Buying your first home is an exciting (if occasionally overwhelming) milestone. But what if your goal isn’t a cosy family home, but your first investment property? A question we often get asked is: Can a first time buyer get a buy to let mortgage in Ireland?
Short answer: yes, it’s possible, but not always straightforward. Let’s break down how buy to let mortgages work for first time buyers, what lenders look for, and the key factors to consider before applying, all with that touch of practical Irish common sense.
Can First-Time Buyers Invest in Property?
The good news? There’s no law saying you can’t buy an investment property as your first-ever purchase. The issue is whether you can get a buy to let mortgage as a first time buyer.
Lenders see first-time buyers as less experienced (fair enough, you’ve no landlord history). They also impose stricter criteria, especially in Ireland where prudence is the watchword. So, while you can invest in property as a first-time buyer, it may be tougher to get a buy to let mortgage (as a first time buyer), compared to someone who already owns a home.
Buy to Let vs First Time Buyer Mortgage: What’s the Difference?
This is a key question: buy to let vs first time buyer, what’s actually different?
First-time buyer mortgages are designed for people buying a home to live in. They usually offer:
- Lower deposit requirements (as little as 10%)
- Government supports like the Help to Buy and First Home schemes
- Lower interest rates
A buy to let mortgage, on the other hand, is designed specifically for investment properties, for purchasing a property to rent out. Features include:
- Higher deposit requirements (often 30% or more)
- Higher interest rates
- No access to Help to Buy or First Home Scheme
- Stricter affordability tests (including projected rental income)
So, if you’re wondering “can I buy to let as a first time buyer,” the answer depends on whether you can clear these extra hurdles.
Can a First-Time Buyer Apply for a Buy to Let Mortgage in Ireland?
Yes, you can apply but getting approved is another matter. Here’s what you need to know before moving forward as a buy to let first time buyer:
- Different Lending Rules: Lenders typically view buy to let mortgages as higher risk. They often require a larger deposit (often 30%+), evidence of sufficient rental income (yield), and sometimes even prior landlord experience. As a buy to let first time buyer applicant, you’ll have to prove you can handle the financial and legal responsibilities, even if it’s your first time entering the rental market.
- Tax Implications: Rental income is subject to tax in Ireland. You’ll need to file a self-assessed tax return annually. The good news is that mortgage interest is deductible against rental income for tax purposes. Still, getting professional advice is vital to understand your full tax obligations as a first time buyer investing in buy to let.
- Stamp Duty Considerations: Stamp duty for residential property in Ireland is typically 1% on the first €1 million, 2% thereafter. It does not matter if you are an owner-occupier or a buy to let investor with regards to stamp duty. Everyone pays the same residential stamp duty tax.
- Impact on Future Mortgage Applications: If you own a buy to let as your first purchase, you’re no longer classed as a “first-time buyer” when you later try to buy your own home. That means you’ll lose access to:
- The Help to Buy scheme,
- The First Home Scheme
- Lower deposit requirements on your future home.
In other words, “can first time buyer get buy to let mortgage” is a “yes” in theory but the lender’s criteria and the implications for your future homebuying plans are essential considerations.
Are There Any Solutions for a First-Time Buyer to Purchase a Buy to Let with a Smaller Deposit?
Now for the bit of clever thinking. If you are asking, “Can I buy to let as a first time buyer without a 30% deposit?”, there’s one potential workaround:
- Buy as a First-Time Buyer (Residential): Use a normal residential first time buyer mortgage (with as little as 10% deposit) to buy a property you intend to live in.
- Live There for a While: Most lenders require you live in the home for at least 12 months.
- Switch to Buy to Let Later: Once you move out, you can request your lender’s permission to let the property. This is sometimes called “consent to let.” if approved, you may rent out the property. As long as you’re keeping up repayments, most banks are reasonable. This approach lets first time buyers buy to let indirectly, just make sure your lender is on board.
Important: Never rent the property without informing your lender. It might breach mortgage terms.
If you’re weighing this up, it’s wise to get professional guidance. A mortgage broker or bank can help you figure out the best approach for your plans.
Pros and Cons of a Buy to Let Mortgage for First-Time Buyers
Let’s be honest, it’s not all roses. Here’s a quick look at the pros and cons of a first time buyer buy to let mortgage:
Pros
- Potential for Rental Income: Your tenants help pay the mortgage.
- Long-Term Investment Growth: Property can appreciate over time.
Cons
- Tougher Lending Rules: Higher deposits, stricter stress testing.
- No Access to First Home Scheme or Help to Buy Incentives: These government supports are for owner-occupiers only.
- Larger Deposit and Higher Interest Rates: Buy to let loans are simply more expensive to get and service compared to a standard first time buyer mortgage.
If you’re considering it, make sure the numbers stack up, not just today, but in the long term.
How MortgageLine Helps First-Time Buyers Explore Buy to Let Options
At MortgageLine, we know navigating Ireland’s mortgage market can feel like trying to find your way through a foggy Wicklow bog. That’s why we’re here to help you cut through the confusion.
We offer clear, expert advice tailored to your goals, whether you’re exploring first time buyer deals or want to apply for a buy to let mortgage for your first property.
Our experienced brokers understand:
- Which lenders will consider first-time investors
- How to structure your application for success
- The tax and legal implications such as stamp duty rules
- How your plans today could impact your future home-buying prospects.
We make the process simpler so you can make informed decisions with confidence.
Contact us today for a free mortgage review call.
FAQs
What is the smallest buy to let mortgage you can get?
There’s no official minimum, but lenders typically prefer loans of at least €100,000–€150,000. Smaller loans may not be viable after fees and setup costs.
What is the minimum down payment for a buy to let mortgage?
In Ireland, expect to need at least 30% of the property price as a deposit for a buy to let mortgage.
What is a bigger deposit needed for a buy to let mortgage?
Buy to let mortgages are restricted to max 70% LTV under Central Bank of Ireland mortgage lending rules. There are no 10% options like you see for first-time buyer residential mortgages.
