Will Republic banks lend for a mortgage on property in the North?
You heard a lot about banks offering mortgages to people looking to buy through the Edging but everything I see online looks dated. Can you tell me if I can get a mortgage to buy a second home in Northern Ireland when I live and work in the Republic?
Ms. A.O’N., Twitter
With all we hear about Northern Ireland being part of the European Union for business purposes and the long history of people living and working across the border, you would have thought it There would be a fairly well-oiled protocol for cross-line mortgages on both sides of the border.
Apparently not. Or, at least, not now.
Quite simply, you will not get an Irish lender to finance a mortgage for a property in Northern Ireland. We quickly asked all the major lenders in case we were missing anything, but the response from those who did respond was consistent – thank you, but no thank you.
It’s not so much the banks themselves, I imagine – although I imagine they would be suspicious enough given the difficulty of enforcing security in all jurisdictions. AIB put it succinctly: “Due to the updated regulatory guidelines after Brexit, consumers wishing to qualify for a mortgage in Northern Ireland must reside in the UK rather than the Republic of Ireland.
Bank of Ireland agreed, adding that “for Northern Ireland we only accept a BTL [buy-to-let] asks if the applicant is a UK resident and UK owner / occupant ”.
Other banks have given similar answers – although it seems very complex for some to come up with an answer to what appears to be a fairly basic question. You will therefore have no joy in betting on an Irish lender.
Borrow in the UK
But what about the UK? It is certainly possible, but don’t expect lenders to rush for your business. This is of course a larger market, but most lenders tend to have a cover bank for non-UK loans.
I guess Barclays and NatWest – the UK parent company of Ulster Bank – are among the leading banks willing to consider applications from EU residents for a mortgage on investment property in the UK. There could also be lenders specializing in what is truly a niche market. There are certainly a lot of brokers who assure people that there are options available to them.
My experience is that brokers are infinitely optimistic about the business, but can often struggle later with applications that don’t fit the standard model. However, in a market like the UK – where there is substantial demand for investment from expatriates – there must be brokers specializing in this type of business.
Just like at home, any lender will want to know your situation – your income, their level of security, any outstanding financial commitments (including on your home here), and personal details such as your age.
They will also be interested in your credit score to help them assess what type of credit risk you are. And the problem here, I guess, is that the credit scores are national. So I guess any solid credit rating you have gained here in Ireland if you are looking to buy a second property is not necessarily going to be of benefit to you with a UK lender.
On the other hand, the mortgage will be secured against the property in Northern Ireland, so unlike the banks here, there will be no worries about access to security if things go wrong.
I guess if you can find a UK lender they will be careful in assessing your disposable income to cover the cost of that investment and in assessing your credit risk. Chances are you won’t be able to get as large a mortgage as a UK resident – or you could get a second property in the Republic.
You will also likely pay a premium for the loan – in addition to the generally higher rates offered for buying and renting properties, given the riskier nature of the transaction for the bank.
Please send questions to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email [email protected]. This column is a reading service and is not intended to replace professional advice. No personal correspondence will be exchanged