Galway city council has approved raising a further €5 million for first time buyers under the Rebuilding Ireland Home Loan Scheme.
The Home Loan Scheme is meant to give people a leg up onto the property ladder who have had trouble in getting a mortgage from the banks.
People can apply to the local authority for a mortgage of up to 90% of the value of a property. In Galway city the maximum property value allowable under the scheme is €320,000.
Councillor Peter Keane said that the government should considered raising the property value limit as, even though Galway is in the top band, this can seriously limit what is available to people.
In order to qualify a person must meet credit and savings criteria, and be able to to show that they have already been rejected by two financial institutions.
The income of a single applicant must not exceed €50,000 and the combined income of joint applicants must not be over €75,000.
The scheme operates at three levels of interest: A 2% fixed rate up to a 25 year loan, a 2.25% fixed rate for a 30 year loan, and a 2.3% variable rate.
To date the city council has received 130 applications for a mortgage under the Home Loan scheme.
Of those 76 were deemed ineligible under the criteria laid out by the government, and of the 56 that were eligible 38 have been approved to total value of €6,666,250.
So €3,188,250 has been drawn down by 21 successful applicants under the Home Loan scheme.
Seven offers made by the city council have expired, and 10 are still waiting to be drawn down.
Last July the council raised €1.5 million in funding for the scheme and another €1.5 million in September.
It is now seeking another €5 million to meet what it expects the scheme to cost by the end of 2019.
While technically this money is raised in the form of a loan it is not repayable to the central government.
Councillor Mike Crowe said that this is a welcome scheme that would “help people get on the ladder” but added that it keeps running out of money.
Councillors John Connolly and Owen Hanley expressed disappointment at the number of applicants who did not meet the criteria for the scheme, with cllr Connolly calling it “another aspect of our housing policy that is failing.”
Chief Executive Brendan McGrath said that “we don’t draft the criteria” for who is eligible, that is set in legislation, but added that council staff are always willing to help people with their applications.
He added that of the 54 applications which were eligible for consideration, 38 were approved, a high standard.
The Chief Executive also said that there is nothing stopping people from reapplying and that the rate of approvals for the Home Loan Scheme is going up all the time.
He concluded that this is a very useful tool for the council to have in its “armoury” to help out the “squeezed middle” trying to buy a home for the first time.
The council unanimously approved raising the €5 million loan from the Department of Housing, Planning, and Local Government.