Local vs. Irish Lenders: Choosing the Right Mortgage for Your Overseas Home
Introduction
Buying a second home, a holiday retreat, or an investment property abroad is a dream for many Irish expats and investors. Yet the financing side can be a maze: should you apply for a mortgage with an Irish bank you already know, or turn to a local lender in the country where the property sits?
Both routes have advantages and pitfalls, especially in a market where Irish mortgage rates have nudged higher (average new‑mortgage rate 3.59% in September 2025, RTE) and currency volatility remains a concern. This guide breaks down the key differences, compares costs, and offers a step‑by‑step checklist to help you pick the right mortgage for your overseas purchase.
1. Who Are the “Local” and “Irish” Lenders?
| Lender type | Typical providers | Core product focus |
|---|---|---|
| Irish lenders | AIB, Bank of Ireland, Permanent TSB, KBC (Ireland), Ulster Bank (still operating Irish mortgage book) | Euro‑denominated mortgages for Irish‑resident borrowers; increasingly offering foreign‑currency mortgages for overseas properties. |
| Local lenders | National banks or mortgage specialists in the target country (e.g., Santander Spain, BNP Paribas France, Nationwide UK, ING Netherlands) and non‑bank lenders such as mortgage brokers or fintech platforms. | Mortgages in the local currency, often with lower LTV limits for non‑residents but more flexible underwriting on local income. |
Irish lenders – what they offer
- Euro‑denominated loans – useful if you plan to fund the purchase with euro savings or if you will be repatriating rental income to Ireland.
- Foreign‑currency mortgages – AIB’s “Foreign Currency Mortgage” lets you borrow in the property’s currency (e.g., USD, GBP, EUR). Only one non‑euro currency per application; exchange‑rate risk passes to the borrower.
- Return‑to‑Ireland mortgages – Designed for Irish citizens living abroad who intend to move back; often require a minimum Irish income or a guarantor.
- Competitive rates for high‑value borrowers – Irish banks can give rates close to the national average (3.5‑4.0% for fixed 2‑year deals in 2025) when you have a strong credit profile.
Local lenders – what they bring
- Local‑currency financing – No need to convert euros, eliminating exchange‑rate exposure on the principal.
- Higher loan‑to‑value (LTV) for residents – Many countries allow up to 80‑90 % LTV for non‑resident buyers, compared with 70‑75 % often imposed by Irish banks on overseas loans.
- Tailored products – Some markets (e.g., Spain, Portugal) have “expat mortgages” with flexible income verification, allowing overseas salaries to be used.
- Potentially lower rates – In markets where the central bank rates are below the ECB, local mortgages can be 0.5‑1.0 % cheaper than an Irish euro loan.
2. Key Factors to Compare
2.1 Currency risk
| Scenario | Impact |
|---|---|
| Euro loan for a GBP property | If the euro strengthens, your repayment in euros falls, but the property’s value in euros may drop, affecting resale value. |
| GBP loan for a GBP property | No currency conversion needed; repayments stay in line with local interest movements. |
| Hybrid approach | Some borrowers take a euro loan for part of the purchase (e.g., 50 %) and a local loan for the rest, balancing risk and cash‑flow needs. |
Tip: Use forward contracts or a multi‑currency account (offered by HSBC International and some fintechs) to lock in exchange rates for the first 12‑24 months.
2.2 Residency and income proof
- Irish banks – Typically require Irish‑based income or a UK/Ireland‑based guarantor. Non‑resident income can be accepted but often at a higher “risk premium” (e.g., a 10 % higher rate).
- Local lenders – May accept foreign salary slips, especially if the employer has a local branch (e.g., a multinational in Spain). Some require a local bank account for repayments.
2.3 Tax and legal considerations
| Issue | Irish lender | Local lender |
|---|---|---|
| Irish tax on worldwide income | Rental income abroad must be declared in Ireland; mortgage interest may be partially deductible under the “foreign‑property relief” (subject to caps). | Same tax obligations, but you may also benefit from local tax deductions (e.g., Spain’s “deducción por inversión en vivienda habitual”). |
| Legal title registration | Irish banks often insist on a mortgage deed registered in the foreign jurisdiction, which can add legal fees. | Local lenders handle registration automatically; you still need a solicitor in the country of purchase. |
| Cross‑border enforcement | Enforcing a Irish‑origin mortgage in a foreign court is complex and costly. | Local lenders have direct recourse under domestic law, simplifying repossession if needed. |
2.4 Fees and ancillary costs
| Cost type | Irish lender (typical) | Local lender (typical) |
|---|---|---|
| Application fee | €500‑€1,000 | €300‑€800 (often waived for high‑LTV) |
| Valuation fee | €250‑€500 (often in euro) | €200‑€600 (local currency) |
| Legal & registration | €1,000‑€2,000 (including translation) | €800‑€1,500 (local solicitor) |
| Currency conversion | 0.5‑1 % of loan amount if converting euros to local currency | None (loan already in local currency) |
| Early‑repayment penalty | 1‑2 % of outstanding balance for fixed‑rate deals | Often lower (0.5‑1 %) or none for variable rates |
3. Comparing Rates – A 2025 Snapshot
| Lender | Currency | Fixed 2‑yr rate (2025) | Variable rate (2025) | Max LTV |
|---|---|---|---|---|
| AIB (Euro loan) | EUR | 3.55 % | 4.05 % | 75 % |
| Bank of Ireland (Euro loan) | EUR | 3.60 % | 4.10 % | 75 % |
| HSBC International (GBP loan) | GBP | 3.30 %* | 3.80 %* | 80 % |
| Santander Spain (EUR loan) | EUR | 3.20 % | 3.70 % | 85 % |
| BNP Paribas France (EUR loan) | EUR | 3.25 % | 3.75 % | 80 % |
| Nationwide UK (GBP loan) | GBP | 3.40 % | 3.90 % | 85 % |
*HSBC rates are for non‑resident borrowers with a UK‑based income; they include a modest “expat surcharge” of 0.15 %.
