State mortgage scheme gave 3 loans since 2012

The Government is to overhaul its own alternative mortgage scheme for people turned down by conventional lenders after it emerged no mortgage was provided in 2015 and just three have been issued under the scheme since 2012.

The ‘Home Choice Loan’ is a mortgage for first-time buyers first introduced in 2009 as a temporary loan offering from local authorities.

The Government-backed mortgage was to provide up to 92% of the market value of a property purchased to a maximum loan amount of €285,000. To qualify, applicants need to earn over €35,000 as a single applicant and over €45,000 combined income as joint applicants, be in continuous employment for a minimum of one year and provide evidence via a broker that they could not obtain sufficient finance from two banks or building societies.

However, last week those operating the scheme admitted the list of authorised brokers on the Home Choice Loan web page needed to be updated. For example, it lists 32 brokers in the Cork area alone, yet inquiries last week showed many are no longer engaged in the scheme.

Those at Home Choice Loan later provided a list of just three brokers in the Cork area “who have informed us that they are authorised brokers for Home Choice Loan”.

Figures provided by the Department of Housing showed no loans were issued in 2015, two were issued in 2014 and one was issued in 2013. Figures are still being compiled for 2016 and since the scheme was first implemented a total of 21 mortgages worth €3.92m have been issued.

A Department of Housing spokesman said: “The minister is currently giving consideration to the relevance of the Home Choice Loan scheme and how local authority mortgages can be better publicised to ensure those creditworthy households who could benefit from access to these mortgages, are made aware of the opportunity.

“However, it is likely that to some extent, what we are seeing in terms of the Home Choice Loan is a mirror image of what is happening in the private housing market, where there is a misalignment between house prices and the capacity of first-time borrowers to raise sufficient cash deposit to meet prudent financial rules that are intended to safeguard the borrower into the future.”

The loan is a normal capital and interest-bearing mortgage, repaid on a monthly basis. It offers one variable interest rate which the website said was currently set at 3.25% variable, APR 3.30%. However, under the Housing (Local Authority Loans) Regulations 2012, local authorities can also offer eligible first-time buyers a local authority standard variable rate annuity loan at a rate of 2.3%.

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