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

PedroDublin

Hello everyone, what do you think the purchase date mean on the new help to buy scheme? Contracts signed by buyers, contracts received, mortgage withdrawal, closing date..... I have seen different things on different news

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Glen_Quagmire

For me and I'm sure a lot of others like me who are looking to get onto the property ladder in Dublin as a single mortgage applicant, this scheme isn't much use as the price of new builds in Dublin are out of the price range of a single applicant unless you're earning over 100k a year.

Michael D Not Higgins

Glen_Quagmire wrote: »

For me and I'm sure a lot of others like me who are looking to get onto the property ladder in Dublin as a single mortgage applicant, this scheme isn't much use as the price of new builds in Dublin are out of the price range of a single applicant unless you're earning over 100k a year.

Sorry Glen, but the government aren't targeting you. The cheapest new home on daft for Dublin is 195k which, with a 20% deposit, would need a single salary of 44.5k to qualify (and that's in Finglas just north of Ballymun).

The median household income in Ireland is 50k (figures a few years old, has probably gone up by now), in Dublin you could easily expect the average FTB couple looking to buy a house is closer to 70k+. With a 20% deposit they can afford a house just over 300k. This is the demographic the government are targeting.

Even with that, of the 186 new home listings for Dublin on Daft, only about 30 of them are in this imaginary couple's budget and some of those are already listed as sold out.

There are two things the government are targeting, the supply and the onerous deposit requirements. People are complaining since they say they can qualify for a mortgage on LTI but not on LTV, so the scheme gives them a leg up to satisfy the central bank rules. The supply is also an issue so the government are limiting it to new builds in an effort to stimulate construction.

In my opinion it's an okay short term fix but it doesn't solve the underlying issue of builders not building due to costs of construction. Likely this is a more difficult and medium term thing to address and they needed a short term process to help out. The real acid test will be what they do to address the supply in the medium to long term.

Glen_Quagmire

I understand what you're saying. I just think the whole thing is very frustrating, I understand mortgages were never easy to obtain going back through the years but for a person like myself and many others in my situation it's actually becoming impossible unless you are lucky enough to have a heap or savings built up (which is very difficult with high rents and cost of living) or help from family.

How the generations coming behind me are gonna be able to get mortgages for houses in Dublin in 5 or 10 years time is beyond me.

pilly

KathleenF wrote: »

Has anyone more detail on the pro rata rates for lower priced homes?

It's 5% of the house price.

pilly

What a lot of people are missing out on this is the fact that it's a tax rebate so you have to have paid 20k tax to get that amount back. Now a lot of people on average wages will not have paid 20k tax over the last 4 years. And before anyone jumps down my throat I'm not including USC because the government doesn't classify that as PAYE which is essentially is.

Michael D Not Higgins

pilly wrote: »

What a lot of people are missing out on this is the fact that it's a tax rebate so you have to have paid 20k tax to get that amount back. Now a lot of people on average wages will not have paid 20k tax over the last 4 years. And before anyone jumps down my throat I'm not including USC because the government doesn't classify that as PAYE which is essentially is.

You would need to have a salary of over 90k to qualify for the mortgage to get the 20k rebate. If you've been fully employed for the last 4 years around your current wage, you will most likely qualify for the max rebate on the max house price you will qualify for.

awec

Michael D Not Higgins wrote: »

You would need to have a salary of over 90k to qualify for the mortgage to get the 20k rebate. If you've been fully employed for the last 4 years around your current wage, you will most likely qualify for the max rebate on the max house price you will qualify for.

Also, I would guess that most mortgage applications are joint applications.

I reckon in the majority of cases they will qualify for the max 5% between the two people, probably with quite a bit to spare.

exaisle

This scheme is such a load of crap you'd need to be blind to not see the steam rising from it.

All it will do is put the cost of new builds up.

There are two ways of reducing property prices....increase supply or decrease demand. End of. The government (and presumably the geniuses in the department of finance) who thought this stupid scheme up should not meddle with supply and demand in a fairly open economy like ours. The market will find its own level and there are no short-term solutions. I'll just say that again...there are no short-term solutions. Solving the housing crisis is something that will have to be done over a generation by the provision of good quality local authority housing with long term tenants being given the option to buy after a certain period eg. 10 years. Sorry folks. In the meantime, many families will end up renting which is pretty much the norm in many areas of Europe.

The government should concentrate on providing good quality local authority housing like they used to before the boom/bust/boom.... That in turn will increase supply and allow prices to stabilise.

pilly

awec wrote: »

Also, I would guess that most mortgage applications are joint applications.

I reckon in the majority of cases they will qualify for the max 5% between the two people, probably with quite a bit to spare.

I was referring to a single person, sometimes they buy property too.

Michael D Not Higgins

pilly wrote: »

I was referring to a single person, sometimes they buy property too.

But you can only qualify for a rebate on what you can afford to get a mortgage for. A single person who qualifies for a mortgage for a 400k house has most likely paid more than 20k tax in the last year alone.

