Buy-to-let and remortgage in Ireland

wowey

Uk allows people doing buy-to-let scheme to remortgage without limits. They end up with many properties, as a result of that first mortgage. Is there such a thing in Ireland or you can just remortgage once/twice and that's it.

DubCount

Simple answer is no.

For a start, central Bank lending rules require 30% equity for Buy2Let Mortgages. Interest only mortgages are also not the norm, so the requirements to make capital repayments also make building a buy2let portfolio through borrowing pretty much impossible. Add in higher risk for buy2let for both banks and borrowers - just doesnt happen.

wowey

Thank you for your reply. I knew it was the case a few years ago, just wanted to make sure that nothing changed.

Just not sure why you say it's a higher risk - in my opinion, buy-to-let is a lower risk because it pays for itself, unlike residential mortgages, where you can loose a job tomorrow and stop paying.

Murt10

You get a tenant in and they suddenly decide to stop paying the rent. It will take you years to get them out legally, plus you'll have your own legal costs, and they may very well thrash your property before they leave and you'll never get anything out of them.

The risks are indeed much higher with a BTL

DubCount

https://www.boards.ie/discussion/comment/118522372#Comment_118522372

From a bank point of view, the default risk on Buy2Let is higher than Owner Occupier. I guess owner occupiers will make greater sacrifices to keep a roof over their own heads.

As Murt10 said in his post, if you get stuck with a non-paying tenant who knows how to play the system, the full process to get a legal eviction can be 2 years plus. Not many small landlords can afford mortgage repayments for 2+ years with no rent coming in plus legal costs plus significant damages before tenant does move out. Then there are risks of a local authority / HAP review bringing a requirement for significant expenditure, risks of discrimination cases in selecting tenants, risks of damages from failing to follow any element of the large amount of legislation in this area. There aren't many investors signing up for all this risk, there are just easier ways of turning a coin.

wowey

That is, in Ireland. In the UK a friend of mine who has over 60 properties says that it takes 1-4 months to evict a tenant in a legal way.

That was in April 2021 anyway.

https://www.boards.ie/discussion/comment/118522372#Comment_118522372

Default rates for BTL are significantly higher than PDH.