Money Matters
AFFORDABLE HOUSING SCHEME
( part 1 of 2 )
The Affordable Housing Scheme is the best for 1st time buyers – 97% mortgage available. The Scheme aims to help lower income households to buy their own homes. The Scheme allows lower-income house buyers the change to buy newly constructed homes and apartments in areas where property prices have created an affordability gap for lower income house buyers. These properties are then offered for sale to eligible first-time buyers at a price significantly less than their actual market value.
The local authorities provide land on which new houses are built and sold. Your local authority will generally advertise the availability of houses for sale under this Scheme in the local press or perhaps on local radio. If there are more eligible applicants than houses the local authority will determine the order of priority, taking account of household circumstances and other factors.
The houses are bought with a mortgage provided by the local authority. The loan can be up too 97% of the price of the house, subject to repayments being no more than 35% of the household net income i.e. income after tax and social insurance (PRSI). Some private mortgage lenders also offer mortgages and may have differing loan criteria.
Households maybe entitled to a mortgage subsidy depending on their income in the previous tax year. If they are surrendering a tenant purchase house, a local authority house or a house provided by a voluntary body, they have the option of going for the mortgage subsidy or the Mortgage Allowance Scheme.
You qualify for the Affordable Housing Scheme if:
-You are in need of housing and your income satisfies the income test below, or
-you are registered on a housing waiting list with a local authority, or
- you are a local authority tenant or a tenant purchaser and you want to by a private house and return your present house to the local authority, or
- you are a tenant for more than one year of a home provided by a housing association under the Capital Loan and Subsidy Scheme and you want to buy a private house and return your present house to the housing association.
The income test only applies to people mentioned in the first bullet point; if you are covered by the second, third or fourth bullet points, you are exempt from the income test.
Income Test
Single income households.
If your gross income (before tax) in the last income tax year was €40,000 or less, you are eligible (effective January 2006).
Two income households.
Multiply the gross income (before tax) of the higher earner in the last income year by 2.5 and add the gross income of the other earner in the last income tax year. If the answer is €100,000 or less, you are eligible.
Mortgage Subsidy
If your gross household income is less than €28,000, you will be entitled to a subsidy that will reduce your mortgage payments. This subsidy will be paid to the local authority. The subsidy is between €1,050 and €2,550 per years.
A household that does not qualify under the third and fourth categories above (i.e., a household that does not qualify for this subsidy) may instead qualify for the Mortgage Allowance Scheme.
Tony Murphy
A.L.I.A. (dip) (QFA)
Mortgage Market,
The Square, Ballincollig.