StupidLikeAFox

exaisle wrote: »

The market will find its own level and there are no short-term solutions. I'll just say that again...there are no short-term solutions. Solving the housing crisis is something that will have to be done over a generation by the provision of good quality local authority housing with long term tenants being given the option to buy after a certain period eg. 10 years. Sorry folks. In the meantime, many families will end up renting which is pretty much the norm in many areas of Europe.

What we have heard time and time again is that people are:
1 - Working hard and paying tax
2 - Paying huge rents, so have repayment capacity
3 - Can't afford to save a deposit

This gives those people an opportunity to reclaim the tax they have paid and use it as a deposit to get a mortgage they can afford.

I think the problem is looking at this from the perspective of people who have bought since July, or are ready to buy in the near future. This is aimed at people who are way off being ready to buy - it will help speed up their process by eliminating the problem of being unable to save a deposit.

MrMorooka

Glen_Quagmire wrote: »

For me and I'm sure a lot of others like me who are looking to get onto the property ladder in Dublin as a single mortgage applicant, this scheme isn't much use as the price of new builds in Dublin are out of the price range of a single applicant unless you're earning over 100k a year.

pilly wrote: »

I was referring to a single person, sometimes they buy property too.

I've pretty much accepted that as a single applicant the only way I am going to own the kind of property I would ideally want in Dublin is to keep saving until I have a 6 figure 'deposit', so that's my plan. Brave renting for the next 5~ years or as long as I can, while saving everything else. Not that that's bad, through renting I can live where I want. The only other way would be to have a joint application with someone who makes at least as much as I do(48k), but you have to be realistic- given my social life and personal circumstances, there is currently no reason to believe that I will ever be able to make a joint application.

This measure does nothing really for me, but I'm not the target market. My problem is not the deposit at all, I already have a large deposit saved up and I put €1000 into my saving account almost every month, it's LTI(edit : not LTV, whoops) that would stop me from buying where I want to without a partner.

Cian53

Anyone know if one off builds by private builders are included in this and not jus developers housing...also wat qualifies as new build.iv jus bought a house tat was built in 2010 but we are the first occupiers.will I be eligible for rebate

Glen_Quagmire

The LTI rule is a pain for some people who can certainly manage a bigger mortgage but it's there to protect the majority of people from getting themselves in over their head.

What do the banks look at when giving out exceptions to the LTI rule of 3.5 times salary?

68 lost souls

Glen_Quagmire wrote: »

The LTI rule is a pain for some people who can certainly manage a bigger mortgage but it's there to protect the majority of people from getting themselves in over their head.

What do the banks look at when giving out exceptions to the LTI rule of 3.5 times salary?

Im pretty sure length of service and the field of employment are considered amongst other things such as number of children, other outgoings, how much you save a month.

A job like a primary teacher with job security for life and a fixed pay scale that will have known increments. is more likely to get an exception than a salesman who can lose their job based on performance.

ThisRegard

Fianna Fail have now come out and said they're opposed to the scheme, so it'll be interesting to see what happens when the debate starts on the finance bill.

The Budget scheme for first-time buyers is now in doubt after Fianna Fáil says it is opposed to the plans.

And the party says it will table amendments to the scheme when it comes before the Dáil later this year.

Housing spokesman Barry Cowen says the high cap for the scheme makes it nothing more than a "mansion grant".

And he has cast questions about how the scheme will work - or whether it will come to fruition at all - by saying Fianna Fáil will use its Dáil power to overhaul it:

http://www.todayfm.com/FF-will-table-changes-to-firsttime-buyers-scheme

68 lost souls

ThisRegard wrote: »

Fianna Fail have now come out and said they're opposed to the scheme, so it'll be interesting to see what happens when the debate starts on the finance bill.

When is the debate and vote on the finance bill?

Last I heard there was speculation that FF may try and get the scheme capped at 400,000

ThisRegard

Yeah, seems likely they'll push for a cap, and like has been asked here, there's questions as to how it can be implemented.

I thought the debate might have been next week but that article indicates 'later this year'.

68 lost souls

thebeerbaron wrote: »

They should rename it help push up prices scheme:
http://www.thejournal.ie/budget-housing-3024449-Oct2016/
not 1 thing in the budget to increase supply. Total joke, these politicians haven't a clue

Ugghhh terrible reporting. As mentioned in other threads. House prices increase between phases all the time!!!! Its nothing to do with the budget.

dzwx

Michael D Not Higgins wrote: »

Yes the money has to go on the deposit and it has to be less than 20% deposit including the rebate. If you're buying this year before the scheme is launched you can buy up to 20% with your own money and get the 5% back when it launches.

If you buy next year, you can have a max deposit of 15% with the max rebate of 5%.

So lets say I managed to get deposit bigger then needed to buy a house that I'm looking for, do I have to use ALL my savings as a deposit?or can I use just enough to hit 80% LTV and use rest for something different and still take advantage of new scheme?

68 lost souls

dzwx wrote: »

So lets say I managed to get deposit bigger then needed to buy a house that I'm looking for, do I have to use ALL my savings as a deposit?or can I use just enough to hit 80% LTV and use rest for something different and still take advantage of new scheme?

