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

PedroDublin · 11-10-2016 5:03pm #1

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

Atlantic Dawn · 11-10-2016 5:07pm

If you signed after July 19th you qualify, house has to be newly built...

The Scheme will apply to the purchase of newly built primary residences by first-time buyers from 19 July this year until the end of 2019.

http://www.rte.ie/news/budget-2017/2016/1011/823164-help-to-buy-scheme-launched-for-first-time-buyers/

KathleenF · 11-10-2016 5:10pm

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

testicles · 11-10-2016 5:13pm

This post has been deleted.

ohlordy · 11-10-2016 5:19pm

testicles wrote: »

This post has been deleted.

It's a min 80% LTV

Cathmandooo · 11-10-2016 5:19pm

testicles wrote: »

This post has been deleted.

It's at least 80% LTV mortgage, if you had enough savings to buy a house with a deposit of over 20% then in their eyes you don't need a hand.

Arbie · 11-10-2016 5:21pm

PedroDublin wrote: »

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

From the budget examples:

"Example 7
Tom and Mary signed a contract to purchase a newly built home off the plans in May 2016. Neither
of them have purchased a property before. They paid the deposit on the house at the time of
contract signing but the developer is still constructing the estate and they have not moved into
their new home. As they signed the contract to purchase their property prior to 19 July 2016, they
will not qualify for the Help to Buy incentive."

Looks like it is the date that the buyers sign the contract.

sevg · 11-10-2016 6:51pm

I assume this scheme will also work if you plan to build your own house and not just buy one in a development. Also is it 20%deposit needed if accepting the rebate regardless of the cost of the house? As with the CB rules its 10% deposit up to about €220,000.

RandomAccess · 11-10-2016 7:02pm

Arbie wrote: »

From the budget examples:

"Example 7
Tom and Mary signed a contract to purchase a newly built home off the plans in May 2016. Neither
of them have purchased a property before. They paid the deposit on the house at the time of
contract signing but the developer is still constructing the estate and they have not moved into
their new home. As they signed the contract to purchase their property prior to 19 July 2016, they
will not qualify for the Help to Buy incentive."

Looks like it is the date that the buyers sign the contract.

Hey,
Where did you get that example? link?

Arbie · 11-10-2016 7:19pm

sevg wrote: »

I assume this scheme will also work if you plan to build your own house and not just buy one in a development. Also is it 20%deposit needed if accepting the rebate regardless of the cost of the house? As with the CB rules its 10% deposit up to about €220,000.

Self-builds are covered under the scheme. At least 80% of cost must be financed by mortgage Edit: At least 80% loan to value.

I don't know about the other questions.

RandomAccess wrote: »

Hey,
Where did you get that example? link?

From the Department of Finance website: http://www.budget.gov.ie/Budgets/2017/Documents/Taxation%20Annexes%20to%20the%20Summary%20of%20Budget%202017%20Measures.pdf

cronos · 11-10-2016 7:37pm

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 · 11-10-2016 7:48pm

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

cronos · 11-10-2016 7:51pm

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 · 11-10-2016 7:53pm

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.

cronos · 11-10-2016 7:55pm

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.

Collyb101 · 11-10-2016 8:01pm

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 · 11-10-2016 8:02pm

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?

awec · 11-10-2016 8:04pm

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.

cronos · 11-10-2016 8:06pm

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?

awec · 11-10-2016 8:07pm

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.

asteroids over berlin · 11-10-2016 8:08pm

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!

awec · 11-10-2016 8:09pm

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.

Collyb101 · 11-10-2016 8:09pm

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?

asteroids over berlin · 11-10-2016 8:12pm

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

asteroids over berlin · 11-10-2016 8:14pm

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 · 11-10-2016 8:14pm

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.

Collyb101 · 11-10-2016 8:18pm

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.

11-10-2016 8:21pm

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.

Collyb101 · 11-10-2016 8:23pm

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

asteroids over berlin · 11-10-2016 8:28pm

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!

awec · 11-10-2016 8:29pm

Nicole Hissing Thunderstorm wrote: »

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.

They are hardly going to means test it, the government has no idea what's in your bank account, but if you reduce the amount of your deposit you are willing to spend then you are also probably reducing the amount you can borrow (unless you're getting a very small mortgage).

