Friday 26 May 2017

How the proposed homeloan changes would work

Charlie Weston and Thomas Molloy

Q How would the tax relief plan work?

A FG is promising to give those who took out a mortgage between 2004 and 2008 extra interest relief.

This will work out at up to €166 a month for someone with a €300,000 mortgage. In other words, €55 per €100,000 borrowed.

FG said it would pay for this by abolishing mortgage interest relief for new buyers from this June. That is six years earlier than it was planned to abolish it.

This will go down like a lead balloon with those banking on keeping their relief until 2017. The plan may help some people, but make matters worse for others.

Q What else are they proposing?

A The party says it will force domestic banks to cut their standard variable rates by 0.25pc. The banks covered by the state guarantee -- AIB, Bank of Ireland/ICS, Irish Nationwide, EBS, Permanent TSB -- will be the ones affected by this.

These lenders will have to cut their own costs to allow them to fund this mortgage rate cut.

Q What else is on offer?

A The party says it will allow those in trouble with their mortgage to get access to some of their pension funds before they reach retirement age.

It also says it would ban lenders imposing penalties on those who restructure their mortgages. The Central Bank has already moved to ban penalties being levied on those in arrears.

Irish Independent

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