ACT FAST IF YOU WANT TO BEAT THE NEW CURBS ON LENDING

Q

We are in the middle of trading up to a new home. We have an exemption to borrow more than the standard limits allowed under the Central Bank lending rules. I’m bidding on a property and don’t want to be left high and dry. Am I affected by the recent changes to the rules this week? Will I have to reapply for a mortgage? And could I lose my exemption status if so? And will this affect the housing market?

A

For the benefit of all buyersour readers, the Central Bank rules restrict home loans to a maximum of both: 3.5 times joint incomes 80% of the property price for second and subsequent

90% of same for first-time buyers.

Exemptions are allowed to these limits.

Up to January 1, 20% of overall lending to both firsttime buyers and to second and subsequent buyers can exceed the 3.5-times-income limit, for example.

But from January 1 onwards, this limit will be separate for each type of borrower.

The 20% limit will continue for first-time buyers – but it has been halved to 10% for second and subsequent buyers such as yourself.

If you have mortgage approval, this is not affected by the new mortgage measure for the duration of the approval.

However when it runs out and you have to reapply for a mortgage from January 1, 2018, onwards, your application will be assessed under the revised mortgage measures announced as part of the 2017 review. So yes, you could lose your exemption status when you reapply.

Banks can decide which second and subsequent buyers are allowed to exceed the 3.5 times income limit and they generally choose those with the best borrowing criteria – such as income, spending habits, savings records and job security. Come January, half of second and subsequent buyers will lose this valuable exemption, but only as they reapply.

If you want to avoid being one of them, try to effect a quick sale that doesn’t drag on past the expiry of your loan approval. Also try to improve your borrowing profile. So, keep a tight rein on spending and don’t go overboard with your credit card over Christmas.

Overall, the new measure will lead to a minor restriction in the supply of money available to bid in the mortgage market. But with so much demand and so little supply, it’s unlikely that this will impact house prices by much, if at all.

Q

I am 47 years of age and plan to resume private health cover in 2018. I face a very severe loading now on account of my age – 2% of the policy price for every year over 34 – unless I can reduce this by claiming relief.

I stopped cover at the end of 2013 for financial reasons, but not unemployment, so I don’t qualify for relief on that basis.

My only hope is to claim relief for health insurance bought in previous years. I was always covered on a family plan with my father and late mother, which would give me enough credits to avoid the loading.

However, the VHI information on me dates back only as far as 2004-2013,

Is there any general search I can do to try to get my private health insurance history pre-2004?

A

This is a very important issue for people such as yourself. I asked the VHI to look into this and a spokeswoman told me: ‘Vhi Healthcare does not hold records of customer policy information where the policy was cancelled prior to 2004.

‘Where there is no proof of membership on file, a customer can choose to complete a self-declaration form which allows them to declare previous insurance details with Vhi Healthcare for consideration.’

Since the introduction of Lifetime Community Rating in 2015, the VHI, like other insurers, have put plans in place to hold customer policy information to support verification of credit periods for up to 20 years after cancellation.