Government Funds Local Authority Housing Scheme

23-01-2018 1:56pm

I don't understand why a system can't be put in place based around rent payments.

For example, a couple who can prove they've been renting for 5 years or more can pay less of a deposit, say 5 percent.

That would help the people genuinely stuck renting.

Makes no sense that a person with the option can just move home and save what other people pay towards rent and are considered good candidates while renters have no hope.

hots · 23-01-2018 2:07pm

The problem isn't giving people more ability to buy, it needs to be giving them more houses to buy once they are able.

Lumen · 23-01-2018 3:19pm

Deleted User wrote: »

I don't understand why a system can't be put in place based around rent payments.

For example, a couple who can prove they've been renting for 5 years or more can pay less of a deposit, say 5 percent.

That would help the people genuinely stuck renting.

Makes no sense that a person with the option can just move home and save what other people pay towards rent and are considered good candidates while renters have no hope.

It's nothing to do with proving your ability to pay. It's about providing an equity cushion so that the bank can repo the property without making a loss (or more likely, that you continue paying when under stress because you don't want to lose your equity).

In practice, repo in this country is almost impossible, but that's the logic.

ted1 · 23-01-2018 3:29pm

Averagevegan wrote: »

Losty Dublin wrote: »

I can see some potential pro's out of this.
It may force the main lenders to reduce their rates and some of their fringe costs. It may coax some vacant properties onto the open market as well as some of the private small time rental homes.

It will make things easier for some people to escape from a long term rental trap.

It will discourage sub prime lenders from entering the market.

However I can't see it being decisive enough to make a difference bar the last, which is something that the Central Bank can control to some extent everything. Also, given the chronic lack of housing in most sectors of the market none of these were badly needed acting upon and it will only serve to hurt the market in the mid term.

The government is going to be a subprime lender.
When the defaults occur, it will be swept under the carpet as always.
just give away the money and save on the admin.

What makes you think that? The borrowers may have perfect credit scores, but fail stress tests For a mortgage with 5%+ rates. At 2.25% they are perfectly safe.

ted1 · 23-01-2018 3:31pm

Deleted User wrote: »

I don't understand why a system can't be put in place based around rent payments.

For example, a couple who can prove they've been renting for 5 years or more can pay less of a deposit, say 5 percent.

That would help the people genuinely stuck renting.

Makes no sense that a person with the option can just move home and save what other people pay towards rent and are considered good candidates while renters have no hope.

Because the banks are still exposed to propert drops , 10 and 20% deposits means that the property can drop in price by 10-20% and the bank can still recoup their money.

ted1 · 23-01-2018 3:33pm

Pepe LeFrits wrote: »

Does anyone know how the councils are going to manage this? Have they the infrastructure there already? Are they white-labelling with a bank? Credit unions?

I mean, it’s not like logging into their online banking and just flinging a load of cash at someone. There’s a lot of overhead and ongoing maintenance – front line staff, admin staff, finance staff, underwriters, solicitors, IT costs yada yada. Running a bank ain't cheap.

Big councils like Dublin City have these departments and staff, they use them to look after their shared ownership / affordable housing / hap/ etc

Househunter16 · 23-01-2018 3:37pm

If a person was to get one of these mortgages, we will say 200k,and after 10 years wanted to pay it back would there be a big penalty for doing so.

zell12 · 23-01-2018 3:52pm

Househunter16 wrote: »

If a person was to get one of these mortgages, we will say 200k,and after 10 years wanted to pay it back would there be a big penalty for doing so.

Why would you @ 2% pa?

Househunter16 · 23-01-2018 4:55pm

zell12 wrote: »

Why would you @ 2% pa?

If you wanted to sell the house, or just to have it paid back.

dory · 23-01-2018 5:27pm

Househunter16 wrote: »

If you wanted to sell the house, or just to have it paid back.

Yea I'd also like to know about selling it on later. I'll have to read the small print.

Idbatterim · 23-01-2018 6:08pm

GLaDOS wrote: »

Myself and my girlfriend are a little above the joint threshold.