Collyb101 · 11-10-2016 8:31pm

asteroids over berlin wrote: »

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!

Either way, you need the scheme or you've just been short changed. I worked for Central Bank Of Ireland around the time the new rules came into play. That's a load of ****e and so is this. Only good thing about it is that people who have not paid tax are screwed. Should have got out of their beds.

Stheno · 11-10-2016 9:24pm

Collyb101 wrote: »

Either way, you need the scheme or you've just been short changed. I worked for Central Bank Of Ireland around the time the new rules came into play. That's a load of ****e and so is this. Only good thing about it is that people who have not paid tax are screwed. Should have got out of their beds.

The scheme sounds good, but it's going to have limited application.

If you buy a house for 200k, you'll get a rebate of 10k against your previous four years income tax towards your deposit, which means you'll have to have paid 10k in PAYE to get it.

So for a single person on normal PAYE they would have to be earning a minimum of 37.5k to pay 5 k tax per year to get the 20% but on that salary they won't qualify for the 180k mortgage.

For a couple, they would have to have joint earnings as a married couple of probably close to 90k to have paid that level of tax to take advantage.

The people who will benefit from this the most will be those who are earning quite high salaries

It's going to do nothing for the worker earning the average wage of 36k

ted1 · 11-10-2016 9:29pm

awec wrote: »

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

There's a shed load of taxes on new builds, this gives them the money for the rebate and why it is only on new builds.

ted1 · 11-10-2016 9:32pm

Stheno wrote: »

The scheme sounds good, but it's going to have limited application.

If you buy a house for 200k, you'll get a rebate of 10k against your previous four years income tax towards your deposit, which means you'll have to have paid 10k in PAYE to get it.

So for a single person on normal PAYE they would have to be earning a minimum of 37.5k to pay 5 k tax per year to get the 20% but on that salary they won't qualify for the 180k mortgage.

For a couple, they would have to have joint earnings as a married couple of probably close to 90k to have paid that level of tax to take advantage.

The people who will benefit from this the most will be those who are earning quite high salaries

It's going to do nothing for the worker earning the average wage of 36k

36k*3.5 =126, no one 36k will get a new build. You can't build a house for that

Stheno · 11-10-2016 9:34pm

ted1 wrote: »

36k*3.5 =126, no one 36k will get a new build. You can't build a house for that

Think you misread me, that's what I said

probably put it badly

awec · 11-10-2016 9:37pm

I don't think it's designed to make new builds suddenly affordable for single applicants.

It seems to be geared toward helping those who could afford the mortgages but are struggling to get the deposit together due to the current rental prices, to effectively try and unblock the system. As well as the obvious financial benefits for builders to get them to actually build houses.

awec · 11-10-2016 9:42pm

Potentially dumb question: is this limited to one payout per mortgage application?

Can I claim back 20k from my income tax and my missus claim back 20k from hers and put that all together on one application?

thatslife · 11-10-2016 9:43pm

For self builds, the LTV needs to be 80% and you need to have made 1st drawdown after July 19 to be eligible - i get.
The query I have is, this 80% LTV, is this decided by the mortgage given to you by the Lender originally or by the final drawdown valuation? LTV could be different at end of build.

Stheno · 11-10-2016 9:45pm

awec wrote: »

Potentially dumb question: is this limited to one payout per mortgage application?

Can I claim back 20k from my income tax and my missus claim back 20k from hers and put that all together on one application?

As a recipient of the predessor of this (first time buyers grant) it was limited to 3k for each application, so you got just the 3k or in this case 20k rebate split between you

awec · 11-10-2016 9:49pm

Stheno wrote: »

As a recipient of the predessor of this (first time buyers grant) it was limited to 3k for each application, so you got just the 3k or in this case 20k rebate split between you

Make sense!

Stheno · 11-10-2016 9:50pm

awec wrote: »

Make sense!

Does, it was actually quite fair when I bought with my then OH back in 99 as it was just the one house we were buying.

And in the case of this rebate it makes it more achieveable! Especially if one partner earns more than the other, given how our taxation system is so progressive.

louise1985 · 11-10-2016 9:55pm

thatslife wrote: »

For self builds, the LTV needs to be 80% and you need to have made 1st drawdown after July 19 to be eligible - i get.
The query I have is, this 80% LTV, is this decided by the mortgage given to you by the Lender originally or by the final drawdown valuation? LTV could be different at end of build.

