The Rebuilding Ireland Home Loan is a new Government-backed mortgage for first-time buyers. It will be available nationwide from local authorities from Thursday, 1 February 2018.
The loan can be used both for new and second-hand properties, or to build your own home. In line with Central Bank rules, a person or couple can borrow up to 90% of the market value of the property. Under the loan, they can choose a fixed rate of 2%-2.25% interest for 25 - 30 years, so they will have absolute certainty of their repayments over the lifetime of the loan.
What this means essentially is that a person or couple can purchase a home, while ensuring that they can still keep their monthly repayments to one third of their net disposable income – with no risk of their mortgage rate rising and so no threat to their ability to afford repayments, giving them certainty and security.
To avail of the Rebuilding Ireland Home Loan, your annual gross income cannot exceed €50,000 as a single applicant, or €75,000 for joint applicants. There’s also a cap on the value of the home you can buy. In the Greater Dublin Area, Cork and Galway, the maximum market value is €320,000. In the rest of the country, it is €250,000.
So, for example, a person earning €40,000 a year and living in Mayo could afford to buy a house worth €224,920, provided they had the deposit of €22,400. They could then borrow €198,000 from their local authority and their monthly repayments would be in the region of €858 a month, or 33% of their Net Disposable Income.
As a second example, a couple earning €75,000 and living in Dublin could afford to buy a house worth €320,000, provided they had €32,000 as a deposit between them. They could then borrow €288,000 from their local authority and their monthly repayments would be €1,221, or 24% of their Net Disposable Income.
Up to the end of October of last year, we saw that two-thirds (or over 5,300 homes) of the overall number of houses purchased by first-time buyers in the Greater Dublin Area, Cork and Galway were purchased for less than €320,000. Across the rest of the country, we saw that just over 90% (or 3,380 homes) of the overall number of houses purchased by first-time buyers were purchased for less than €250,000.
Other eligibility criteria apply, for instance, you must meet prudential lending analysis (i.e. must demonstrate that you are able to afford the loan repayments) and that you have had two insufficient offers or refusals for a mortgage from two lending institutions. A Home Loan Calculator is available online so you can get an idea of how much you could borrow and what the repayment rates might be. This website is now live.
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