How to beat the 3.5 times income rule

How to beat the
3.5 times income rule

The current Central bank rules state that you can’t borrow more than 3.5 times your income. For example, if you and your partner earned a combined income of €100,000 the most you can borrow would be €350,000. These rules mandated by the Central Bank and all lenders need to be abide by it.

Lenders were allowed to make a limited number of exceptions to this rule but since Covid 19 these exceptions have stopped and everyone can only borrow 3.5 times their income. There is only really two ways around this.

Use your Overtime/Bonus/Commission

Not everyone knows this but your extra income from work can be included in the 3.5 times income calculation. The issue is of your extra earnings lenders are willing to include.

The general rule is that you have been in the same job for the last 3 years and have received a similar bonus for the last 3 years then there should no issue having your additional income included.

If your additional income fluctuates then an average of the last 3 years may be taken.

If you only have been in your job for a year and don’t have 3 years evidence of additional earnings things are a bit trickier. We often can get 100% of your bonus included but it depends on your industry, position etc. It is very much handled on a case by case basis and each lender will treat the case differently. You are really better off talking to a broker.

If you have received share options or if you are on a vesting schedule this can be used as income for the purpose of your application. There can be a bit of maths involved here to figure out exactly how much you earned from these types of schemes but it can be done if you really need the extra income for your application.

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Extra Income for civil servants

If you are a civil servant and you are in receipt of a government pension you could be eligible for a mortgage based on your future salary rather than your current salary.

The general rule is that you can use your salary from 2 points up the salary scale. For example, if you are at point 3 on the scale you can use your income from point 5. If you are unsure what this figure is then you should contact your HR department and ask for a copy of your salary scale.

The only lender doing this at the moment is ICS and they can only be contacted through a broker. We have an agency with ICS and would be happy to help as we are doing quite a few of these cases at the moment.

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