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Trading up will become a lot more difficult under changes


Picture posed: Thinkstock

Picture posed: Thinkstock

Picture posed: Thinkstock

A COUPLE may have spent the last few days walking through the open plan kitchen/dining room of a nice five-bed with three baths and a sun room they spotted on an estate agent's website, carefully sidestepping the granite-over-walnut kitchen island and admiring the bevelled glass in the French windows.

He was delighted with the nine-foot ceilings, A3 BER rating and feature fan-light over the front door reminiscent of another era.

And while up to now this home may have been a real prospect, their plans to trade up now belong to a different era.

Under the new deposit requirements laid down by the Central Bank, this couple will need to have at least 20pc of the purchase price before they can trade up into the house of their dreams.

The softening of approach offered to first-time buyers doesn't apply to them, so the full 20pc will be demanded by the bank.

Take, for example, a couple with a four-bed semi-detached that according to the property price register is worth around €525,000. They still owe a hefty €450,000 on it with 18 years left to run on the mortgage.

However a recent job promotion means they can definitely afford a bigger house.

At €750,000, the five-bed is pricey but like most people they dream of moving up the property ladder.

The problem is that they need a full 20pc of the purchase price - an eye-watering €150,000 - before committing and the equity in their home is just €75,000.

The only option is to cobble together the rest but that would make it extremely expensive and whittle away completely what savings they do have.

The bank might have been lenient before if the couple had a good credit record and positive job prospects.

The one chance they might have is if a bank manager decided that they fall into the category of 'special cases'.

Banks will be allowed to keep 15pc of their loan book outside of the Central Bank's new regulations.

However, there are no guidelines for how they decide who is special. There is no guarantee that even the most prosperous person will qualify.

Independent.ie Guide to House Prices in Ireland

We have surveyed estate agents in every corner of the country to bring you the most comprehensive guide to house prices in Ireland. Whatever type of home and area you are interested in, the details are just a click away using the links below. 

Irish Independent