Sometimes I wonder why we bother working.

maybe explain it to employer, they can give you E500 all for one voucher, worth E1000 at the marginal rate , there would be E2000 between you, in a salary "reduction" ...

zell12 · 23-01-2018 6:15pm

It's in the booklet
1. fixed:
- during the fixed rate period, you may be liable for a breakage fee if you switch to a variable rate or pay off all or part of your mortgage.
2. variable:
- the flexibility to make lump sum repayments, increase your repayments or make early repayments

23-01-2018 7:26pm

Somebody (not me) has made a very very funny video about the governments latest scheme :pac:

https://www.captiongenerator.com/870682/Government-response-to-the-housing-crisis

All credits to user "A random walk" over on the pin.

bot44 · 23-01-2018 7:59pm

"We've people earning 30k outbidding people earning 70k"

23-01-2018 8:06pm

Ah I'm p1ssing myself

That video makes it all worthwhile

quadrifoglio verde · 23-01-2018 8:20pm

Hmm, if I were to temporarily reduce my working hours, I'd qualify for the same mortgage as I currently do, with a low interest rate guaranteed for the life of my mortgage.
My salary for last year has me under the limits as I only qualified in June. This year as it stands I'd be 10k over it, but net difference is only around5k....might talk to my boss.

Just popped my reduced salary into a mortgage calculator on rebuilding Ireland. I can borrow 60k more than what I currently can get and have a lower mortgage repayment.
Where I'm looking to buy, I could rent out the two other bedrooms through rent a room for near enough the mortgage and live pretty much mortgage free for the next few years.

Lolle06 · 23-01-2018 10:02pm

quadrifoglio verde wrote: »

Hmm, if I were to temporarily reduce my working hours, I'd qualify for the same mortgage as I currently do, with a low interest rate guaranteed for the life of my mortgage.
My salary for last year has me under the limits as I only qualified in June. This year as it stands I'd be 10k over it, but net difference is only around5k....might talk to my boss.

Just popped my reduced salary into a mortgage calculator on rebuilding Ireland. I can borrow 60k more than what I currently can get and have a lower mortgage repayment.
Where I'm looking to buy, I could rent out the two other bedrooms through rent a room for near enough the mortgage and live pretty much mortgage free for the next few years.

Yes, you could do this. But then again: This scheme is probably for ppl who do not reduce their higher salary on purpose, but who usually earn a lower salary up to the point of application?! Meaning you‘d have to reduce your salary for 12 months pre-application for this mortgage? And you still don’t know if you WILL be approved for this, so it is actually a rather big gamble - losing out on the extra salary for nothing? Same applies for ppl who suddenly have a thing for gambling or get a new car-loan, I would think.

GingerLily · 23-01-2018 10:07pm

Lolle06 wrote: »

Yes, you could do this. But then again: This scheme is probably for ppl who do not reduce their higher salary on purpose, but who usually earn a lower salary up to the point of application?! Meaning you‘d have to reduce your salary for 12 months pre-application for this mortgage? And you still don’t know if you WILL be approved for this, so it is actually a rather big gamble - losing out on the extra salary for nothing? Same applies for ppl who suddenly have a thing for gambling or get a new car-loan, I would think.

Its a bit worrying alright that some people think this way!

Lolle06 · 23-01-2018 10:10pm

GingerLily wrote: »

Its a bit worrying alright that some people think this way!

It is worrying, isn’t it? But here we are...

quadrifoglio verde · 23-01-2018 10:22pm

Lolle06 wrote: »

Yes, you could do this. But then again: This scheme is probably for ppl who do not reduce their higher salary on purpose, but who usually earn a lower salary up to the point of application?! Meaning you‘d have to reduce your salary for 12 months pre-application for this mortgage? And you still don’t know if you WILL be approved for this, so it is actually a rather big gamble - losing out on the extra salary for nothing? Same applies for ppl who suddenly have a thing for gambling or get a new car-loan, I would think.

Instead of working 47 hours a week that I'm currently working to try and get a mortgage as a single earner, I'll just work 38. Much better quality of life, I can buy the house I'd like to buy and pay less interest.

