First-time buyer relief on mortgage ends in June
PEOPLE considering buying their first home were warned yesterday that generous mortgage interest relief for new buyers is set to be abolished sooner than expected, under the Programme for Government.
The abolition of mortgage tax relief comes at a time when house prices continue to fall, with the Central Bank saying this week property prices could fall up to 60pc from their peak level in 2007. The decision on whether or not to buy comes at a time when mortgage interest rates are rising.
Plans by the new Government to boost mortgage tax relief for the "negative equity generation" who bought between 2004 and 2008 mean the relief for first-time buyers will go earlier than was planned by the last government.
Currently, a qualifying first-time buyer has up to the end of the year to complete the purchase of their new home and begin paying their mortgage in order to qualify for the relief, which is available for up to seven years after buying.
Under the new Programme for Government, mortgage interest relief is set to be abolished for new buyers in June.
A first-time buyer couple can get up to €416 a month in mortgage interest relief in the early years of their mortgage.
Director of online brokerage, MoneyCoach.ie, Frank Conway, said first-time buyers stand to lose up to €31,500 in total over seven years if they do not qualify for mortgage interest relief.
The Programme for Government also plans to increase mortgage interest relief up to a maximum of €500 per month for first-time buyers who purchased between 2004 and 2008.
A number of mortgage lenders continue to offer loans of up to 92pc for new buyers, including AIB and Bank of Ireland. First-time buyers now make up the majority of new mortgages, with four in 10 mortgages in the past three months of 2011 taken out by first timers.