Dáil Éireann Debate, Thursday - 31 May 2018
246. Deputy Sean Fleming asked the Minister for Housing, Planning and Local Government if the value of a site can be taken into account when assessing the 10% deposit under the Rebuilding Ireland home loan scheme, as is the case with other lenders; and if he will make a statement on the matter. [24117/18]
Amharc ar fhreagraThe low rate of fixed interest associated with the Rebuilding Ireland Home Loan provides first-time buyers with access to mortgage finance that they may not otherwise have been able to afford at a higher interest rate. One of the key conditions of the Rebuilding Ireland Home Loan is that prospective applicants must demonstrate that they have had inadequate loan offers from two commercial lenders.
To support prudential lending and consistency of treatment for borrowers, a Loan to Value ratio of 90% applies to the Rebuilding Ireland Home Loan as per the Central Bank's prudential lending guidelines. Therefore, in order to avail of the loan, applicants must have a deposit of funds equivalent to 10% of the market value of the property.
In the case of a self-build property, a loan can be made up to 90% of either the construction cost, or in the case where the site is also being purchased the construction cost plus the cost of purchasing a site. However, in both these instances, 90% of the loan being sought is the maximum amount that will be approved.
Applicants must provide bank or similar statements (such as post office, credit union, etc.) for a 12-month period immediately prior to making an application, clearly showing a credible and consistent track record of savings. The cash savings should be no less than 3% of the market value of the property. Gifts are permissible up to 7% of the market value of the property, where their source is verified. In the instance of a self build, it will be 3% of either the construction cost, or the construction cost plus the cost of purchasing a site.
Decisions by local authorities as to whether to advance a loan to an individual are taken on a case-by-case basis, within the criteria as set out in the credit policy. Each local authority must have in place a credit committee which makes the final decision on applications for loans. There is also an appeal procedure in each local authority so that those who are not satisfied with a decision regarding their application can have the decision reviewed.
For prospective purchasers of new-build or self-build properties, such as in the example suggested, the applicant may also be eligible for the Help to Buy Initiative for first-time buyers through the Revenue Commissioners. This could provide additional assistance of up to 5% of the purchase or construction price of relevant properties, which represents a significant contribution towards the relevant deposit requirements. A range of eligibility criteria applies to applications under the Help to Buy Initiative, and full details are available on the website of the Revenue Commissioners at https://revenue.ie/en/property/help-to-buy-incentive/index.aspx.
