Applying for a mortgage in 2025 – Here’s what you need to know –
The Irish mortgage market is constantly changing. Over the past year, we’ve seen mortgage rates climb and then start to fall, alongside the arrival of two new lenders, bringing the total number of lenders in Ireland to 12.
With rates currently ranging from 3% to 6.4% and green mortgage options dominating the lower end of the market, it’s clear that 2025 demands informed decision-making from mortgage applicants.
Here’s what you need to know to navigate the mortgage landscape effectively this year:
Not all lenders will offer you the same mortgage amount
The fundamentals of mortgage lending broadly remain the same – lenders assess an application based on your ability to repay the mortgage and that you have a minimum 10% deposit to go towards the purchase.
While all lenders operate under Central Bank rules, which cap lending at 4 times allowable income for first-time buyers and 3.5 times for others, their interpretation of “allowable income” can differ significantly.
Exceptions are available to allow you to borrow more than the Central Bank capped levels, for first time buyers this means you can potentially borrow up to 4.75 times allowable income and for second and subsequent buyers the max lend level is 4.5 times allowable income.
How much can I borrow?
If your income includes variable elements such as bonuses, overtime, commissions, or allowances, how much of this is considered varies across lenders—from 0% to 90%.
For example, a first time buying with gross basic income of €50,000 overtime of €20,000, nurse for example, some lenders would only allow 10k (capped at 20% of basic income) so allowable income €60,000 at 4 times equals mortgage level €240,000. One of the newer entrants to market will allow 90% of actual amount which would be €18,000 and total allowable income €68,000 which would mean a mortgage level of €272,000.
New broker-only entrants to the market may also consider stock granted or additional income sources, potentially boosting the loan amount you can secure.
This variation underscores the importance of shopping around or working with a broker who can access multiple lenders to find the best fit for your circumstances.
Mortgage rates and options vary greatly
The difference between choosing the lowest and highest mortgage rate can mean thousands of euro in extra costs. The highest interest rate on the market is currently more than double the lowest.
Interest adds no value to your mortgage and, in particular at the outset when the balance outstanding is at its highest.
An example would be a mortgage holder borrowing €350,000 over 30 years at a 3% rate, would pay interest of €10,400 in year 1. A 4% rate on the same mortgage incurs €13,887 in year-one interest—a €3,500 difference for just a 1% rate differential.
With an unprecedented twelve lenders offering fixed rates from one to 30 years, cashback deals, and overpayment options, the market is more complex than ever. Selecting the wrong rate could lead to unnecessary expense, so reviewing all options or seeking expert advice is crucial.
At doddl, we are always looking to best meet your needs. We work with all major lenders so will speak to you to understand your requirements and to set out options that are available. This may be a combination of mortgage level, rate, a flexible benefit you want such as overpayment or a cashback offer.
Government supports are available, but limited
While government schemes like the Help to Buy, First Home, and Local Authority Affordable Purchase schemes provide valuable support, they’re limited to new-build homes. With many first-time buyers purchasing second-hand homes, these supports often fall short.
Here’s a breakdown of the key schemes:
- Help to Buy: Offers up to €30,000 (or 10% of the purchase price) as a tax rebate for new-build homes, which can be used as part of your deposit.
- First Home Scheme: Bridges the gap between your mortgage and deposit and the purchase price, offering up to 30% of the property’s value (20% if combined with Help to Buy). This equity stake is repayable on sale of the home, on death, if the home is no longer a principle private residence or you move to a lender outside of the scheme’s participating lenders. You can choose to repay the amount and reduce or clear the equity stake at any time.
- Local Authority Affordable Purchase Scheme: Provides discounted new homes for moderate-income buyers, with the local authority retaining an equity stake proportionate to the discount.
For second-hand homes, supports are minimal and generally focus on renovation grants, such as the Vacant Property Grant. Remember there are options to finance home improvements as part of your mortgage application – see our blog on this – How to finance home improvements
Regularly review and switch your mortgage where it makes sense to do so
Even after securing your mortgage, regular reviews can save you money. Over time, as property values rise and mortgage balances fall, your loan-to-value (LTV) improves, potentially qualifying you for lower rates.
If your property has an improved Building Energy Rating (BER), you may also access Green rates, which are currently the market’s most competitive. For example, AIB offers a 3% fixed Green rate for A-rated homes compared to 4.55% rate for non-A-rated properties – a 1.55% difference on interest paid.
Navigating 2025: knowledge is power
The journey to home ownership in 2025 remains challenging, but being well-informed can make all the difference. From understanding lender criteria and rate variations to leveraging government supports, equipping yourself with knowledge—and seeking expert guidance where needed—will help you secure the best possible outcome for your mortgage and your home.
At doddl we work for our clients to secure the best mortgage rates and terms to meet their needs. If you are not sure where to start then contact our team –
Home Purchasers – Start Here!
Mortgage Switchers – Start Here!