Takeaway: If you are buying in a Euro‑zone country, local banks can be up to 0.3 % cheaper than Irish banks, while offering higher LTVs. For GBP‑denominated properties, a UK‑based lender (e.g., Nationwide) usually beats an Irish euro loan after you factor in conversion costs.
4. Application Process – Step‑by‑Step
| Step | Irish lender | Local lender |
|---|---|---|
| 1. Pre‑approval | Submit Irish credit file, proof of income, and passport. Expect a decision within 5‑10 working days. | Provide local passport/ID, proof of overseas income, and a local bank statement (often a 3‑month average). Decision time 7‑14 days. |
| 2. Property appraisal | Irish bank orders an international valuation (via a partner like JLL). Cost €300‑€500. | Local lender arranges a valuation through a domestic surveyor; cost is usually included in the overall fee. |
| 3. Legal documentation | You need a mortgage deed drafted in the foreign jurisdiction, translated, and registered. | Lender’s solicitor prepares the deed; you sign locally. |
| 4. Exchange‑rate set‑up | If borrowing in foreign currency, you’ll sign a forward contract with the bank. | No conversion needed. |
| 5. Funding | Funds transferred from Irish account to the seller’s local escrow. May take 3‑5 business days. | Direct payment from local mortgage account to seller; usually quicker (1‑2 days). |
| 6. Ongoing servicing | Repayments can be made in euros via SEPA or via a multi‑currency account (HSBC, Revolut). | Repayments in local currency via direct debit; some banks allow online international transfers at low cost. |
5. Practical Tips for Irish Expats
- Run the numbers in both currencies. Use an online mortgage calculator (e.g., MyMortgages.ie’s overseas calculator) to see the total cost over 5‑10 years, including conversion fees.
- Lock in exchange rates early. A 12‑month forward contract can save up to €2,000 on a €200,000 loan if the euro moves 2 % against the foreign currency.
- Check double‑taxation agreements. Ireland has treaties with most EU countries, the UK, the US, and Canada, which can prevent you from being taxed twice on rental income.
- Maintain a good credit score in Ireland. Irish banks still base part of their underwriting on your Irish credit file, even for foreign‑currency loans.
- Consider a “bridge loan.” If you’re still selling a property in Ireland, a short‑term bridge loan from an Irish bank can give you cash flow while you wait for the overseas purchase to settle.
- Use a specialist broker. Companies like MyMortgages.ie or Top Mortgages have dedicated expat teams that can source both Irish and local deals and negotiate fees on your behalf.
- Plan for insurance. HSBC International offers property insurance in over 30 markets; otherwise, secure a local home‑insurance policy that covers both building and contents.
6. When to Choose an Irish Lender
- You have substantial euro savings and want to avoid any currency conversion.
- You prefer to keep all your banking relationships under one roof (easier account management, single online portal).
- You intend to move back to Ireland within a few years, and a “return‑to‑Ireland” mortgage offers favourable terms for future refinancing.
- You need a large loan (over €300,000) where Irish banks may have higher lending caps for existing customers.
7. When a Local Lender Makes More Sense
- The property is priced in a non‑euro currency and you plan to generate rental income in that same currency.
- You can qualify for a higher LTV (80‑90 %) locally, reducing the amount of cash you need to bring to the table.
- Local market rates are significantly below the Euro‑zone average (e.g., the UK’s Bank of England base rate is 4.25 % vs. ECB 4.5 % in 2025).
- You want to avoid the administrative burden of cross‑border legal registration and translation.
Conclusion
Choosing between an Irish lender and a local lender for your overseas mortgage hinges on three core questions:
- Which currency will you earn and spend in? Align the loan currency with your cash flow to minimise exchange‑rate surprises.
- How much can you borrow? Local lenders often allow higher LTVs, but Irish banks may compensate with lower fees for trusted customers.
- What’s your long‑term plan? If you expect to return to Ireland, an Irish “return‑to‑Ireland” mortgage could provide a smoother refinancing path later.
By crunching the numbers, understanding the hidden fees, and leveraging the expertise of a specialist broker, Irish expats can secure a mortgage that protects their investment and fits their lifestyle—whether that’s a sun‑kissed villa in Spain, a bustling flat in London, or a tranquil chalet in the French Alps. Happy house hunting!