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Dublin: 2 °C Wednesday 13 November, 2019
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People living in the south but working in Northern Ireland CAN still get a mortgage after all

Some confusion had reigned regarding the new European Mortgage Credit Directive as to whether those paid in foreign currencies can apply for mortgages here.

shutterstock_358292705 (1) Source: Shutterstock/merc67

THE CENTRAL BANK has moved to assure would-be mortgage applicants who live in the Republic of Ireland but work in Northern Ireland that they can in fact still apply for house finance.

It had been reported recently that Irish banks were denying mortgage-finance to cross-border workers as a result of the institution of the Central Bank’s Mortgage Credit Directive in March.

One such customer, living in the Republic but working in Derry, told TheJournal.ie recently that their bank had informed them as much during a mortgage consultation.

A new European law known as the Mortgage Credit Directive was transposed into Irish law on 22 March by the Department of Finance.

“Those regulations came into immediate effect and apply to all new mortgage agreements entered into by consumer borrowers as and from 21 March 2016,” the Central Bank said in a statement.

However, in relation to foreign currency loans the new regulations “require that the creditor must give the consumer the right to convert a foreign currency loan into an alternative currency (subject to conditions specified by the creditor being met) or put arrangements in place to limit the exposure of the consumer to exchange rate risk”.

This does not mean that a consumer has the right to get a foreign currency mortgage – it is up to each lender to consider an application for a foreign currency mortgage.

It seems that such moves on the part of the banks may have resulted from confusion over to what extent the new regulations apply – however, the fact remains there is no reason why a person living in the south and working in the north can not acquire a mortgage.

“The initial knee-jerk reaction by the banks was to shut down all mortgage lending to those earning foreign currency,” said Pascal Curran of Advice First Financial, based in Letterkenny.

This move effectively cut thousands of potential customers living in the border areas out of the loop.

Describing the loosening of such restrictions as “fantastic news” for house-hunters, Curran says that nevertheless “lending criteria is stricter than it was previously”.

“Although the situation appears much less bleak than it did several weeks ago, these loans are still much harder to get as a result of the new directive,” he said.

Currently only four lenders are in a position to offer these loans and only in varying degrees.
In some cases lenders will accept only one income when processing an application while in others they’ll accept only 80% of two combined incomes.

“Many people living in the Republic and working in the North may still have problems when seeking finance for a new home,” he added.

Read: Intel warns the rental housing squeeze could stall its expansion in Cork

Read: “We’re looking for a fair slice of the company we’ve helped build.”

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