‘To ask for 10 per cent is simply soul-destroying’
A REAL CHANCE for people to get a foot on the housing ladder or a kick in the teeth? It all depends on which side of the political divide you are on.
While the newly-launched ‘Rebuilding Ireland Home Loan, Affordable Purchase Scheme and Affordable Rental Scheme’ has been widely welcomed, it has its detractors, with the 10 per cent deposit required for its mortgages described by some a major deterrent for hard-up, first-time, house buyers, at least those without the bank of mum and dad to turn to.
However, the low interest, fixed rate mortgages on offer can potentially save homebuyers around €10,000 over the life of a mortgage and given rising rents, could mean you are paying less to buy than to rent, albeit once you have got over the deposit hurdle.
Former mayor Cllr George Lawlor said the scheme, announced with great fanfare by Minister Eoghan Murphy, has a nasty sting in its tail.
‘Under the existing scheme, prospective borrows are allowed to borrow up to 97 per cent of the purchase price of their home; however, the terms of the new proposal dictates that borrowers must have 10 per cent of the purchase price before their application can be considered.
‘ This is a real kick in the teeth to those people who are anxiously saving to get the monies together to avail of the current scheme,’ he said.
‘ There are some good elements to it, such as fixed interest rates,’ said Cllr Lawlor, ‘ but the deposit requirement is nonsense.’
Commenting on the Taoiseach’s suggestion that children should turn to the bank of mum and dad for their deposits, Cllr Lawlor said he was ‘showing his middle class colours’.
‘Of course people help their children, but if you have three children are you going to give them €20 grand each, even if you have €20 grand in the first place,’ said Cllr Lawlor who is putting a motion to the February meeting of the county council urging County Hall to revert to the three per cent deposit requirement.
Cllr Lawlor said many of the people he assists as they try to avail of the current Local Authority Mortgage Scheme are in a situation where they are paying exorbitant rent whilst at the same time trying to get the money together to meet the current three per cent requirement.
‘ To now ask them to stump up 10 per cent is simply soul-destroying for them and will only facilitate those in higher income brackets or those whose parents can afford to help them out. The notion that young couples will have to have €15,000 - €20,000 at their disposal is quite simply ludicrous,’ said the Labour councillor.
Cllr Lawlor accused the Minister of not living in the real world if he believes that hard-pressed working families are in a position to have thousands of euro at their disposal to even qualify to apply.
‘It is now imperative that the 10 per cent deposit requirement reverts to the current three per cent requirement if the Minister is serious about assisting those who need help most in purchasing a home’.
Wexford Deputy Brendan Howlin said the notion that we have parents able to hand out €20,000 for a deposit is ‘off the wall,’ although county council chief executive Tom Enright says the council is investgating whether credit unions could assist.
‘ Thousands of young people can’t afford a deposit for a house while paying crazy high rent,’ said the Labour former minister.
Despite the fiery rhetoric, Fine Gael Minister Michael D’Arcy believes the new ‘affordable’ housing measures will help build a sustainable future for the people of Wexford.
The new scheme, he says, will support people and families in our communities who are not eligible for social housing, but who also cannot afford to rent or buy their own home. Minister D’Arcy said the scheme will guarantee that homes will be affordable for the buyer and renter. ‘We are doing this in three ways- through the Rebuilding Ireland Home Loan, the Affordable Purchase Scheme and the Affordable Rental Scheme.
‘ The Rebuilding Ireland Home Loan is a new government-backed mortgage for first-time buyers. It will be available from our local authority here in Wexford from Thursday (February 1). ‘ 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 per cent of the market value of the property.
‘Under the loan, they can choose a fixed rate of 2-2.25 per cent interest for 25 - 30 years, so they will have absolute certainty of their repayments over the lifetime of the loan,’ said the Fine Gael minister. ‘ 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 Wexford, the maximum market value is €250,000.
‘ The new Affordable Purchase Scheme is a national scheme that will see affordable homes built initially on State land, in co-operation with local authorities. For renters, we recognise that we can do more, and so a further way of addressing affordability of homes is through an Affordable Rental Scheme. This will be done using a cost rental model.’
A Home Loan Calculator is available at rebuildingirelandhomeloan.ie.