What is House Purchase Loan?

House purchase loan is a scheme for financing the purchase of a:

1) Private purchase (including self build)

2) Affordable Home

3) Local Authority Tenant Purchase

  • The maximum loan amount which may be advanced for the acquisition or construction of a house has is €220,000. The maximum loan-to-value (LTV) ratio is 97%. subject to the purchaser’s ability to repay.
  • The maximum loan term will be 30 years
  • The application form should be accompanied by confirmation that applicants have sought their mortgage from two lenders (banks or building societies) and have received inadequate funding offers or refusals from each before making application for this House Purchase Loan.

Who is eligible for House Purchases Loans?

To be eligible for a house purchase loan, the applicant(s) must be:

  1. A first time buyer (as defined by Section 92B of the Stamp Duties Consolidation Act, 1999 (as amended) i.e. a person, (or, where there is more than one buyer, each of such persons)):
  2. who has not on any previous occasion, either individually or jointly, purchased or built on his/her own behalf a house (in Ireland or elsewhere) and
  3. where the property purchased is occupied by the purchaser, or a person on his behalf, as his/her only or principal place of residence and
  4. where no rent, other than rent under the rent-a-room-scheme, is derived from the property for five years after the date of the current purchase.
  5. Aged between 18 and 70 years;
  6. Earning under €50,000 as a single applicant and under €75,000 as joint applicant; and
  7. In the case of the primary earner on the application, in continuous employment for at least two years (this can be self employment) and the second applicant must have at least one year. Certain exceptions can be considered.

Key Criteria

  • Neither applicant can be a current owner of property.
  • The property must be situated in CountyMeath and must have a gross internal floor area of 175 square metres or less, be in good condition and have good marketable title.
  • The property cannot exceed a value as determined by the local authority. This also applies to a property purchased under Shared Ownership.
  • The applicants must occupy the property as their normal place of residence
  • The maximum loan amount is €220,000.
  • The maximum loan term is 30 years and must be repaid by an annuity of principal and interest combined. All payments shall be made at monthly intervals.
  • The loan is repaid at a variable interest rate *

(THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME)

  • Interest is charged from close of sale
  • Single applicants must not be earning greater than €50,000 per annum. The combined income of joint applicants must not be greater than €75,000 per annum. Applicants must have a credible savings record.
  • Applicants must be of good credit standing with a satisfactory credit record.
  • The primary earner on the application must have at least two years continuous employment (this can be self employment) and the second applicant must have at least one year. In certain circumstances exceptions to this policy will be considered.
  • The application form must provide details of marital status, dependents, current & previous employments, other borrowings, savings, details of property proposed for purchase and any other information requirements that may be determined from time to time.

Fees

  • Application fee €60.00 (except in the case of Tenant Purchase)
  • Administration fee €600
  • Legal Fees €800 * (council solicitor)

* Customer must pay Council Legal Fees and their own legal fees

Prior to loan drawdown:

  • Local authority mortgage protection must be in place.
  • Adequate building reinstatement insurance must be in place and the local authority’s interest must be noted on the policy.
  • Administration Fee to be paid
  • Direct Debit Mandate to be signed
  • Loan Acceptance form
  • TRS Form
  • Birth Certificate
  • Completed and signed snag list (in case of new build)

Source of Applicant Equity

  • The applicant(s) must have a 3% deposit.
  • The applicant(s) must produce bank or similar statements (post office, unit linked, etc) for a twelve month period clearly showing a track record of savings.
  • Gifts are permissible towards the 3% deposit and the source must be verified

Borrowing Record

  • Applicants must give consent for credit checks and reporting.
  • Applicants must provide evidence of all existing borrowings with 12 month up-to-date loan statements.
  • Applicants with poor payment record will not be accepted.

The following applicants will not be considered:

  • Applicants currently more than 3 months in arrears, or who have had 3 months arrears at any stage over the past 2 years, unless a satisfactory explanation is received.
  • Applicants who are the subject of legal action for debt recovery.
  • Applicants who have been involved in a previous settlement which has resulted in a loss to a financial institution.
  • Applicants who are declared bankrupt or currently subject to bankruptcy proceedings.
  • Applicants who have a court order (judgment) for recovery of debts granted against them.

Income Details

Only income earned by applicants with rights of residency and rights to seek employment in the Republic of Ireland can be used in calculating borrowing capacity. Applications from non-residents will not be considered.

Building Insurance

Building Insurance in the amount of the rebuilding cost specified on the valuer’s report must be in place prior to loan cheque issue.

A letter of indemnity containing the standard mortgagee’s clause should be furnished as confirmation of same prior to cheque draw down. However, building insurance schedules can now be accepted provided the below criteria are met:

  • The interest of the Local Authorityis noted.
  • The address matches that listed on the loan approval.
  • The inception date of the policy pre-dates the loan cheque issue date.

Marital Separation

Where either party to a mortgage application is separated/divorced, the following guidelines should be followed:

Where a Separation agreement exists, a copy of the separation agreement must be obtained prior to issuing loan approval.

Tax Relief at Source

Tax relief for home mortgage interest is given at source (TRS). Mortgage TRS can be claimed in respect of a house purchase loan and will be given by the local authority in the form of a reduced mortgagepayment where applicable.

Mortgage Protection/Life Assurance/Payment Protection

It is a legal requirement that all applicants have the approved local authority mortgage protection policy in place prior to cheque drawdown for the loan amount and the term of the loan.

The local authority will arrange for mortgage protection insurance under the standard local authority/HFA mortgage protection scheme. The cost of mortgage protection insurance which covers both death and permanent disability is currently 0.5615%

Mortgage Allowance Scheme

Mortgage Allowance assists tenants and tenant purchasers of local authority homes who wish to surrender their homes to the local authority and purchase or build a private home for their own occupation by reducing their mortgage repayments over the first five years of the mortgage.

Mortgage Subsidy

To qualify for Mortgage household income needs to have been less than €28,000 (before tax and social insurance is taken off) in the previous tax year. The subsidy will be paid to the local authority and will reduce the monthly payments due on the mortgage.

Note: A mortgage subsidy is not payable in addition to the mortgage allowance. Purchasers who are eligible for the mortgage allowance scheme should be given the option of availing of the mortgage allowance or the mortgage subsidy. The relative benefits of the mortgage subsidy or the mortgage allowance will depend on the income of the purchaser.

“WARNING YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT”