How to secure a mortgage exception
The rules for banks offering mortgages that don't meet the strict 10/20pc deposit criteria cannot be applied for by borrowers; lenders apply them as they see fit to applications exceeding their criteria.
Experience to date suggests that exceptions are applied to well-packaged and presented cases which typically show strong savings record, stable employment and a good level of earnings.
Only one exception will be applied to an application i.e. either a loan to value exception or a loan to income exception. They are:
Loan to Income (LTI)
Rule: Maximum 3.5 times gross annual income for all principal dwelling homes. This also applies to borrowers in negative equity but not to buy-to-let mortgages.
Exception: Can be exceeded in up to 20pc of cases (by Euro value) in one year.
Loan to value (LTV)
Rule: For first-time buyers, a limit of 90pc LTV applies on the first €220,000 of the value of a residential property and 80pc thereafter. For non first-time buyers, a limit of 80pc LTV applies on any value of the property. The limits do not apply to borrowers in negative equity. For buy-to-lets, a limit of 70pc LTV applies.
Exception: The limits can be breached in up to 15pc of cases (by Euro value) each year. Banks can apply stricter lending criteria if they wish. For buy-to-lets, the limit can be exceeded in up to 10pc of cases.
Trevor Grant of Let's Talk Finance adds: "Switcher mortgages and housing loans for the restructuring of mortgages in arrears or pre-arrears are not in the scope of the Regulations. My advice as always is for borrowers to engage a professional and qualified independent mortgage specialist to ensure that their application is packaged and presented properly.
"One other key piece of advice for anyone thinking of buying a home in the new year is to apply early as exceptions ran out toward the end of 2015 and there is no reason to believe the same will not happen in 2016."