Consumer Corner: These are the financial supports you are entitled to when buying a house

Did you know that under the Help-to-Buy scheme, first-time buyers can receive a tax rebate of up to €30,000 or 10% of the purchase price of a newly built home?

Consumer Corner: Under the Help-to-Buy scheme, first-time buyers can receive a tax rebate of up to €30,000 or 10% of the purchase price of a newly built home

Newly-appointed Taoiseach Simon Harris said that he plans to fix the housing crisis “once and for all”. However admirable this plan is, today in Ireland it is still really difficult for many people to buy their first home. There are some initiatives that might help however aside from the traditional mortgage at the bank route.

Trevor Grant, chairman of the Association of Irish Mortgage Advisers says that with the rapid rise in regional house prices, many first-time buyers are finding themselves priced out of areas that were once within reach. He says however that to secure a spot on the property ladder this year, first-time buyers must stay proactive, ensuring they have the necessary deposit in the wings and explore what State schemes they may be eligible for.

Some of these schemes that first-time buyers are eligible for are the Help-to-Buy or First Home scheme. New homes purchased under both schemes can receive substantial support from the State. Under the Help-to-Buy scheme, first-time buyers can receive a tax rebate of up to €30,000 or 10% of the purchase price of a newly built home, whichever is less. Through the First Home scheme, the Government and participating banks contribute up to 30% of the home's cost in exchange for a house stake.

Mr Grant says that it's worth noting that the Help-to-Buy scheme can be used along with the First Home scheme, though the maximum equity stake allowable under First Home is 20% of the purchase price. He added that the First Home scheme is also eligible for tenants intending to purchase the property they rent.

“Unfortunately, purchasers of second-hand homes do not qualify for the schemes, but the good news is that there are some exceptions to the rule. For instance, while the First Home scheme is designed primarily for first-time buyers, exceptions may apply to individuals who previously purchased or built a property with their spouse or partner but have since separated.

“Similarly, those who have sold or relinquished their property as part of a personal insolvency or bankruptcy agreement may also qualify for the First Home scheme. One exception to the Help to Buy scheme is if the property was initially non-residential but has been converted for residential use. It's important for first-time buyers to explore every option available to them to make sure they are not missing out on any much-needed State support,” says Mr Grant.

Ian Lawlor, managing director of Lotus Investment Group says as increases in Ireland’s house prices have vastly outstripped any rise in wages seen over the past ten years many prospective first-time buyers are simply treading water and unable to reach the point where they can finally buy a home.

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“It has therefore never been more important for first-time buyers to take full advantage of any State financial supports available to them in their quest to buy a home.” Mr Lawlor says that for first-time buyers interested in buying a vacant home which needs doing up, the Vacant Property Refurbishment Grant could be useful. A standard grant of up to €50,000 is available under this scheme with a top-up of €20,000 available if the property is derelict.

“This grant isn’t exclusive to first-time buyers it is also available to those who turn a vacant home into a rented property. A home must be vacant for at least two years in order to qualify for the Vacant Property Refurbishment Grant.” It is also worth trying to get the best deal you can on your interest rate. Earlier this month, the ECB announced its decision to hold off on reducing interest rates due to inflation in the eurozone easing less than anticipated, though, says Mr Grant a change might occur later in 2024.

“However, this decision doesn't guarantee a drop in home loan mortgage rates. Therefore, mortgage holders should not delay in seeking out better mortgage deals, as there could be significant savings to be made.

“For instance, if you secured your mortgage five or more years ago, it's likely that the Loan-to-Value (LTV) ratio indicating the percentage of the property price borrowed has decreased since the beginning of your mortgage term. In such cases, switching to a lower LTV mortgage rate could result in significant savings, potentially hundreds or even thousands of Euros annually.” The actual amount saved depends on factors such as the size of your mortgage and the remaining term. To secure a lower LTV rate, you'll need a home valuation, typically costing around €185. These mortgages are accessible for both fixed and variable mortgage holders.

Another option worth considering is a green mortgage. Certain existing mortgage holders may be eligible for a discounted four-year fixed rate of 3.65%, provided their property meets specific energy efficiency standards, typically falling within the B3 to A1 range on the BER rating scale.

“For the estimated 100,000 mortgage holders whose fixed-rate terms are set to expire within the next 12 months, it's advisable to prioritise exploring better mortgage deals, whether from their current lender or elsewhere in the market.

“Switching to a cheaper lender could save you tens of thousands, or more, over the lifetime of your mortgage, depending on its size and current terms. Make sure to check if you can get a better deal from your existing lender before switching.”