Discussion in 'Budget 2018' started by Ihana, Oct 11, 2016.
Self builds will hardly qualify will they? (they do increase supply after all)
From the budget book
"The house must be a new build and applicants must take out a mortgage of at least 80% of the purchase price. This scheme will run until the end of 2019."
>80% loan to value will rule out most self build mortgages I would think.
The scheme captures self-builds - see annex D for details:
http://www.budget.gov.ie/Budgets/2017/Documents/Budget 2017 - Full document.pdf
From the Budget Summary
In order to qualify, applicants must take out a mortgage of at least 80% of the purchase price, or in the case of a self-build, 80% of the valuation approved by the mortgage provider.
Deirdre and Evan are planning to self-build their own home in 2017. They estimate that the value
of the home will be €375,000 when completed. For this, provided they have paid sufficient income tax over the previous four years and they are taking out a minimum 80% mortgage, they will qualify for a rebate under the Help to Buy scheme of €18,750.
Would most self-builders borrow 80% of the value?
I would have thought that with a gift of a site, they probably wouldn't.
"The property (house or apartment) must be a new build or a self-build. It must be purchased or built as the applicant’s principal private residence. The relief is not available for buy-to-let properties. In order to qualify, applicants must take out a mortgage of at least 80% of the purchase price, or in the case of a self-build, 80% of the valuation approved by the mortgage provider. Individuals who are in a position to avail of a mortgage at a lower loan to value ratio than 80% already have sufficient resources to more than meet the deposit requirements of the macro-prudential rules and thus are less in need of assistance from the Exchequer. This incentive will be open to applicants who have signed contracts to purchase their home on or after 19 July 2016. In the case of a self-build, applicants who drew down the first tranche of their mortgage on or after 19 July 2016 will also be eligible. This was the date of the launch of ‘Rebuilding Ireland: Action Plan for Housing and Homelessness’. The backdating of this incentive was announced at that time with a view to avoiding any potential interruption in house sales, by purchasers who may otherwise have deferred purchases, pending the commencement of the incentive. The incentive is scheduled to run until the end of 2019."
Site value plus building cost might be higher than final valuation of house.
What would a typical example be?
Gift of site : €30k
Cost of build: €170k
Mortgage: 90% of €170k : €150k
Valuation: €200k ( assuming site + cost = house value)
Mortgage of €150k
LTV: 75% - therefore no rebate?
If the valuation was pushed down to €180k
Mortgage of €150k would be 83% , so rebate of €9k payable.
This restriction will cause a lot of messing and should be scrapped.
In our case outline figures
Gift of site: €50 K
Cost of build: €250K (approximately for 1800 sq ft - building is really expensive now)
Valuation: €300K at least I should hope, but nothing has sold for that in recent years in area (albeit nothing very nice for sale).
Just figured out, some people can qualify for higher mortgages based on affordability criteria and can withold savings to avail of scheme and later pay down mortgage.
Others will not be able to qualify for higher mortgages, will be forced to use their savings and be exempt from the scheme.
Thats not really fair.
Somebody has made a bit of an mistake in the process if that's the case, most likely the site value inappropriate.
Talking to my mortgage broker this evening he says that none of his self build mortgages submitted in past 2 years have been anywhere near the 80% loan to value ratio. Surely make more sense to apply it as relationship between mortgage and total spent on house rather than house value. i have been gifted a site which is worth 60K +. where does that come into the equation with regards to this grant
Duckndive, I agree. It should be 80% of build costs rather than final value or no self builds will qualify at all.
Is the Help to Buy scheme only for first time buyers?
This is exactly the predicament I'm in. House is €220,000. If I could get a 5% rebate it'd be €209,000. With the 3.5 times salary I can get €159,000. And I can make up the rest with €50,000 savings. But then my LTV is 72% (I think).
Take out the rebate and I'll have to get a mortgage of €170,000 which I won't qualify for. Years of savings and I just keep coming up against walls.
Nevermind! Just saw they changed it to 70%. I need to keep up.
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