When it comes to applying for a mortgage, public sector workers in Ireland find themselves in a favourable position. Many lenders offer additional incentives to public sector employees, acknowledging the stability and security associated with their jobs. If you’re a teacher, nurse, Garda or any other public sector worker, this article will help you understand mortgages for public sector employees and what is potentially on offer from lenders in Ireland.

What Lenders in Ireland are Offering to Public Sector Employees

Recognising the financial stability associated with public sector jobs, some lenders in Ireland allow public sector workers to borrow more against their salary and are more flexible in assessing affordability than they are for non-public sector mortgage applicants.

Here are some of the key offerings:

  • Basic Pay: Basic pay can be calculated at a level 1-3 points up the pay scale from the one you are on.
  • Variable Income: Up to 100% of regular overtime earned may be factored into your borrowing limits. Variable income also covers things like location allowance and shift allowance etc.
  • Contractual Allowances: 100% of contractual allowances can also be factored into your borrowing limits allowing you to borrow more if necessary.
  • Probation Period: Existing public sector employees transferred or promoted on 12 months probation may be treated as non-probationary applicant lenders. New entrants however on 6 months probation will be treated on a case-by-case basis.

Top Mortgages for Public Sector Employees in Ireland

Which lenders in Ireland offer the most attractive benefits for public sector employees? Several lenders reward the lower risk status attributed to public sector employees with attractive mortgage lending criteria. These include:

  • ICS
    • The most favorable lender for public sector employees
    • Allows public sector applicants to borrow based on 3 points up the salary scale
    • 100% of contractual allowances can be included as income
    • 100% of overtime can be included as income (based on most recent year)
      However, at the time of writing, ICS have higher interest rates when compared against other lenders
  • Finance Ireland
    • Favorable lender for public sector employees
    • Allows public sector applicants to borrow based on 2 points up the salary scale
    • 100% of contractual allowances can be included as income where 3 years evidence of these can be provided
    • 100% of a three year proven average of overtime and variable income can be included as income. The total (average overtime plus current allowances) is then capped at 50% of overall basic salary
      However, Finance Ireland currently have the highest interest rates on the market
  • Haven
    • Favorable lender for public sector employees
    • Allows public sector applicants to borrow based on 2 points up the salary scale
    • 100% of contractual allowances can be included as income where 3 years evidence of these can be provided
    • 100% of a three year proven average of overtime and variable income can be included however, if application is overly reliant on overtime as income, the amount allowed may be reduced to 50%
    • Lowest interest on the market for green rated properties
  • Bank of Ireland
    • Favorable lender for public sector employees
    • Allows public sector applicants to borrow based on 1 point up the salary scale
    • 100% of contractual allowances can be included as income
    • 100% of guaranteed overtime can included as income based on an average of two most recent years (50% of non-guaranteed overtime)
    • Competitive interest rates for Higher BER rated properties and attractive cashback offer on standard fixed-rate terms
  • PTSB
    • Somewhat favorable for public sector workers
    • Does not facilitate higher pay scale borrowing
    • 100% of contractual allowances can be included as income
    • 100% of overtime can be included as income based on an average overtime over two most recent years
    • Competitive interest rates and cashback offers
  • Avant Money
    • No preferential lending conditions for public sector employee applicants
    • Competitive interest rates on standard and longer-term fixed-rate products

Find out what interest rates and cashback incentives lenders are offering right now in our Mortgage Interest Rate Tracker for First Time Buyers. 

Public Sector Mortgage Applicant Example

Let’s consider the example of Ciara and Dermot, a primary school teacher and Garda based in Galway.

  • Ciara is on point 6 of the salary scale and earns €47,576
  • Dermot is on point 7 of the pay scale and earns €53,311
  • Dermot regularly works overtime and earns shift and other allowances totalling €15,880 per annum
  • Ciara is also in receipt of allowances totalling €4,530

Like all mortgage applicants, Ciara and Dermot can borrow up to 4 x times their combined income which would mean, based on their actual income they would be limited to borrowing (47,576 + 53,311) x 4 = €403,548.

Due to their status as public sector workers, several lenders (highlighted above) will allow Ciara and Dermot to have their salaries assessed based on between 1 and 3 points up the salary scale. Based on a 3 point increment, they could now potentially borrow (€52,175 + €55,592) x 4 = €431,068.

They will also allow 100% of Ciara and Dermot’s allowances as well as Dermot’s overtime to be added to their income thus enabling the couple to borrow more, if needed.

How do Public Sector Employees Qualify for a Mortgage?

To qualify for a mortgage and the special borrowing conditions offered by lenders, public sector employees need to meet the specific criteria set by the lender. While these can vary slightly, most requirements are covered in the below:

  • Employment and Income
    • Must be a permanent employee in the public sector such as teacher, a nurse, a member of the gardai or civil servant.
    • You will need to provide proof of your employment and income through recent payslips.
    • Probationary periods should typically be completed however allowances may be made in certain circumstances.
  • Credit History
    • A good credit history is vitally important regardless of your public sector employment status.
    • Any outstanding issues such as unpaid loans or missed credit card payments etc. must be addressed before applying. In such circumstances, speaking to a mortgage advisor before approaching any lender is highly recommended.
  • Savings and Deposit
    • Lenders will want to know where your deposit is coming from (deposit is minimum 10% of the property purchase price for first and second & subsequent buyers).
    • Evidence of savings and the source of the deposit will be required. Savings are also used to establish affordability.
    • You will need to prove your ability to cover additional expenses such as legal fees, surveys, valuation etc.
    • Aim to save as much as possible to strengthen your application.
  • Affordability
    • Lenders evaluate your ability to afford the mortgage based on your income and existing financial commitments.
    • Your rent / current mortgage payments as well as your monthly savings will be an important measurement of affordability.
    • Lenders will generally use stress test measurements to ensure you can handle potential rate increases etc.

Find out more about how to ensure you meet lenders’ criteria in our Get Mortgage Ready in 7 Easy Steps article.

Conclusion

Public sector employees in Ireland are well-positioned to secure favourable lending conditions due to their stable and reliable income. Understanding the specific mortgage products available and the qualification criteria can be complex as they vary from lender to lender. If you’re a public sector employee looking to buy a home or invest in property, consider reaching out to a mortgage advisor to explore the best options tailored to your needs.

At EDUC Mortgages, we specialise in helping teachers and public sector employees find the perfect mortgage solution. Contact us today to learn more about how we can assist you in your mortgage journey.

 

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