My salary certificate for last year has me just under the magic threshold of 50K. I was on minimum wage until I qualified in June. So in that regards I'm safe.
I've been in continuous employment the past 2 years with the same employer.

As for the cut in salary, after tax, it works out at 5k less a year. However it would only be until the house was purchased, then the current salary would increase back to it's normal rate. The way the job market is at the moment in my field, if my salary wasn't reinstated, I'd easily get it elsewhere. Or I could go working as a contractor which pays significantly more, but which the banks won't lend against as I need three years audited accounts.

Is it abusing the ideas behind the scheme. Of course! However when you create a situation where a small reduction in net monthly take home pay leads to increased borrowing capacity and a lower interest rate, don't expect it to not be abused.

quadrifoglio verde · 23-01-2018 10:26pm

GingerLily wrote: »

Its a bit worrying alright that some people think this way!

What is worrying about it? I was prudent. I worked extra hours to increase my gross salary. I moved back home. I haven't gone on a trip around the world like my friends. I have saved 75% of my take home pay over the last 6 months. Why? Because I want a home.

And now I notice that if my salary was to reduce slightly, I can borrow more, buy the house I want and pay significantly less interest than I would through the bank.
And it's fixed for 30 years.
You can't get any more prudent than that.

bleary · 23-01-2018 10:27pm

The worrying thing is that some one in the department and the housing minister thought that this was a good policy to implement

GingerLily · 23-01-2018 10:35pm

quadrifoglio verde wrote: »

GingerLily wrote: »

Its a bit worrying alright that some people think this way!

What is worrying about it? I was prudent. I worked extra hours to increase my gross salary. I moved back home. I haven't gone on a trip around the world like my friends. I have saved 75% of my take home pay over the last 6 months. Why? Because I want a home.

And now I notice that if my salary was to reduce slightly, I can borrow more, buy the house I want and pay significantly less interest than I would through the bank.
And it's fixed for 30 years.
You can't get any more prudent than that.

You may not be given one of these mortgages - what your doing is gambling.

I think it's a bad idea, but it's your choice.

quadrifoglio verde · 23-01-2018 10:39pm

GingerLily wrote: »

You may not be given one of these mortgages - what your doing is gambling.

I think it's a bad idea, but it's your choice.

Im betting 5k that I buy a better house, at a lower repayment rate and save 80K plus over the course of the next 30 years....I like them odds

BattleCorp · 23-01-2018 10:49pm

quadrifoglio verde wrote: »

Im betting 5k that I buy a better house, at a lower repayment rate and save 80K plus over the course of the next 30 years....I like them odds

That house you want to buy has probably gone up €80k since this scheme was announced.

Cuddlesworth · 23-01-2018 11:35pm

LirW wrote: »

I can only urge people to caefully assess themselves what they can afford to repay even if things turn for the worse.

So they loose their job and stop paying the mortgage. Then what? Pretty sure a decade later we still have the worst mortgage arrears in the world. Court cases take years to happen and only the lowest hanging fruit has even seen the courts. You can live in a house and save thousands on rent with no repercussions.

Having worked with many councils in the past, I would really really doubt that most of them would even bother to take arrears to court.

Lolle06 · 23-01-2018 11:41pm

quadrifoglio verde wrote: »

Instead of working 47 hours a week that I'm currently working to try and get a mortgage as a single earner, I'll just work 38. Much better quality of life, I can buy the house I'd like to buy and pay less interest.

My salary certificate for last year has me just under the magic threshold of 50K. I was on minimum wage until I qualified in June. So in that regards I'm safe.
I've been in continuous employment the past 2 years with the same employer.

As for the cut in salary, after tax, it works out at 5k less a year. However it would only be until the house was purchased, then the current salary would increase back to it's normal rate. The way the job market is at the moment in my field, if my salary wasn't reinstated, I'd easily get it elsewhere. Or I could go working as a contractor which pays significantly more, but which the banks won't lend against as I need three years audited accounts.

Is it abusing the ideas behind the scheme. Of course! However when you create a situation where a small reduction in net monthly take home pay leads to increased borrowing capacity and a lower interest rate, don't expect it to not be abused.

