capital gains tax

Irish government affordable mortgage scheme

In the last few weeks the Irish Government launched a mortgage scheme to help low and middle income families (with salaries up to €75k per annum) get their first home.

The scheme offers very attractive lending rates (as low as 2% fixed for 25 years). Also, applicants do not need to adhere to the strict central banks rules for income.

The mortgage scheme will be open to new, second hand, and even self build homes.

The scheme will be a great help to self-employed applicants who have historically been looked at with some disdain by the loaning banks. Only 2 years of certified accounts are required for an application along with proof of being turned down by two lenders (likely not an issue for the self-employed).

In brief you will be allowed to borrow up to 90 percent of the purchase price. Rather than the typical limit of 3.5 times salary the amount allowed to be borrowed will be based on their ability to service the debt itself.

It is difficult to see how the Central Bank rules can be sidestepped in this manner. We presume it is because the local authorities are not subject to their rules.

With house price already booming due to a lack of supply this measure will surely serve to fuel the boom even further increasing demand. It is expected that around 1,000 loans will be issued in the first year of the scheme.

In the overall transaction rate of properties in the countries this would suggest the effect on house prices will be minor but many commentators are suggesting the Government has greatly underestimated the expected applications for this mortgage scheme.

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