Buying a home

Considerations for a first time buyer purchasing a home with a second time buyer

December 01, 2023

We worked with Sinead Ryan of the Irish Independent to answer one of her readers questions –

See full article here – Read here

The question raised was:

I bought my first apartment when I was 25 with help from my parents. I am now 34 and am buying with my partner (we hope to be married in the next few years), and I am selling my apartment to bring my ‘half’ to the property. However, he will be a first time buyer and wants to be able to access the benefits, like the increased multiple of salary on the mortgage. But if I apply, I’ll be considered a non-first time buyer. Would I be better off staying off the deeds to facilitate this? 

Our thoughts at doddl are –

 Considerations for a first time buyer purchasing a home with a second time buyer?

If you have had a mortgage anywhere in the world previously, you are not considered a first time buyer. If you inherit or are gifted a property then you are still considered to be a first time buyer. In your case you would be classed as a second time buyer and if you purchase a home jointly with your partner, who is a first time buyer, you will both be considered to be second time buyers.

Are mortgage rules different for second time buyers?

Central Bank lending rules around loan to income state that first time buyers can borrow up to 4 times allowable income. Second and subsequent buyers 3.5 times income. The rules around deposit are the same for both types of purchaser, min 10% deposit required.

If I am a first time buyer purchasing a home with a second time buyer will I be eligible for the help to buy?

The supports available for first time buyers relate to the purchase of new homes only, these are the help to buy and first home scheme. As such if you were to purchase jointly and the home was a new home, your partner would lose his eligibility for these schemes if you are on mortgage and title.

How much can I borrow as a first time buyer buying with a second time buyer? 

As you are unmarried presently your partner could purchase a property as a first time buyer and single applicant however the mortgage would be assessed based on his income solely.

If you intend purchasing a second-hand home then you may be better to purchase jointly, as I am assuming, your lending power would be higher at 3.5 times joint income as opposed to 4 times sole income.

There are no supports in place for second hand homes so there would be no benefit forsaken by purchasing together in this instance.

Tax and Legal considerations when purchasing a home

Stamp duty applies in the same manner regardless of purchaser status and insurance and life cover would be required albeit joint life cover would be required if you do purchase together.

From your question it would appear if you purchase jointly that you will be bringing the same amount to the purchase by way of deposit based on your reference to half. However, another consideration for cohabiting couples is the legal side of the purchase. You might want to discuss together and with your solicitor whether you should purchase the property as tenants in common as opposed to joint tenants. Tenants in common would mean that you would legally own the property in defined shares for example, 50/50, 60/40 or whatever is relevant. Want to know how much you’ll be paying back? Calculate your repayments here.

Any specific queries please do make contact with our advisors -> Click here

Mortgage Horizons Limited t/a doddl is regulated by the Central Bank of Ireland.

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