By all means, apply for it! I really hope you will get the CoCo mortgage, as it would be very unfair to ppl not to get this mortgage if they only are slightly over the threshold. But at the same time, the line will have to be drawn somewhere?
I am just worried about prices rising even more altogether.
I still think the CoCo’s should encourage more new builds or renovations instead of throwing money at ppl to buy houses in a very overstretched market!

Lolle06 · 23-01-2018 11:55pm

quadrifoglio verde wrote: »

What is worrying about it? I was prudent. I worked extra hours to increase my gross salary. I moved back home. I haven't gone on a trip around the world like my friends. I have saved 75% of my take home pay over the last 6 months. Why? Because I want a home.

And now I notice that if my salary was to reduce slightly, I can borrow more, buy the house I want and pay significantly less interest than I would through the bank.
And it's fixed for 30 years.
You can't get any more prudent than that.

Can I just say, that the fact that you moved back home in order to save money would not count as much as paying rent AND saving money over the past few years, as a lot of applicants for this scheme will be long-time renters with family, who also live prudent and don’t go on holidays. Just think about it... what chances would you have vs. someone who has a family, is a long- term renter and could be in a position to find himself homeless at some stage in the future through no fault of his own? I think these will be the candidates this scheme is aimed at...?

hmmm · 23-01-2018 11:59pm

Lolle06 wrote: »

I think these will be the candidates this scheme is aimed at...?

Call me cynical, but I think this is aimed at those candidates who ask their TD to intervene on their behalf and get them one of the coveted golden mortgage tickets. It's clientelism - there's only 200 million available. Politicians want you asking them for help so they can "intervene" on your behalf in return for your vote.

Bargain_Hound · 24-01-2018 12:00am

My head literally hurts reading this thread.

lightspeed · 24-01-2018 12:00am

I dont know about the rest of you I think ill invest in some shares in paddy power.

Lolle06 · 24-01-2018 12:05am

hmmm wrote: »

Call me cynical, but I think this is aimed at those candidates who ask their TD to intervene on their behalf and get them one of the coveted golden mortgage tickets. It's clientelism. Politicians want you asking them for help so they can "intervene" on your behalf in return for your vote.

Wow. The TD‘s will have a lot intervention to do in this case... I hope they‘ll have the time to write all those letters!

lightspeed · 24-01-2018 12:14am

one of the eligibility rules is as follows:

"be in continuous employment for a minimum of two years, as a primary applicant or be in continuous employment for a minimum of one year, as a secondary applicant"

Would this mean that a single person could not have been unemployed even for a few months in past 2 years?

I was unemployed for about 3 months last year, then did a 6 month contract. unemployed for 2 weeks after that and then started my current job which ive been in over 7 months now.

Im guessing I have a good 18 months left to avail of this. I fear that by then house prices will have rose so much as a result of this scheme it will be scrapped by then.

scouserstation · 24-01-2018 12:27am

quadrifoglio verde wrote: »

Hmm, if I were to temporarily reduce my working hours, I'd qualify for the same mortgage as I currently do, with a low interest rate guaranteed for the life of my mortgage.
My salary for last year has me under the limits as I only qualified in June. This year as it stands I'd be 10k over it, but net difference is only around5k....might talk to my boss.

Just popped my reduced salary into a mortgage calculator on rebuilding Ireland. I can borrow 60k more than what I currently can get and have a lower mortgage repayment.

Why not tell your boss you are quitting your Job, go have a kid and you will be given a house for free, no point in doing things by half measure!

quadrifoglio verde · 24-01-2018 12:30am

scouserstation wrote: »

Why not tell your boss you are quitting your Job, go have a kid and you will be given a house for free, no point in doing things by half measure!

I'm male.....I'd have to stay around afterwards too.
I also quite enjoy my job. However if I can make my house purchase more affordable, then I don't see why not.

KellyXX · 24-01-2018 8:35am

quadrifoglio verde wrote: »

Instead of working 47 hours a week that I'm currently working to try and get a mortgage as a single earner, I'll just work 38. Much better quality of life, I can buy the house I'd like to buy and pay less interest.

