Fingal home buyers borrow €221,449 each under cheap home loans scheme

Some 340 would-be homeowners have applied to Fingal County Council for a cheap home loan, looking to borrow an average of €221,449. However, figures also show that almost a third of applications to the scheme were turned down.

The council said on Thursday that it has received the highest number of applications among the 31 local authorities for the Rebuilding Ireland Home Loan, which was launched earlier this year.

The loan scheme allows putative home buyers to avoid Central Bank loan restrictions and lock in to low-cost interest rates by applying for a home loan with their local authority. With a €200 million budget this year, the loan is expected to allow about 1,000 borrowers get their first home at interest rates of as low as 2 per cent, fixed for the term of the mortgage. The loan scheme is part of the Government's three-pronged approach to make homes more affordable, which also includes rental and purchase schemes.

Approvals

Fingal County Council, which covers areas on the north side of Dublin such as Swords, Blanchardstown and Malahide, said it has received 340 applications since the scheme went live on February 1st. Of these, 136 provisional loan approvals have been issued, of which 17 have been drawn down at a total value of €3,764,640.

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This would indicate average borrowings of €221,449, and given that applicants to the scheme need a deposit of 10 per cent, would suggest that the average purchase price for a property under the scheme is about €246,000. The maximum amount home buyers can borrow under the scheme depends on where the property is located, and is set at €288,000 for the Dublin region.

Applicants, who must have income of not more than €50,000 as a single person, or €75,000 in combined income for joint applicants, can lock into a rate of just 2 per cent, fixed for 25 years, or 2.25 per cent for a term longer than that. This compares favourably with interest rates available in the banking market, where Ulster Bank leads the pack with a rate of 2.3 per cent, which is fixed for just two years.

Interest

Margaret Geraghty, director of housing and community at Fingal County Council, said she was delighted with the interest that has been shown to date in the loan.

“It has turned the possibility of buying their own home into a reality for people who had not been able to access funding through the banks,” she said, adding that the loan approvals are for a mix of new and second-hand houses.

Of the applications received to date, some 107, or 31 per cent, have been turned down, with the reasons for doing so varying from “insufficient savings, to not demonstrating repayment capacity at the level they are looking to borrow” the council said. About 10 per cent of those declined subsequently saw their applications accepted following resubmission.