Friday 19 October 2018

'I didn't get any handouts from parents': Taoiseach took out 100pc mortgage just months before crash

  • Revealed: Taoiseach reveals detail of his personal circumstances following criticism of Dáil remarks
  • Taoiseach borrowed €405,000 from AIB over 40 years
  • Availed of one of the 100pc mortgages banks had been offering during Celtic Tiger years
Leo Varadkar is accused of showing a 'posh boy' attitude. AP Photo
Leo Varadkar is accused of showing a 'posh boy' attitude. AP Photo

Ronald Quinlan and Laura Larkin

Taoiseach Leo Varadkar may have sparked an angry backlash for his suggestion in the Dail that people ask the ‘bank of mum and dad’ to secure a deposit for a home.

When it came to buying his own home however, Mr Varadkar didn’t ask his parents for a cent, choosing instead to take out a 100pc mortgage over 40 years.

With criticism of his Dail remarks showing no sign of letting up, the Taoiseach revealed the detail of his personal circumstances, telling Independent.ie how he had availed of one of the 100pc mortgages the banks had been offering during the Celtic Tiger years.

"As it happens, I didn’t get any help with my deposit when I bought my home. I didn’t need it as I got a 40-year, 100pc mortgage from the bank. Of course, I was delighted at the time. But it was bad policy, all that did was drive up house prices more and more and saddle young people with debt and negative equity," he said.

An examination this afternoon by Independent.ie of public records held at the Land Registry show that Mr Varadkar took out a mortgage with AIB for €405,000 in January 2007 to buy his home in Castleknock in Dublin. 

The timing of the Taoiseach’s purchase was unfortunate, coming as it did just months before the onset of the global financial crisis, and the subsequent implosion of Ireland’s property market.

The potential financial impact of Mr Varadkar's decision was softened somewhat however by the fact that he took out a tracker mortgage. He referred to this in the course of a Dáil debate on variable interest rates in May 2016, revealing how he was "one of the lucky ones with a tracker mortgage, whose interest rate is now approximately 1.1 per cent".

In his address to the Dáil yesterday, Mr Varadkar made no mention of his 100pc mortgage. He did however, caution against any return to the days of banks offering such loans to prospective homebuyers.

Responding to questions from Labour leader Brendan Howlin on people faced with the "hopeless task" of gathering deposits, Mr Varadkar suggested getting money from parents.

"It has always been the case that a person needs to raise a deposit to buy a house. People do it in many different ways.

"Sometimes people go abroad for a period and earn money. Others get money from their parents. Lots of us did.

"Others get money through other loans. Sometimes people stay at home for a period and raise a deposit in that way," he added.

Mr Varadkar has since defended his comments made in the Dáil yesterday which resulted in Opposition politicians describing him as a "posh boy" who doesn’t live in the real world.

He said he stands over remarks about the different ways young people raising money for their first home, including that many "get money from their parents".

Responding to criticism from Opposition TDs, he said: “As it happens, I didn’t get any help with my deposit when I bought my home.

“I didn’t need it as I got a 40 year - 100pc mortgage from the bank. Of course, I was delighted at the time. But it was bad policy, all that did was drive up house prices more and more and saddle young people with debt and negative equity.”

He added that he was “alarmed” to hear opposition leaders calling for the government to offer 97pc mortgages to people.

“And it’s why I am so alarmed when I hear opposition spokespeople calling for tax breaks for developers. They have learned nothing,” he hit back.

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