fbpx
Search
Close this search box.

Buy to Let Mortgage Ireland – Ultimate Guide 2023

Article Contents

Share via:

The Buy to Let market and property investment has huge potential in Ireland. That’s why there’s lots of interest in getting a Buy to Let Mortgage Ireland 2023 for those looking to invest. But, what’s needed and how do you get the best deal? Check out our Buy to Let Mortgage Ireland Ultimate Guide 2023.

Buy to Let Mortgage Ireland

In this article, we discuss what a Buy to Let Mortgage also known as a Buy to Rent Mortgage is, how it works, how to apply, and some more investment property points you should know before deciding to apply for one.

  1. What is a Buy to Let Mortgage Ireland?
  2. How does a Buy to Let Mortgage Work?
  3. How much will my deposit be on a Buy to Let Mortgage Ireland?
  4. How do I apply for a Buy to Let Mortgage Ireland?
  5. Will I be charged Stamp Duty on my Buy to Let Mortgage Ireland?
  6. Advantages and Disadvantages of a Buy to Let Mortgage Ireland
  7. Summary, Buy to Let Ireland Mortgage Ultimate Guide 2023
  8. Next Steps, Buy to Let Mortgage Ireland Ultimate Guide 2023

What is a Buy to Let Mortgage? Ireland Ultimate Guide 2023

A Buy to Let Mortgage is a mortgage for people who are looking to purchase a property to rent out to others. Usually as an investment property to give a steady income. Ireland’s approach to other asset classes makes property one of the few options offering steady returns that are relatively tax efficient.

Untitled design 10

How does a Buy to Let Mortgage Work? Ireland Ultimate Guide 2023

Unlike your standard mortgage, with a Buy to Let Mortgage you can opt for your monthly repayments to pay off just your interest instead of your capital.

  • Capital: The money you borrowed from a lender
  • Interest: What you pay a lender for borrowing money

With this kind of Buy to Let Mortgage, your monthly repayments pay for the interest on your loan. This means you will have more money in the short-term, as you’re only paying off your interest instead of your capital on the investment property.

However once your mortgage has reached the end of its term, you must pay off the mortgage capital in full. This is why many choose to remortgage or sell their investment property once the mortgage has reached the end of its agreed term. The hope is that the capital will have appreciated during the term so it can be used to pay off the mortgage leaving a profit left over.

Alternatively you can decide to use your repayments to pay both the interest and the capital so you are reducing the risk of you not being able to recoup the capital due to a fall in the property market.

The value of your Buy to Let Mortgage depends on how much you plan on charging the residents living in your investment property. If you’re planning on renting out a decent sized property in a good location and are able to charge a higher rent, you can apply for a larger Buy to Let Mortgage.

How much will my deposit be on a Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023

The deposit on a Buy to Let Mortgage Ireland is around 25%-30% of your investment properties value. Deposits on Buy to Let Mortgages Ireland are high, as lenders consider them more high risk.

Whilst 25%-30% is a large sum of money, the bigger your deposit is the more likely you are to be approved for a Buy to Let Mortgage and get a better rate.

It’s important to take the cost of your deposit into account when applying for a Buy to Let Mortgage Ireland.

How do I apply for a Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023

Untitled design 7

After putting down your deposit, your lender may ask you to provide;

  • Evidence of income
  • Credit history

There are a few extra details needed for a Buy to Let Mortgage Ireland. Your bank may ask how much you’re planning on making from rent, as well as the details of the investment property you’re planning on purchasing.

Ultimately, lenders are looking to see if you are able to repay the Buy to Let Mortgage by taking all these factors into consideration.

Only certain lenders provide Buy to Let or Investment property mortgages and rates are higher than for standard mortgages. This is because the banks see investment property mortgages as a higher risk than a standard residential mortgage.

You can get both variable and fixed Buy to Let mortgages, to make things simpler though we have shown a comparison of just variable rates below. Even if you are fixing for a few years the variable rate is still important as it is the rate you will go onto at the end of your fixed period.

Buy to Let 5 Year Fixed Mortgage Rate (APRC)
5 Year Fixed Rate (APRC) EBS Mortgage AIB Mortgage Permanent TSB Bank of Ireland
Up to 50% LTV 6.60% 6.89% 5.26% 6.70%
Up to 60% LTV 6.60% 6.89% 5.26% 6.90%
Up to 70% LTV 6.60% 6.89% 5.26% 7.00%
Up to 80% LTV 6.60% 6.89%
Rates updated 26/07/23 *Green Rates only

Will I be charged Stamp Duty on my Buy to Let Mortgage Ireland? Ireland Ultimate Guide 2023

Untitled design 8

According to the Revenue Commission, the current Stamp Duty rates as of 2022 are;

  • 1% up to €1,000,000
  • 2% on anything after €1,000,000

However if you buy more than 10 Buy to Let investment properties, you will be charged 10% Stamp Duty on the total amount of your investment properties. This rate was introduced to put off the so called ‘cuckoo funds’ buying up large amounts of properties to rent.

You can read more about the Revenue Commission Stamp Duty rates here.

Advantages and Disadvantages of a Buy to Let Mortgage Ireland – Ultimate Guide 2023

If you are considering getting a Buy to Let or Buy to Rent Mortgage, it’s important to consider some of the advantages and disadvantages.

Advantages

  • Investing in the right property can lead to a high return on investment if the property increases in value, making a Buy to Let Mortgage very worthwhile in the long run.

Disadvantages

  • There is an increased Stamp Duty rate for people looking to buy investment properties to rent.
  • There are many potential issues that come with renting out an investment property, such as;
    • Periods of rental lost between tenants
    • Damage to the property
    • Tenants failing to pay rent
  • If you have to sell the investment property and the sale price doesn’t cover the mortgage capital, you will have to cover the rest yourself. This is why it’s important that you don’t rely on selling the property to pay off the mortgage capital.

Summary: Buy to Let Mortgage Ireland Ultimate Guide 2023

Untitled design 9

In short, purchasing a Buy to Let investment property to rent out can be a great way to make money, and can lead to a major return on investment.

However, it’s important to consider the risks attached with becoming a landlord and renting out your investment property to others.

It’s important to take all the expenses and ongoing costs of a Buy to Let Mortgage into consideration. Always be as financially prepared as possible, as rent is not always guaranteed and neither is your investment property going up in value.

This is why we recommend you seek advice from a professional before applying for a Buy to Let Mortgage Ireland.

Next Steps Ireland Ultimate Guide 2023

If you’re thinking about becoming a landlord and looking to get started on your Buy to Let Mortgage application, you can contact one of our QFA money sherpas and get an online consultation free of charge.

You can learn more about Stamp Duty here.

Read more about the mortgage sherpa team here.

Leave a comment

Related articles on Buying a home

Access Your Exclusive First Time Buyer Explainer Video

FREE First Time Buyer guides & tips straight to your inbox.

three circles (1080 × 400px) (2)

Our First Time Buyers Get €50,000 More on average.

Book your FREE 20 mins advice call now.