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  • First time buyers will now require a 10% deposit while all other purchasers will need at least 20%
Uncategorized
Jan 28, 2015 - 10:30

First time buyers will now require a 10% deposit while all other purchasers will need at least 20%

The MyHome Newsdesk
By The MyHome Newsdesk
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First time buyers will now require a 10% deposit while all other purchasers will need at least 20%

The Central Bank will offer some relief for first-time buyers under revised rules on mortgage lending.

Prospective home-buyers will have to save bigger deposits under the regulations.

Banks will only be able to lend up to a maximum of 80% of a property’s value for most owner-occupiers.

However, they will be able to lend up to 90% of the value of the home to first-time buyers up to a limit of €220,000.

This means that first-time buyers will need a 10% deposit for the first €220,000 of their property's cost and 20% of whatever is above this limit.

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For buy-to-let mortgages, the figure is 70%, meaning a 30% deposit is required to secure a loan.

The new rules will take effect once they have been laid before the Oireachtas.

Central Bank Governor Patrick Honohan expects that to happen in a matter of days.

He also said that about half of the houses being bought by first-time buyers in Dublin are below the figure of €220,000.

He said: "These measures will reduce potential financial vulnerabilities for both borrowers and the wider economy and will help ensure a stable and well-functioning mortgage lending market.

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"We have carefully considered all feedback received through the consultation process.

"As far as the LTV limits are concerned, we are retaining the basic 80% limit for owner-occupier loans and 70% for buy-to-lets.

"At the cost of some additional complexity, but without compromising the overall effectiveness of the measures, we are increasing the limit for first-time buyers of lower-cost houses.

"The requirements are flexible enough to be adjusted in the future should the need arise without the need for a long period of consultation," he added.

Minister for Finance Michael Noonan said: "The announcement of these revised proposals will provide certainty to borrowers and ensure that banks continue to engage in prudent lending practices."

Deputy Governor Stefan Gerlach said: "In Ireland we are still experiencing the destabilising effects of a property bubble.

"We have based these regulations on in-depth economic analysis and empirical evidence. Measures such as these should be a standard part of a well regulated financial system."

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<

  • Tags
  • borrowers
  • buy-to-let
  • Buy-to-let mortgages
  • Central Bank
  • deposit
  • Dublin
  • economy
  • loan
  • LTV
  • Michael Noonan
  • Minister for Finance
  • mortgage
  • Oireachtas
  • Patrick Honohan
  • property bubble
  • Stefan Gerlach
The MyHome Newsdesk
By The MyHome Newsdesk
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