-euro, it undergoes stress testing for currency fluctuation at approximately 20%. This means that only 80% of a non-euro income will be considered during the mortgage assessment.
If one applicant is Irish and the other is a non-EU citizen, a right of residency needs to be in place, which can only happen on arrival to Ireland, so plan a visit.
UK, Swiss or EEA nationals (the EU, Norway, Iceland and Liechtenstein) do not need a residency permit to live in Ireland, on account of the Common Travel Area (CTA)
The maximum term for an expat mortgage is 25 years, so younger people with less earning power may find budgeting more difficult.
The good news is that expats can avail of the rates that are available to resident applicants on their private dwelling house – for example, the Green Rate of 3.65%
Mortgage repayments here are stress-tested at 2% above the current lending rate, to ensure borrowers can still afford the mortgage if rates rise. The potential buyer(s) must show that his/her regular monthly savings, and/or present rent paid, are sufficient to cover stressed repayments.
To improve the chances of an affordable mortgage offer, quickly, do the following;
Article by Margaret Barrett
Managing Director at Mortgage Navigators,