NAMA goes countrywide with more 'price-proof' homes offered
A PROPERTY scheme that protects buyers from falling prices is to be extended across the country.
The National Asset Management Agency (NAMA) offer aims to insulate homebuyers from negative equity and will now be extended to another 180 houses in 12 counties.
Negative equity is where the mortgage amount is greater than the value of the property.
The deal, which has been developed by the State's bad bank to protect buyers from negative equity if there are more price plunges, is restricted to first-time buyers and movers. Investors are not being offered the deal.
Called the 80:20 deferred payment scheme, NAMA sets aside 20pc of the selling price for five years.
But buyers continue to meet monthly repayments on the entire amount they borrowed.
If after five years the value of the property falls by anything up to 20pc, the buyer will have their overall loan reduced by a corresponding amount.
Started in May, it included 115 houses in three counties but the expansion means there will now be a greater geographical spread.
So far, 41 houses that were part of the original pilot scheme have been sold.
Now another 180 properties, ranging in size from two-bedroom to five-bedroom homes, in 12 counties will be added.
Prices are as low as €100,000.
The new properties are located in Carlow, Clare, Cork, Dublin, Galway, Kerry, Kildare, Kilkenny, Limerick, Meath, Sligo and Wexford.
NAMA chief executive Brendan McDonagh said the scheme was still at an early stage, but had been positively received by would-be buyers. "We have established that concerns over potential falls in house prices remain an issue for buyers.
"The extension of this initiative will help address these concerns for buyers in nine more counties, in addition to the three included in the pilot phase," he said.
Three banks are participating in the scheme -- Bank of Ireland, AIB subsidiary EBS and Permanent TSB bank.
Buyers have to borrow everything except, obviously, the deposit. But 20pc of those borrowings are set aside.
If the house falls in value by 20pc, for example, at the end of the five years, the 20pc element is written off.
This will mean that the buyer will have been overpaying their mortgage for five years, which should save them interest over the life of the mortgage.
If, on the other hand, the property increases in value, then the deferred amount is moved back on to the mortgage, but the homeowner will have been paying the monthly mortgage based on the full amount anyway so there will be no shortfall.
Nama does not own the properties that are part of the 80:20 offer, but it controls the loans that financed the building of the houses.