With the current housing crisis in the midst of the country, many plans have been developed to get the country out of its current slump. Some merely get laughed at, while others are well on their way to implementation within the housing market. It is likely that before long these effects will take a toll in the market and we will begin to see some upward movement in home buyer confidence.
The government has been quick to release multiple initiatives set out with the goal to turn the crisis around and allow the market to begin looking up. The Home Loan Scheme recently announced by the government is designed with the strategic plan to provide low-cost mortgages to first time home buyers.
With the first announcement of such a plan, many home buyers are thinking; is this too good to be true? As they have been waiting for an extended period of time for some light to be shed on the crisis that allows them to finally move into the homeowner sector.
The Rebuilding Ireland Home Loan is a government-backed mortgage specifically designed for first-time buyers and will be available nationwide.
The loan is versatile and constructed with the idea that it will be suitable for new, used, or the constructing of homes.
It will follow the already constructed Central Bank rules in which state that a borrower is allowed up to 90% of the properties market value with the choice of a fixed rate mortgage of 2%-2.25% interest served over the course of 25-30 years.
The government has chosen to structure the loan in a way that will offer near certainty that they will be repaid in full over the lifetime of the given loan.
The plan to keep borrowers from defaulting will be an effective one as the loan is designed to ensure borrowers payments to stay at one-third of their net disposable income. By also ensuring the borrowers that there is no risk of their mortgage rate rising, reduces the threat the government faces of creating an inability for borrowers to afford the repayments.
To proceed with the development and implementation of this loan, and provide its success in the market, certain obligations are required to be met by the borrower.
These were created with the strict idea of ensuring that only the most capable borrowers benefit from this scheme.
The obligations begin with a requirement of an annual gross income less than 50,000 euro for a single applicant and 75,000 euro for a couple.
An additional requirement is a market value cap on the home being purchased. In the more costly areas of Dublin, Cork, and Galway, the market value is capped at 320,000 euro, while in all other regions of the country there is a cap of 250,000.
Among other schemes under development is the affordable purchase scheme. While many details are yet to be worked out the overall plan is to provide the construction of affordable homes being built on state land, in cooperation with local authorities.
This scheme will withhold much of the same criteria as the rebuilding Ireland home loan and will allow the participants to purchase discounted homes they would not typically be able to afford.
With the rebuilding Ireland home loan as well as the affordable purchase scheme, there are many options for new entrants into the market. The housing shortage is still a very prevalent issue within the country, however, with new construction initiatives, there is a positive outlook on the overall market leveling out.