Provided the bank allows you borrow that much and also then you will pay a higher interest rate and won't be able to take advantage of the banks cash back offers for less than 80% ltv

Cian53

We closed the sale of our house on July 30th..Does anyone know if we wil b eligible for the rebate or will the fact that we paid the booking deposit in June mean we have missed out

q85dw7osi4lebg

Cian53 wrote: »

We closed the sale of our house on July 30th..Does anyone know if we wil b eligible for the rebate or will the fact that we paid the booking deposit in June mean we have missed out

Only if you put pen to paper and signed the contract after 19th July will you get the rebate (I think).

Grassey

68 lost souls wrote:

Provided the bank allows you borrow that much and also then you will pay a higher interest rate and won't be able to take advantage of the banks cash back offers for less than 80% ltv

Actually the bank rate is <=80% for lower rate. The government rebate is for 'at least 80%' loan. We had signed loan for bang on 80% before rebate details were announced. So reckon we'll be OK on both counts being at 80%. Failing that I'll borrow another 1k to bump up the %, avail of the 20k back and swith mortgage after the rebate limit to get back onto lower rate. Accounting for increased rate and switch fees should still come out with net benefit.

If we'd a larger deposit I'd just take 80% now, get benefit of it all and then lump the cash in after drawdown.

syndrome777

68 lost souls wrote: »

Im pretty sure length of service and the field of employment are considered amongst other things such as number of children, other outgoings, how much you save a month.

A job like a primary teacher with job security for life and a fixed pay scale that will have known increments. is more likely to get an exception than a salesman who can lose their job based on performance.

the most important thing is net disposable income after stressed mortgage rep (most of the time stressed interest is 6%)
normal NDI is 2050 for a couple + 250 for each dependable child.
Higher NDI is prob applied for exception to bi given.

Also what percentage of salary goes toward of your mortgage.
There are bands, but let say someone earning 50K is up to 44%,
but 2 ppl earning 50K, that percentage is only taken from higher earner, say someone on €39K, and is lower say 40%

so if your salary is 3000 you can't pay more then 1400 for a mort, and that 1400 being stressed on 6% if that makes sense

OfflerCrocGod

Bob24 wrote: »

No crazy insight and many posters here understand this already, but at least McWilliams calls it for what it is (almost ironic to see the Irish Independent is now the paper publishing this kind of stuff): http://www.davidmcwilliams.ie/2016/10/13/all-the-good-work-to-halt-second-property-crash-undone-in-a-day

I must be misunderstanding his analysis:

...
This will simply allow people to borrow more.

So, for example, take a house costing €400,000. Before the Budget, the buyer had to save a deposit of €58,000. Now, because there will be a 5pc tax rebate on the price of the house, which is 5pc of €400,000, or €20,000, the buyer has to save only €38,000.
...

Ermm...their mortgage is exactly the same in both instances the remainder is being made up by the tax rebate. What am I missing? I presume he meant to say that people would be able to deploy this money they are saving to increase their purchase price? But if they already had that money then they'd have bought before the announcement, it doesn't add up. Once you have enough to bid then you make your move, you don't wait around twiddling your thumbs hoping the government gives you a dig out. Not with rents the way they are, 5-6 months of rent would suck up a large chunk of the rebate.

Cuddlesworth

OfflerCrocGod wrote: »

I must be misunderstanding his analysis:
Ermm...their mortgage is exactly the same in both instances the remainder is being made up by the tax rebate. What am I missing? I presume he meant to say that people would be able to deploy this money they are saving to increase their purchase price? But if they already had that money then they'd have bought before the announcement, it doesn't add up. Once you have enough to bid then you make your move, you don't wait around twiddling your thumbs hoping the government gives you a dig out. Not with rents the way they are, 5-6 months of rent would suck up a large chunk of the rebate.

Larger amount of people bidding for the 400k house now. So prices go up, since their is no supply and FTB's have 20k in their pockets now.

hawkeye_bmr

We signed on 19th, so just scraping thru, house is down on ppr as new build, but the 4yrs previous PAYE is gonna be the next hurdle I can see..

Having returned home from Oz may 2015 after 3yrs away, we both have only 1 full year of PAYE, around 3k, so I'm assuming that that's all we'd get even tho 5% would be 7k~

Wondering what happens in this situation?

Alter_Ego

Cuddlesworth wrote: »

Larger amount of people bidding for the 400k house now. So prices go up, since their is no supply and FTB's have 20k in their pockets now.

You need almost 60k deposit and income of circa 100k to buy 400k house under old rules.

You need 40k deposit, 20k grant and income of circa 100k to buy 400k house under new rules.

The goal of the scheme is to help with the deposit requirement. Plus, there is too little new houses being built for the scheme to have any significant impact on the overall market.

The scheme also doesn't change the simple fact that majority of the population earns less that 100k per annum and will never be able to afford a 400k house to start with.

68 lost souls

Cuddlesworth wrote: »

Larger amount of people bidding for the 400k house now. So prices go up, since their is no supply and FTB's have 20k in their pockets now.

It's only on new builds and generally you don't bid on new builds it's first come first serve