Homeowners seeking to downsize to smaller properties will have benefits from updated mortgage rules coming into effect this month. The Tánaiste and Minister for Finance, Simon Harris, has indicated support of the Central Bank’s intentions to reform mortgage lending rules.

Under the proposed changes, lenders will have flexibility in offering bridging loans, which allow people to purchase a new property prior to the sale of their existing home. With the new rules, particular types of bridging loans will be exempt from the existing loan-to-income limit.

Current rules limit the amount of money anyone can borrow to a maximum of four times gross income (for first-time buyers) and three and a half times gross income for second/subsequent buyers. These changes are intended to benefit people who may be retired or on lower incomes and who wish to purchase a smaller, more suitable property.

“This is an important measure in our efforts to increase housing choice for older people and I commend the Central Bank and Governor Makhlouf for adopting such a sensible, pragmatic approach,” the Minister said. “Delivery of more suitable homes for older people and supporting people who wish to voluntarily rightsize is an important element of Government’s overall approach to housing and this practical measure is very welcome,” he added.

While several bridging products are already available in the finance market, these changes are expected to remove any potential impediments to this type of loan.