City Council approves €1.5 funding for first time buyers in Home Loan Scheme

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Galway city council has approved €1.5 million in funding for first time buyers under the Rebuilding Ireland Home Loan Scheme.

The Home Loan Scheme is meant to help first time buyers get who have already been refused by a commercial bank get a leg up by borrowing from the council instead.

Councillors welcomed the news, saying that it was important to help young people get onto the housing ladder at a time when property prices are going up.

61 applications have been received by the city council for the Home Loan Scheme in 2018 so far, 15 of which have been approved.

The total value of the 15 applications, if all are drawn down, comes to approximately €1.9 million.

Requirement for Home Loan Scheme

In order to qualify for the Home Loan Scheme a single applicant can’t have an income over €50,000 and a joint applicants are capped at €75,000 between them.

A 15% deposit and a good savings record are also required for Galway city council applicants, with the council covering 85% up to a property value of €320,000.

Councillor Terry O’Flaherty said that a young couple looking to buy a family home in Galway would have a hard time coming up with a €48,000 deposit on a home at that price.

Applicants who have already identified a home they want to buy must show proof that they’ve been turned down by two banks.

But, it’s also possible for people to apply without identifying a property. If the applicant is successful they can then go back to the housing market having been pre-approved for a loan.

Councillor Donal Lyons asked what the councils options are if borrowers default on their payments.

Dermot Mahon, senior executive officer of corporate services at the council said staff meet with every applicant beforehand, and will tell them if they don’t meet the criteria.

They also work hard with every borrower to work put a payment plan if borrowers get into arrears.

Urgency of applications

Councillor Noel Larkin asked how long it takes for an application to be approved between being submitted in Galway, going to Dublin for approval, and getting back.

“Houses are being snapped up very quickly.” He warned. Saying that even if a home has been identified, it could well be sold by the time the loan has been approved.

Mr. Mahon said applications have a turnaround of about 20 weeks. But if the home an applicant wanted to buy is gone, they are still approved for the loan and can go look for another.

Councillor Collette Connolly asked why they were only asking for €1.5 million if the loans already approved exceeded that. To which Chief Executive McGrath said that half a million in funding was already approved last year.

The €1.5 in funding million the council voted for at this meeting will be a loan from the Department of Housing, Planning and Local Government.

Other councillors asked if applications for the scheme have closed, and if not can they go back to the department for more money.

Mr. Mahon said this just the first round of funding for the Home Loan Scheme. If more applications come in they can go the department for further funding, and have been told it will be granted.

There are three interest rate options available for applicants: 2% fixed up to a 25 year loan, 2.25% fixed up to a 25 year loan, and a 2.3% variable rate.

Of the applicants approved so far, five are council tenants who want to buy out their home under the Tenant Purchase Scheme.

Five haven’t yet identified a property, but have now been pre-approved for a loan, and the last five know what home they want and have already been refused by two commercial banks.

Councillor Declan McDonnell raised a question about a recent government report saying that council shouldn’t sell any more of their housing stock to tenants.

Chief Executive McGrath said that he was aware of the reports’ existence, but the government hadn’t instructed the council to discontinue the Tenant Purchase Scheme, and it would continue until they are so instructed.