B of I mortgages for affordable housing

Bank of Ireland has started processing mortgage applications for people who have been allocated a house through local authority affordable housing schemes.

The bank's breakthrough mortgage allows qualifying customers to borrow up to 97 per cent of the purchase price of the properties, which are provided to applicants at discounted prices.

First-time buyers are normally only allowed borrow up to 92 per cent of the property price, requiring them to save an 8 per cent deposit.

Some 11,000 affordable homes are expected to come on the market over the next two to three years.

Joe Larkin, managing director of Bank of Ireland Mortgages, said it had received a large number of queries since it announced its intention last November to become the first private alternative source of credit for the affordable housing market.

Up to now, mortgage finance for affordable housing has only been available from local authorities through the Housing Finance Agency, but the maximum loan available was €165,000.

There is no limit on the loan size at Bank of Ireland, subject to applicants' repayment capacity. The bank's standard range of interest rates applies and terms of up to 35 years are available.

The Department of the Environment, Heritage and Local Government is in negotiations with several other lenders to bring out similar mortgages.

EBS is among those planning on entering the market.