How hard is it to get an exemption from the mortgage rules?

Charlie Weston Your Questions

Q I have decided I am definitely going to try to buy a house this year, hopefully within the first six months. Although I have the deposit saved, I have been holding back because the mortgage rules are preventing me from borrowing what I think I will need. But I’m going to try get an exemption. I know they are probably not that easy to come by, but are any banks giving them? A The rules are certainly hindering some people’s home-buying plans, but the Central Bank has announced that there will be no loosening of these for the foreseeable future, according to the head of credit at MyMortgages.ie Joey Sheahan.

This will make exemptions even more precious in the year ahead, he said. The good news is there are currently eight lenders offering exemptions, which means a borrower can borrow more than 3.5 times their income, or a second time buyer can borrow up to 90pc of the value of the property. Mr Sheahan said he expects more banks to open for exemptions over the coming weeks.

Ulster Bank has announced that it is changing its borrowing practices and applicants availing of exemptions will no longer have to pay higher rates, but will have access to the raft of lower rates Ulster Bank has introduced. However, you should be mindful that, if you do manage to secure an exemption, you may have to move swiftly with some banks, Mr Sheahan said. KBC announced plans to bring in a six-month “use it or lose it” time limit on exemption approvals which means that if you do not close your property sale within this time, you will lose your chance. You must also have a property picked and you cannot change property. This is to stop borrowers who have not yet selected a home to buy from holding exemptions.

Q We are four siblings who need to buy a house to provide a permanent home for another non-working sibling who is vulnerable. Two of us are in Ireland, two are abroad. We will all be contributing different amounts of money to the purchase which will not involve a mortgage. We plan that this sibling will be paying us some rent from his social welfare which will be used to pay for all yearly costs. We will need to set up a bank account to facilitate this. How can we set this up with the four names on it (two live abroad) but with one or two of those in Ireland doing the dayto-day banking? The money in this account would belong to each sibling pro rata to the amount paid by each for the house. What are the yearly tax implications of this account/how can it be sorted? We may also have rental income from a second room as we may facilitate another tenant if our sibling desires the company.

A When it comes to taxation, all four siblings would be considered co-owners of the property, according to the consumer tax manager of Taxback.com Marian Ryan. Each would be deemed a landlord and would have to file tax returns each year in relation to the property. The rental income from their brother (and the other potential tenant) and the resulting rental expenses each year would be apportioned to each of the four owners. This would be split based on their percentage ownership (i.e. the amount that they each contribute to the purchase of the property).

All four siblings would need to file a tax return each year regardless of their residency, Ms Ryan said. Although two of the siblings are living abroad, they would still be obliged to file non-resident landlord returns each year. Then, once the property is sold in the future, each of the family members would need to file a CGT (Capital Gains Tax) return and pay CGT at a rate of 33pc on any gain they make on the sale of the property. The value of property when sold and the cost of the property when purchased would be apportioned based on the contribution each sibling made to the purchase of the property, the Taxback.com manager said. VHI

Q My renewal falls in January. Am I entitled to receive the new rebate of €75?

A The answer to this question is yes, according to Dermot Goode of TotalHealthCover.ie. Vhi has confirmed that all members on their books at the January 23, 2021, will receive this rebate of €75 per adult and €25 per child on the policy.

This is not a reduction in premium or a policy discount.

It is a once-off payment that will be issued directly to the policyholder but Vhi members can still expect to see premium increases on their policy from renewal, Mr Goode said.