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Government approves multi-million mortgage fund

THE Government has approved a multi-million euro fund to bail out people who can’t pay mortgages taken out with the help of a local authority.

Almost one-third of local authority mortgages are in arrears, according to official figures.

Now local authority holders who are in the most distress will be able to access a new €20m fund.

The money will be used to offer a scheme called mortgage-to-rent. This is where a housing charity buys the house at current market value and the family rents it back from the approved housing body.

Any mortgage debt that is still owned when the house is sold is usually written off.

Up to now, 33 mortgage to rent transactions have been completed, another 61 are at the sale agreed stage, 22 are under offer and 61 are at valuation stage.

Announcing the new fund, Minister for Housing and Planning, Jan O’Sullivan, said: “The €20m fund will allow local authorities to offer the mortgage to rent scheme to local authority mortgage holders with unsustainable mortgages. 

“This will enable families to stay in their home and their established community.”

She said surrendering the ownership equity in a home was a very difficult decision for a family.

But the mortgage-to-rent option gives families stability after an often long period of financial turmoil.

“Ownership of the home transfers to the local authority and the family pays a differential rent,” the junior minister said.

Local authority mortgage loans are issued by the council. Under law, if you are unable to get a loan from a building society or bank, you may be eligible for a mortgage from your local authority.

To avail of the mortgage-to-rent scheme mortgage holders must have a mortgage that is deemed unsustainable with any change unlikely in the future, they must be engaging with the arrears support unit in the local authority, and the property must have a current market value of less than €220,000 in the Greater Dublin area and not more €180,000 in the rest of the country.

The property must also be in negative equity,

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Households must be eligible for social housing support from the local authority and net household income must not exceed a maximum of €25,000, to €35,000 a year, depending on where a family is located.

David Hall of the Irish Mortgage Holders Organisation welcomed the new fund, but said the mortgage-to-rent scheme was too complicated.

There are over 20,000 mortgage holders on the housing loan books of local authorities nationwide. But close to 6,300 householders on the local authority loan books are in arrears.

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