My salary certificate for last year has me just under the magic threshold of 50K. I was on minimum wage until I qualified in June. So in that regards I'm safe.
I've been in continuous employment the past 2 years with the same employer.

As for the cut in salary, after tax, it works out at 5k less a year. However it would only be until the house was purchased, then the current salary would increase back to it's normal rate. The way the job market is at the moment in my field, if my salary wasn't reinstated, I'd easily get it elsewhere. Or I could go working as a contractor which pays significantly more, but which the banks won't lend against as I need three years audited accounts.

Is it abusing the ideas behind the scheme. Of course! However when you create a situation where a small reduction in net monthly take home pay leads to increased borrowing capacity and a lower interest rate, don't expect it to not be abused.

I just found out a very easy way of doing this.
If you have kids then yourself or your partner take enough parental leave to get you under the threshold. I'm thinking of doing this. I was thinking it would be nice to just quit. This way I wouldn't have to even quit and get my time off.
If you do take parental leave, 18 weeks each I think if you wanted that much, go and enjoy the time off . What a lovely little bonus for the tax payer eh. About time we got something back.

Edit. Just speaking to a colleague this morning. We aren't the only ones with this idea

KellyXX · 24-01-2018 8:39am

quadrifoglio verde wrote: »

What is worrying about it? I was prudent. I worked extra hours to increase my gross salary. I moved back home. I haven't gone on a trip around the world like my friends. I have saved 75% of my take home pay over the last 6 months. Why? Because I want a home.

And now I notice that if my salary was to reduce slightly, I can borrow more, buy the house I want and pay significantly less interest than I would through the bank.
And it's fixed for 30 years.
You can't get any more prudent than that.

Don't feel in the least guilty. You paid more tax dollars towards the housing crisis than most. About time you benefitted from them is the way I see it.

LirW · 24-01-2018 11:31am

Are you living in Dublin, Kelly? Because if you're trying to buy in Dublin for a family, 320 isn't getting you much there in most areas. While it definitely would work out for other counties, it'll put a lot of pressure on the market in and around the biggest cities in Ireland.
Perfect though for people living for example in Sligo.
Also if you consider quitting and going through with it yet it would happen that the council application would take 18 months or more to complete or would disqualify you for whatever reason, what would you do then?

Genuinely interested.

dzwx · 24-01-2018 11:56am

Government is trying to fix housing problem by throwing money on people to buy non existent houses. Supply is the problem.
Out of curiosity, does 3.5 lti rule still apply on this, just checked that linked calculator and surprisingly I'm initiated to borrow 288k which can't be true according to cb rules.

KellyXX · 24-01-2018 11:59am

LirW wrote: »

Are you living in Dublin, Kelly? Because if you're trying to buy in Dublin for a family, 320 isn't getting you much there in most areas. While it definitely would work out for other counties, it'll put a lot of pressure on the market in and around the biggest cities in Ireland.
Perfect though for people living for example in Sligo.
Also if you consider quitting and going through with it yet it would happen that the council application would take 18 months or more to complete or would disqualify you for whatever reason, what would you do then?

Genuinely interested.

I was considering quitting but I had a better idea.
Paternity leave for both of us could be spread out over a few years to get the figures right if we needed.
I was thinking of buying a place that needed work or could be extended and then using cash to bring it up after the date.
It's only a plan hatched in the last 24 hours and it has changed many times in that time

but we could make it work if it was going to benefit us significantly.

There are lots of people already with the idea of trying to make something like this work for them.
We probably won't because the length of time involved might not suit and we already have other options. But others will do things like I described.

To us it's taking advantage of the interest rate and the value of that over time that's attractive. Working in finance I'm always turning the cogs on any financial loophole i spot. I think I'm autistic like that tbh.

GingerLily · 24-01-2018 12:04pm

It's terrifying that people are even thinking of quitting their jobs to qualify.

KellyXX · 24-01-2018 12:10pm

GingerLily wrote: »

It's terrifying that people are even thinking of quitting their jobs to qualify.