Bit of a technical question but does anyone know what they mean by first drawdown after 19 July 2016. Our first drawdown hit the bank on 26th July 2016 however this application was sent to bank from solicitor on 12th July 2016!!
Wondering if I have money to spend or not ðŸ™ðŸ™ðŸ™ðŸ˜႒ðŸ˜႒ðŸ˜႒

Stheno · 11-10-2016 9:57pm

louise1985 wrote: »

Bit of a technical question but does anyone know what they mean by first drawdown after 19 July 2016. Our first drawdown hit the bank on 26th July 2016 however this application was sent to bank from solicitor on 12th July 2016!!
Wondering if I have money to spend or not ðŸ™ðŸ™ðŸ™ðŸ˜႒ðŸ˜႒ðŸ˜႒

The Finance Bill next Thursday will clarify it more.

Konata · 11-10-2016 9:58pm

Stheno wrote: »

For a couple, they would have to have joint earnings as a married couple of probably close to 90k to have paid that level of tax to take advantage.

Is it specified somewhere that you have to be married to be eligible?

Stheno · 11-10-2016 10:00pm

Konata wrote: »

Is it specified somewhere that you have to be married to be eligible?

No, but Revenue treat taxation of married couples differently from couples who are not married, and it changes the limits.

Couples who are not married pay more tax if one partner earns more than another and hits the 40% threshold much lower than if married.

The difference can be up to 300 per month in the amount of tax paid.

68 lost souls · 11-10-2016 10:05pm

Stheno wrote: »

No, but Revenue treat taxation of married couples differently from couples who are not married, and it changes the limits.

Couples who are not married pay more tax if one partner earns more than another and hits the 40% threshold much lower than if married.

The difference can be up to 300 per month in the amount of tax paid.

This stands to knock the point on the head earlier of earners of 36k not benefiting and that you need to be earning in excess of 90k as a couple.

An unmarried couple or indeed a newly married couple who have earned tax superstition for 4 years only have to have earned less than 30,000 each to hit 20k paye over 4 years.

Glen_Quagmire · 11-10-2016 10:05pm

Stheno wrote:

The difference can be up to 300 per month in the amount of tax paid.

Wow, didn't realise it was that much. Who wants to get married? Giggidy

Konata · 11-10-2016 10:07pm

Stheno wrote: »

No, but Revenue treat taxation of married couples differently from couples who are not married, and it changes the limits.

Couples who are not married pay more tax if one partner earns more than another and hits the 40% threshold much lower than if married.

The difference can be up to 300 per month in the amount of tax paid.

Thanks, obvious now that you've explained it! So a married couple will get less of a rebate than an unmarried couple earning the same income? I guess it all evens out since they would've been paying less tax in the first place (and thus had more net income).

Eric Cartman · 11-10-2016 10:10pm

In the same vein of people spending 50k on a car to save 200 a year in tax , I predict that people are now going to go as far as they can to the 400k amount to reap the most from this offer.

Stheno · 11-10-2016 10:10pm

68 lost souls wrote: »

This stands to knock the point on the head earlier of earners of 36k not benefiting and that you need to be earning in excess of 90k as a couple.

An unmarried couple or indeed a newly married couple who have earned tax superstition for 4 years only have to have earned less than 30,000 each to hit 20k paye over 4 years.

An individual who is married to someone else earning 36k who is also earning the same, will end up paying 4.5k in PAYE every year, which means that they will have paid 18k in the previous four years, so thats the limit they can claim back

http://download.pwc.com/ie/budget-2016/result.html?status=3&grosssalary=36000&spousesalary=0&salary2=0&age=&salary3=0&prsicategory=1&pensions=&investments=&otherincome=&companycarvalue=&mileage=0&healthbik=&healthadult=0&healthchild=0&clubsbik=&otherbik=&prefloanmortgage=N&mortgagerelief=N&firsttimebuyer=N&loaninterestpaid=&loaninterestrate=&propertyband=0&localauth=0&Submit=Calculate+My+Tax

That's a couple who are married and earning 72k

You need to hit 90k for a married couple to qualify for 20k over four years.

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

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