WealthGuide
16 January 2025•Mortgages

Understanding Mortgage Deposit Requirements in Ireland

When purchasing a home in Ireland, understanding mortgage deposit requirements is essential. A deposit is the upfront cash payment you must provide, complementing your mortgage loan.

By WealthGuide

Minimum Deposit Requirements

The Central Bank of Ireland sets minimum deposit rules based on the type of buyer:

  • First-Time Buyers: A minimum deposit of 10% of the property’s purchase price is required. For example, if you’re buying a home worth €300,000, you’ll need at least €30,000 saved as a deposit.
  • Second and Subsequent Buyers: Also need a 10% deposit under updated rules since 2023, which previously required 20%.
  • Buy-to-Let Buyers: Must provide a larger deposit of at least 30% of the property’s value.

Loan-to-Value (LTV) Ratio

The deposit size directly impacts your Loan-to-Value (LTV) ratio—the percentage of the property’s price covered by your mortgage. A lower LTV (achieved with a larger deposit) can help secure better interest rates and reduce monthly repayments.

Help for First-Time Buyers

First-time buyers may benefit from government schemes to reduce deposit burdens:

  • Help to Buy Scheme: Offers up to 10% of the property value (maximum €30,000) for newly built homes if you’ve paid sufficient taxes over the past four years.
  • First Home Scheme: Provides up to 30% of the property value to bridge gaps between your savings, mortgage, and purchase price, though it involves shared ownership with the scheme.

Additional Costs to Consider

Beyond the deposit, buyers should budget for other expenses:

  • Stamp Duty: 1% on properties up to €1 million and 2% above that threshold.
  • Legal Fees: Typically around €3,000.
  • Valuation and Survey Costs: Approximately €500.
    These costs mean you should save an additional 2% of the property price to cover transaction fees.

Saving for Your Deposit

Deposits must come from savings, gifts, or equity (for second-time buyers). Borrowing funds for a deposit is not allowed under Central Bank rules. Lenders also assess your financial history and affordability before approving your mortgage application.

Conclusion

In Ireland, saving a sufficient deposit is crucial when planning to buy a home. First-time buyers need at least 10%, while additional schemes like Help to Buy can ease this requirement. However, always account for extra costs like stamp duty and legal fees when budgeting for your dream home.