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Explainer: Income limits, maximum prices and interest rates; all you need to know about the new council mortgage scheme

Today the Government will unveil plans to enable local authority’s to provide mortgages to first-time buyers, but just who is entitled to apply and how much will be available?

Who is entitled to apply for the local authority mortgages?
First-time buyers that have had two insufficient offers or refusals for a mortgage from two lending institutions can apply for the loan.

In addition, to qualify, an individual’s annual gross income cannot exceed €50,000, or in the case of a joint application €75,000.

What is the maximum loan a person can get under the scheme?
First-time buyers can get a loan worth up to €288,000.

What is the benefit of this loan over a bank loan?
While the loan will be subject to the same lending rule as banks, the benefit of this loan is that it will be charged at a fixed interest rate of 2.25pc for 30 years, this is likely to save homebuyers up to €10,000 over the lifetime of a mortgage.

Currently banks are offering first-time buyers interest rates in excess of 3pc.

Will there be a limit on the price of a home one can buy or build?
Yes, in the Greater Dublin Area, Cork and Galway, the maximum market value of a home will be €320,000.

In the rest of the country, it will be €250,000.

Can I use the loan to build a house?
Yes, the Government loan can be used to buy both for new and second-hand properties, or to build your own home.

When and where can a person apply?
The scheme will be available for applications from February 1 and people can see if they they qualify for the loan through the website which is live.

How much money has the Government set aside for this?
The Government has set aside €200m for the scheme in 2018.

What’s this about the Government building on State land?
The Minister for Housing, Eoghan Murphy, will also today announce an affordable purchase scheme that will see affordable homes built initially on State land.

Under the scheme, the State will retain an equity in all discounted homes sold. For example, a house that costs €250,000 may be made available to purchase at €200,000.

The equity share can be paid off, interest free, by the purchaser at a later date. Or if the owner wants to sell early, the State can take that portion back at the time of sale.

Just what is the affordable rental scheme?
Also set to be unveiled today is an affordable rental scheme.

This scheme will see rent charged based on the cost of building the property, together with ongoing management and maintenance charges, but with a minimal profit margin included.

Has this been done before?
Yes, currently a pilot project on this initiative is under way in Dún Laoghaire-Rathdown County Council, in conjunction with the Housing Agency and an approved housing body, using publicly owned land.

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