Why would other people quitting their jobs terrify you?

Plenty of people quit their jobs to have a break.
Myself and other half quit both our jobs about 5 or so years ago to go travelling. Now I just feel like a break from work to do things I like doing.
If you are in an industry where it's easy enough to get a job when you feel like working again it's a nice option.

Sure that's basically what parental leave is. 5 months off work with the option to return afterwards if you want to.

GingerLily · 24-01-2018 12:16pm

KellyXX wrote: »

Why would other people quitting their jobs terrify you?

Plenty of people quit their jobs to have a break.
Myself and other half quit both our jobs about 5 or so years ago to go travelling. Now I just feel like a break from work to do things I like doing.
If you are in an industry where it's easy enough to get a job when you feel like working again it's a nice option.

Sure that's basically what parental leave is. 5 months off work with the option to return afterwards if you want to.

Tell you what - keep us updated on your progress, I'm sure it'll be entertaining to follow.

And at least I can say you were warned

smurgen · 24-01-2018 12:18pm

I think people would be mad to buy in ireland now.i can't see myself buying for at least 5 years now.

GingerLily · 24-01-2018 12:22pm

smurgen wrote: »

I think people would be mad to buy in ireland now.i can't see myself buying for at least 5 years now.

I've been evicted twice in 24 months and have never missed a tent payment, my mortgage for a 3 bed house will cost 100e more then my rent for a one bed, buying is our only option because renting is a horrible existence, particularly evictions.

I understand if you can wait you would be better off waiting, but it's not a luxury for everyone.

KellyXX · 24-01-2018 12:23pm

GingerLily wrote: »

Tell you what - keep us updated on your progress, I'm sure it'll be entertaining to follow.

And at least I can say you were warned

As I said. I probably won't be doing it, but it doesn't stop me trying to figure out how to do it. Call it a hobby. And I'm pretty sure lots of people it will suit to manipulate their income to take advantage. If you think people don't do that all the time I'm afraid you need to wake up and smell the coffee.

I work for a multinational that does nothing but find loopholes for clients.

quadrifoglio verde · 24-01-2018 12:32pm

GingerLily wrote: »

It's terrifying that people are even thinking of quitting their jobs to qualify.

You know what I think is terrifying.
The government have decided to offer mortgages at greater lti ratios than central bank rules, to people who can't borrow from a conventional bank and charge them lower interest for it.
That to me is terrifying.
However I'm at a stage in my life where I want to buy. I don't want to rent and I certainly don't want to live at home. I want to own my own place. And the idea of paying 1064 a month for the next 30 years to own my own house is quite appealing to me

smurgen · 24-01-2018 1:03pm

GingerLily wrote: »

I've been evicted twice in 24 months and have never missed a tent payment, my mortgage for a 3 bed house will cost 100e more then my rent for a one bed, buying is our only option because renting is a horrible existence, particularly evictions.

I understand if you can wait you would be better off waiting, but it's not a luxury for everyone.

I'm thinking of emigrating and maybe coming back when things are more sustainable.i just see the current situation as crazy.stay here and get ripped off by private landlords or stay here and get ripped off by banks.

24-01-2018 1:10pm

If I'm honest I'm only saving while waiting for the next crash.

Unfortunately there are so many happy to jump on the boom that there are too many votes in pumping it on the way up and not letting people live with the consequences on the way down.

Only way to win is to get in at the right time and hopefully get out at the right time when retirement comes.

24-01-2018 1:18pm

Repeating the mantra again:

Ireland will never be free of this mania until they face up to the fact that you cannot define something as a basic right while flogging it as a national financial panacea out of the other megaphone.

The link between housing and investment has to be shattered. Housing should be a bad investment, a cost sinkhole!

Unfortunately, the vast majority still see owning a home as a must (because renting sucks and because nobody plans for old age aside from owning a property asset) so the govt that breaks this link will go down in flames.

That's leaving aside the fact that our banking system is still horrifically dependent on property.

I think I've just talked myself into leaving (fifth time this week)

Government Funds Local Authority Housing Scheme

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