30% deposits, not enough houses: The challenge of buying a home for returning emigrants

Living abroad but thinking of returning home? Before you pull the plug on life overseas, know that finding a property here right now and arranging a mortgage as an overseas borrower has its challenges.

It is possible to get a mortgage, even if you’re working and living in a country outside the Euro zone, but returning emigrants will need a sizeable deposit, a buoyant salary and plenty of time.

Crowded field

Whether you’re an emigrant returning for good, or you’re in search of a holiday bolt-hole, you’re not alone. Ireland’s population is increasing and the biggest chunk of those arriving are returning Irish emigrants. Indeed some 28,900 Irish people moved home in the 12 months to the end of April this year, according to CSO figures.

The figure was over 30,000 the year before. Irish people are continuing to emigrate too of course, but that’s typically a younger crew, unlikely to be vacating the type of homes sought by those returning.

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Yes, the big challenge for returning emigrants, like every other buyer, is finding a home. Stock levels remain low, although have started to increase, particularly in urban areas.

In September, for example, there were 32 per cent more properties available for sale in Dublin, according to myhome.ie, the highest figure since pre-pandemic times.

Supply levels in rural Ireland, however, are particularly dire, reducing up to 51 per cent in the three-year period. With fewer properties available, your house search may take longer than you expected.

“There isn’t much stock, but this time of year is particularly low in stock anyway. It will replenish somewhat in the new year, so now is a good time for returning emigrants to make contact with agents,” says Maeve McCarthy of Charles McCarthy estate agents in West Cork.

Tis the season

Estate agents haven’t seen a pronounced wave of house-hunting returners this year, they say. Some report fewer than the previous year, tallying with CSO figures. But Christmas tends to be different; when it comes to enquiries from emigrants, right now is a busy time.

“It’s typical at Christmas,” says McCarthy. “We see a spike in our website traffic and our social media interactions over the Christmas period. People are sitting at home with a tin of Roses, half watching a movie and half scrolling, asking themselves, if we were to move home, what could we buy?

“We always have a little flurry of interest post-Christmas from expats who have been home and perhaps have seen a ‘For Sale’ sign on a property, or they have just taken the time while at home to log on and search a little more,” says Jill O’Neill, a director with Sherry FitzGerald.

Emigrants serious about buying will have done their due diligence before travelling.

“We do have people home on holidays for Christmas who make appointments in advance – ‘we’re coming home this week, we’d like to see x, y and z’”, says McCarthy. But if you want to squeeze in a few viewings while you are home, don’t leave it until Christmas to make the appointments, she advises.

“Owners could be using the property themselves over Christmas, so make your appointments in advance.”

Overseas buyers can inform themselves by setting up property website alerts for their preferred location. And if you want an estate agent to take you seriously, try to be specific about what you want.

We will happily show you a property on Christmas week, St Stephen’s Day or New Year’s Eve, but do your research before you come

Popular locations like West Cork, for example, will have multiple parameters – do you want sea views or beach access; is walking distance to a school a priority, or is being on a school bus route sufficient; do you want to be in a town or would you prefer to be in splendid isolation?

“Know your non-negotiables,” says McCarthy. “The more specific you can be when you contact an estate agent, the more chance you have of finding a property. It’s when you get these general emails, ‘oh we just want to buy a house in West Cork – then you think this person isn’t serious.

“We will happily show you a property on Christmas week, St Stephen’s Day or New Year’s Eve, but do your research before you come.”

Wherever you are hoping to buy, but particularly if it’s in a holiday hotspot, set aside some time while you are here to stake the place out.

“Come down and spend a couple of days here. It’s great in the summer when the sun is shining and everyone is around, but book an AirBnB or a hotel and drive around in winter.”

Money talks

If you are not resident in Ireland, getting a mortgage can be tricky. In general, there isn’t much appetite amongst Irish banks to give mortgages to those not living here, so unless you are a cash buyer, your finance options are somewhat limited.

For Darragh O’Sullivan, the expat mortgage manager with Mortgage123.ie, Christmas is a particularly busy time.

