Question:
I'm currently living and working in Canada - I have been here for the last nine years with my family. While the original plan was always to return home before the children entered primary school, this is now looking unlikely, and we plan to stay here for another three or four years at least.
We still travel home regularly, and my wife and kids spend every summer as well as a month at Christmas in Ireland. With this in mind we are hoping to buy a small property to use as a holiday home, and rent out when we're not there. What are my options for buying while I'm still in Canada? Is it feasible?
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The short answer is yes - it’s definitely feasible. However, your options with regards mortgage lending rates are varied and will be heavily dependent on the intended use of the property. As it stands, many of the mainstream banks will only offer Buy-To-Let interest rates for overseas buyers, which means that a borrower could end up paying up to 4.5 per cent interest.
However, if it is a borrower’s intention to use a property as a holiday home, which you mention above, then, subject to meeting the necessary application requirements, they can secure home loan interest rates with Haven Mortgages. In this instance, the maximum loan to value (LTV) available is 65 per cent and the variable interest rate currently available at this LTV is 2.95 per cent.
So, as you can see the financial difference between the two options is huge. Based on a € 300,000 loan amount over 25 years, the difference between the investment and home loan rates is € 253 monthly or € 3,036 annually, or € 75,900 over the 25-year term.
The EU Credit Directive means that many banks have stopped offering mortgages to Irish people living outside the EU, due to the fact that the borrower can potentially seek to request their mortgage to be transferred into the currency in which they earn their wages, and many banks simply do not have this facility.
However, we have seen a sharp increase in overseas buyers seeking to purchase a holiday home in Ireland.
In terms of next steps, I would advise that you make contact with an Irish-based broker. You might be able to get some recommendations from friends and/or family in Ireland. A broker can act as your proxy here in Ireland and can take you through the process step by step, to ensure you have all your boxes checked before you submit your application so as to increase your chances of being successful on your first attempt.
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