The Rebuilding Ireland Home Loan is a new initiative launched by the Government in conjunction with local authorities, offering first time buyers mortgages at up to 90% of the market value.
Below are some of the main points of the scheme
Who can apply?
The scheme is aimed at first time buyers who are low to middle income earners who have had two rejections or inadequate offers for a mortgage from two lending institutions. Joint income cannot exceed €75,000 for in the case of one income €50,000. Joint applicants must provide evidence that the first applicant has been in continuous employment for 2 years and the second application for one. Those who are self-employed will need to provide 2 years certified accounts.
How much money is available?
For this year, the Government has ear-marked €200 million but they have suggested that this will be increased in future years if it is successful. Therefore, given the current market, this amount will fund about 1,000 homes.
What loan amount can be obtained?
In accordance with the Central Bank Regulations up to 90% of the purchase price can be borrowed. A maximum purchase price of €320,000 has been set for Dublin, Cork Galway and commuter counties such as Kildare, Louth, Meath and Galway. For the rest of the country, the maximum price is €250,000. Therefore, to purchase a home in Cork you would be eligible to borrow a maximum of €280,000 and to purchase a home in Kerry a maximum of €225,000 can be borrowed.
What are the benefits of this loan vs a bank loan?
Whilst the same lending rules apply, this loan will be charged at a fixed interest rate of 2.25% (in comparison to in excess of 3% offered by banks) for 30 years, saving homebuyers up to €10,000 over the duration of their mortgage. Variable rates will start at 2.3 % up to 30 years. Undoubtedly, these rates are far more attractive than what is on offer from the main lenders.
What type of house can I purchase?
On receipt of the loan, you can purchase a new or second hand home as well as having the opportunity to build your own home. The Department of Housing has confirmed that first time buyers will be eligible for the 5% tax Help to Buy rebate as well as applying for the low cost mortgage through the scheme.
How can I apply?
From February 1st you can see if you qualify by logging into rebuildingirelandhomeloan.ie . The application is likely to take 4-6 weeks.
What is the new Affordable Purchase Scheme?
Again in conjunction with local authorities, the Minister for Housing has announced a new affordable purchase scheme which will see affordable homes built on State land. It is estimated that approximately 10,000 homes will be available. These homes will then be made available to those eligible for the Home Loan Scheme, with the State retaining an equity share. As an example, a house that costs €250,000 could be sold for €200,000. The purchaser can pay off the equity share interest free at a point in the future, or if they wish to sell early, the State can recoup that portion back at time of sale.
Rent will be charged based on the value of the property and will include ongoing management and maintenance charged, but with a minimal profit margin incorporated into the price. Currently a pilot project of this scheme is under way in Dún Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an approved housing body, using publicly owned land.