2017-21 help to buy scheme - megathread. All help to buy discussion here please

Quick question, not sure of the maths on this example. Hoping someone might be able to work it out. Figures are made up for the purpose of simplifying the maths.

So say a first-time buyer is looking to buy a new build house for sale at 400k and has savings of 300k. They could look to get a mortgage of approx 120k to cover the amount not covered by savings and enough to lay floors and buy furniture etc...

However, with this new rule, they will get nothing as their loan to value is not less than or equal to the 80 percent.

What if instead, they choose not to use all their savings to buy the house, so invest (80k) in the mortgage thus matching the 80 percent Loan To Value rule. Then accelerating their payments with the rest of the savings that they could have just put in initially.

The questions are:

1. Do you think this still meets the criteria?
2. Are they going to end up paying more to the bank in additional mortgage interest than you save in the tax rebate?
3. Any issues you could foresee in accelerating mortgage payments? Will this acceleration reduce the APR being paid or will the bank take into account the savings when calculating the APR?

CT2

You must have a mortgage of 80% LTV or higher. If you have a less LTV then you don't qualify.

CT2 wrote: »

You must have a mortgage of 80% LTV or higher. If you have a less LTV then you don't qualify.

I'm aware of that rule that's not the question in the example. If that was directed at my example, not sure it was.

Spanish Eyes

FTBs buying a new build for 600k?

Why would they qualify? I know it's restricted but still....

I though this was for "ordinary mortals". LOL.

Spanish Eyes wrote: »

FTBs buying a new build for 600k?

Why would they qualify? I know it's restricted but still....

I though this was for "ordinary mortals". LOL.

It's to get new houses built rather than people just purchasing existing houses.

Do you guys think the benefits of the scheme will be shadowed by a rise in demand for new builds thus knocking up the prices?

notkenny

Hi, I know we get 5% tax rebate on purchase price upto 400k but how does this actually works?

For example if the house price is 300k we need deposit of 38K ( 10 % of 220k and 20% of 80K). So do we have to pay 38k deposit first and claim 5% later or only pay 23k deposit ( 38k-15K)?

If we pay only23k how does builder get that remaining money? Does he have to claim form govt later?

Please some one clarify?

cronos wrote: »

Quick question, not sure of the maths on this example. Hoping someone might be able to work it out. Figures are made up for the purpose of simplifying the maths.

So say a first-time buyer is looking to buy a new build house for sale at 400k and has savings of 300k. They could look to get a mortgage of approx 120k to cover the amount not covered by savings and enough to lay floors and buy furniture etc...

However, with this new rule, they will get nothing as their loan to value is not less than or equal to the 80 percent.

What if instead, they choose not to use all their savings to buy the house, so invest (80k) in the mortgage thus matching the 80 percent Loan To Value rule. Then accelerating their payments with the rest of the savings that they could have just put in initially.

The questions are:

1. Do you think this still meets the criteria?
2. Are they going to end up paying more to the bank in additional mortgage interest than you save in the tax rebate?
3. Any issues you could foresee in accelerating mortgage payments? Will this acceleration reduce the APR being paid or will the bank take into account the savings when calculating the APR?

They could do that I guess, but they would need to qualify for a 320k mortgage which means a combined income of ~90k.

If they've saved the 300k then chances are they are well over this limit, but if the 300k has come to them through other means that may not be the case.

awec wrote: »

They could do that I guess, but they would need to qualify for a 320k mortgage which means a combined income of ~90k.

I guessed they could do it but just wasn't sure it would actually save money in the long run. Would they just end up paying the bank as much in extra mortgage interest as they would get in the rebate?

notkenny wrote: »

Hi, I know we get 5% tax rebate on purchase price upto 400k but how does this actually works?

For example if the house price is 300k we need deposit of 38K ( 10 % of 220k and 20% of 80K). So do we have to pay 38k deposit first and claim 5% later or only pay 23k deposit ( 38k-15K)?

If we pay only23k how does builder get that remaining money? Does he have to claim form govt later?

Please some one clarify?

Depends when you plan on buying.

The scheme opens in January so if you buy before then you'll be claiming the money back retrospectively. If you buy after that you will get the money to use as part of your deposit with the bank.

Fyi....some economist on newstalk said that to qualify for the maximum i.e. 20k your salary (combined??) must of been over 60k for the last 4 years. Just something to get clarification on if your looking at this scheme. It oinda gets more farcical by the minute!

asteroids over berlin wrote: »

Fyi....some economist on newstalk said that to qualify for the maximum i.e. 20k your salary (combined??) must of been over 60k for the last 4 years. Just something to get clarification on if your looking at this scheme. It oinda gets more farcical by the minute!

Sounds fair enough really. They can hardly dish out 20k tax rebates to people who pay hardly any tax.

Do you guys think the benefits of the scheme will be shadowed by a rise in demand for new builds thus knocking up the prices?

awec wrote: »

Sounds fair enough really. They can hardly dish out 20k tax rebates to people who pay hardly any tax.

True.

I find the scheme lop sided, suits people buying outside Dublin, well hard to find a new build for less than 400k in Dublin in a decent area. Then again, apartments are affordable i guess and yes i now know it's aimed at the developers etc

Collyb101 wrote: »

Do you guys think the benefits of the scheme will be shadowed by a rise in demand for new builds thus knocking up the prices?

I think this is the idea - developers make more money and thus have the incentive to build more

mjp

Arbie wrote:

Self-builds are covered under the scheme. At least 80% of cost must be financed by mortgage. I don't know about the other questions.

For self builds its not 80% of cost but 80% of value of house which is a lit different. I'm looking at building next year with coatings coming in at 260k and mortgage of 220k. Estimated value of house when completed is 340k giving me a loan to value ratio of 64% so currently nowhere near the 80% ratio. Talking to mortgage broker this evening and he says the 80% of value if true is crazy as none of his self build applications in the past few years have come anywhere near the 80% mark.

Should hopefully get more clarity on this from minister Coveney over the coming days.

asteroids over berlin wrote: »

True.

I find the scheme lop sided, suits people buying outside Dublin, well hard to find a new build for less than 400k in Dublin in a decent area. Then again, apartments are affordable i guess and yes i now know it's aimed at the developers etc

I'm trying to work out where the benefit actually lyes. Say the price of a house I want to buy rises by 10k due to increased demand now. I would have to take that into consideration and get a larger mortgage (especially as there is the 80 LTV rate). Now let's say I'm provided 10k back in rebate. The extra 8k (80% of 10k ) I had to borrow is probably going to cost me much more in interest long term than the 10k rebate benefitted me.

[Deleted User]

Absolute bull that it's limited to 80% mortgages. Why should those with higher deposits not be able to benefit.

Wonder are thy actually going to means test it or could you get an 80% variable mortgage, avail of the scheme and then throw a big lump of money in to pay off a chunk of the mortgage.

It should also apply to all houses not just new builds but that's not even worth discussing.

Buy now, when you get the rebate throw that straight in as lump payoff... I like your thinking!

Collyb101 wrote: »

Buy now, when you get the rebate throw that straight in as lump payoff... I like your thinking!

Yeah get in very quick (possible now though?)or hold off 4 years or so, possibly prices will level out, i suspect this is the idea from the government!