State schemes offer help to get on ladder
First-time buyers who have difficulty financing a house purchase through the normal banking channels should consider the alternative methods which are supported by the Government and local authorities.
But before they do, they need to get their finances in order, just as they would when applying to a private mortgage provider.
In particular, they need to clear existing loans and outstanding credit card debt and show a good savings record.
It is also very important to start saving for a deposit as early as possible and to be able to show a record of saving.
Tidying up all of these areas will show a potential lender an ability to borrow and repay a mortgage.
Remember also when approaching private lenders that they may consider rent paid as a record of saving.
Once a maximum price budget has been set, first-time buyers should find out what they can buy for that money.
It is important to be serious, particularly in the second-hand home market, where vendors may be in a difficult financial situation.
Many prices are not advertised on property websites or they are given as a guide so it may require additional contact with vendors or calling directly to estate agents to get a clearer picture.
If you have been unable to secure adequate finance from two other lenders, the following options are available:
Local Authority House Purchase Loan
In addition to the private finance options available from banks and building societies, local authorities can also provide mortgages for loan applicants. These mortgages are known as Annuity Loans and can provide up to 97pc of the market value of a property.
The maximum loan amount is €220,000. The income limit for a local authority House Purchase loan is €50,000 for a single applicant and €75,000 for joint applicants.
The mortgage term can be up to 30 years and mortgage repayments cannot be more than 35pc of an applicant's net income. The current variable interest rate is 3.25pc (APR 3.3pc).
Contact your local authority for further details.
Home Choice Loan
Home Choice Loan is a government-backed mortgage for first-time buyers provided nationwide by four designated local authorities, and is available through authorised mortgage brokers.
Home Choice Loans provides up to 92pc of the market value of a property purchased. The maximum loan amount is €285,000. The mortgage term is up to 30 years.
A Home Choice Loan offers one variable interest rate. The rate is currently set at 4.2pc variable (APR 4.28pc). Visit www.homechoiceloan.ie.
Affordable Home Scheme
The scheme is for people who cannot afford to buy a home on the open market. The new homes are provided at a discount of the market price, and must be owner occupied.
If the home is sold within 20 years, a percentage of the sale price is paid to the local authority. This is known as a 'clawback'.
Affordable homes are for first-time buyers who will live in the property, which cannot be rented out, but the owner can rent out a room under the Rent a Room scheme.
The income limit for affordable home applicants is up to €50,000 for a single applicant and up to €75,000 for two people applying jointly.
These income limits are a guide only. Lower limits may apply in some areas.
Some local authorities around the country still have affordable homes available. Check out www.affordablehomes.ie to view what is available in your local authority area.
For example, a three-bedroom mid terrace townhouse is available in a development called Moyglass, Crusheen, Co Clare, for €119,000.
Buying a home is a long-term commitment and should be given careful consideration.
The property market is completely changed from the days of the boom, where buyers felt there was an urgency to purchase ahead of further price rises.
First-time buyers should take their time to consider their options carefully before buying and compare buying with the rental option.
First-time buyers should look at what they can afford, set a budget and stick to it.
This budget must take into account any additional expenses in buying a property, such as legal costs, stamp duty and furnishings.
The stamp duty is at a flat rate of 1pc on all residential property transactions (new or old) up to a value of €1m.
John O'Connor is chief executive of the Housing and Sustainable Communities Agency, which works with Government and voluntary organisations in the delivery of housing and related services.
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