Mortgage Exceptions or Exemptions (what are they, and can I get one)?

Mortgage exceptions or exemptions are a hot topic now as house prices are not going down and demand is remaining stable. Note that mortgage exceptions do not have anything to do with the Wage subsidy scheme. Banks have their own criteria when it comes to giving mortgage approvals to applicants on the wage subsidy scheme.

A mortgage exception occurs when a mortgage proceeds outside of Central Bank guidelines. Mortgage lenders in Ireland can only do up to 1 in 5 of their mortgages on this basis. Even at that, lenders will not give exceptions without caution.

Exceptions are two types only, loan to income and loan to value. Furthermore, you can only avail of one exception.

1. Mortgage Exceptions – Loan to Income Exception

Under the rules, buyers can borrow no more than three-and-a-half times their income and must have a deposit of at least 10%. The surge in house prices over the past five years is leaving many unable to borrow enough under the rules to meet rising asking prices.

A loan to income exception allows you to get enhanced income multiple of up to 4.5 times your gross income. However, in any one calendar year, 20% of mortgages that lenders give out to first-time buyers can be above this cap. For second time, and subsequent buyers, lenders can only approve 1 in 10 mortgages at the higher income limit.

2. Loan to Value Mortgage Exception (Second Time Buyers)

The second major mortgage lending rule relates to the loan-to-value ratios that lenders are required to observe. This refers to the percentage of the property’s value that you can borrow and how much of it you must pay in the form of a deposit.

A loan to value exception is for second time buyers who under Central Bank rules must have a minimum deposit of the 20% when purchasing a property. However, under exception rules, this can be reduced to a 10% deposit.

3. Can I get an Exception?

In January of each year Exceptions become more readily available as lenders can start a fresh yearly cycle in the eyes of the Central Bank. A big change this year is that lenders can now carry forward unused exceptions from 2021. This is a first and should mean more exceptions available in 2022!

Exceptions however are based on certain criteria where you need both good affordability and repayment capacity. Most lenders will also want to make sure you have found or have a property in mind. The great news though is that they are available.

Contact Mortgage123 directly to discuss availability of exceptions at the moment and see if you may qualify.

Mortgage Guide

Get the information you need to start your journey to buying your dream home!

Mortgage Checklist

A list of the key documents you need when applying for your mortgage.

After AIP Guide

If you have Approval in Principle, this guide will help you with the next steps.