“I have a lot of people at the moment going through the mortgage approval process from the four corners of the world. They are coming home for Christmas and they want to get their approval in place before they come home. Estate agents won’t let you bid on a property unless you have mortgage approval in place.”

The mortgage applications crossing his desk are from the usual diaspora hot spots – the UK, Europe, the USA, Australia and the Middle East.

“I see a lot of people from Australia moving back, and people in the States coming to the end of their working career. They are planning to return and they want to buy a property in advance of that.”

He has assisted a number of Irish people who have kept their UK jobs but now live and work remotely from Ireland.

“They asked themselves, ‘why am I in London when I can work remotely?’ Banks will lend on that too,” he says.

The FX mortgage from Haven, the broker division of AIB, is aimed at Irish buyers living abroad, or those who have the right to reside in Ireland, such as UK and Europe passport-holders, or those with a Stamp 4 visa, says O’Sullivan.

Offering 70 per cent loan to value, it’s available to those buying a principal residence or holiday home here. The interest rate varies from 2.5 per cent to 3.35 per cent, depending on the property and the term you want to fix for, he says.

“If the property has a BER rating of at least B3, you can avail of the Green mortgage which is a four-year fixed rate of 2.5 per cent. Otherwise, borrowers can choose from a one-year fix at 2.65 per cent to a 10-year fix at 3.35 per cent.”

Coming up with a 30 per cent deposit tends not to be a problem for returning emigrants, says O’Sullivan.

“I deal with a lot of people in the Middle East who get paid tax-free. It can be easier for them to put together that 30 per cent than for an Irish person to save a ten per cent deposit with the Irish tax system and the astronomical rents here as well.”

Joey Sheahan of Mymortgages.ie agrees that the 3 per cent fixed for four years with Haven is the best rate right now for those who meet the criteria. Haven’s best variable rate is 2.75 per cent for those borrowing less than 50 per cent of the value of the home, or 2.95 per cent if you are borrowing more than that. EBS lends to those living abroad too, and PTSB will consider lending to Irish people working in the EU who are paid in euro, says Sheahan.

Computer says ‘no’

Even with a healthy deposit, overseas earners may still fall foul of a bank’s mortgage calculator. A downside with earning in UAE dirham, US or Australian dollars is that when crunching the numbers, the bank will factor in a 20 per cent currency stress test deduction to insulate against currency fluctuation.

“If someone has a salary of $100,000, the bank will basically allow them $80,000 and convert that figure to euro and that’s the figure they will use in the calculator,” says O’Sullivan. The banks here generally won’t allow any variable income, like commission, to be factored in either, says Sheahan.

Another downside for overseas borrowers is that lenders will factor your mortgage or rent commitment in your adopted country into their calculations, says O’Sullivan.

“Until you move home, you will be continuing to pay that. As a non-resident, you have to be living somewhere,” he says.

Borrowers in the Middle East where housing is often paid for by an employer won’t face this hurdle.

Those availing of the Haven non-resident mortgage may have to tailor their housing search parameters too.

“The property you are buying must be habitable with running water and electricity,” says O’Sullivan. So anything too run down will be off the cards. Those who have had a site gifted to them are out of luck too, as the Haven product is not available to self-build applicants, he says.

Schools

For many emigrants, their children’s education is a trigger to return. College tuition in the US can cost up to $40,000 (€38,744) a year. By contrast, Irish citizens resident in the EU for at least three years of the five years preceding college can be eligible for free tuition. Those who don’t return on time will pay through the nose.

“Nobody goes to the Middle East to stay there forever, they go there to earn,” says O’Sullivan. “They moved out there when the kids were small, but now the oldest is coming up to secondary school and they want their kids to go to secondary school in Ireland,” he says.

The bulk of overseas buyers he deals with are returning to Dublin.

“They are professionals in high-end jobs. Schooling is a big thing for them,” he says.

With a shortage of houses to buy or rent, and even a shortage of school places in popular areas, moving home may take longer than expected. Emigrants wanting their children to qualify for free college tuition fees should act sooner rather than later.