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Finance and Home Ownership

Mortgage

In many cases a mortgage is required to buy a property. A mortgage is a long-term loan secured against the property you buy. This means if you don’t repay your mortgage you may lose your home. Mortgage types vary and have different repayment terms depending on individual circumstances.

Interest is charged on the mortgage and the rate of interest can be fixed or variable. There are a number of mortgage providers, such as banks, building societies and local authorities. In most cases, a private bank or building society provides mortgage loans for households to purchase a home. There are two mortgage products available from local authorities, which households may also choose to apply for. These are the House Purchase Loan (HPL) and the Home Choice Loan (HCL).

House Purchase Loan

If you wish to buy a home (new or second hand) in the ordinary way or to build a house but cannot get a loan from a building society, bank etc, you may be eligible for a local authority housing loan.  

To be eligible to apply for a house purchase loan, you must:

  • be a first time buyer
  • Have not previously owned or built a home
  • live in the home and use it as your principle place of residence
  • be aged between 18 and 70 years
  • be earning under €50,000 as a single applicant and under €75,000 as joint applicants
  • be in permanent employment for at least two years (this can be self employment) and at least one year as a second applicant. Certain exceptions can be considered
  • have been unable to secure adequate finance from at least two banks or building societies.

The maximum house purchase loan available is €200,000. You can borrow up to 97% of the value of the property. A variable interest rate applies.


Home Choice Loan

Home Choice Loan is a Government backed mortgage for First Time Buyers available through authorised mortgage brokers.

It is provided nationwide by four designated Local Authorities to purchase a new or second hand property or build your own home.

Home Choice Loan provides up to 92% of the market value of a property purchased. The maximum loan amount is €285,000.  The loan is a normal Capital and interest bearing mortgage which is repaid on a monthly basis. A variable interest rate applies.

See the following for further information:

For information in relation to House Purchase Loan (HPL), please contact your local authority directly.

Mortgage Interest Supplement

Mortgage Interest Supplement provides short-term support to help you pay your mortgage interest repayments if you run into difficulty repaying your mortgage. It is administered by the Department of Social Protection. You will only get assistance with the interest portion of your mortgage repayments. You will not get help with the portion that pays off the actual loan and house insurance. There are strict qualifying terms and conditions. See www.welfare.ie for detailed qualifying criteria.


Mortgage Protection

When you get a mortgage from a bank or building society, there is often a requirement that you take out a mortgage protection policy to ensure that the mortgage is fully repaid even if you die. This is simply a special type of life assurance taken out for the term of the mortgage and designed to pay it off on the death of the owner or joint owner.


Stamp duty

Stamp duty is a form of tax payment and is charged on the conveyance documents that transfer ownership of the property. The only factor affecting the amount of stamp duty is the value of the property.

Your solicitor will calculate how much stamp duty is due and request this from you before the closing of the sale. The amount is paid to the Revenue Commissioners who place a stamp on the deeds. Without this stamp, the deeds cannot be registered. The deeds name the owner of the property.

Mortgage Interest Tax Relief

Mortgage interest relief is a tax relief based on the amount of mortgage interest that you pay in a given tax year for your principal private residence (your home). Mortgage interest relief is administered via Tax Relief at Source (TRS). This means that your mortgage lender gives you the benefit of tax relief on the amount of mortgage interest paid. They do this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. See www.revenue.ie for detailed information on mortgage interest tax relief.


Mortgage Arrears  

Many households are dealing with mortgage arrears at the moment. The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. It requires lenders to handle all such cases sympathetically and positively, with the objective at all times of helping people to meet their mortgage obligations.

Under the CCMA, lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears customers. There are 5 steps within MARP - communication; financial information; assessment; resolution and appeals. If these 5 steps have been exhausted and the lender intends to repossess your home, they must then adhere to the MARP rules governing repossession proceedings. For full details on the Code of Conduct on Mortgage Arrears and the Mortgage Arrears Resolution Process visit www.keepingyourhome.ie
 

Link to Citizens Information Website for more information