Home loan scheme builds on confusion

BANG on time, the Home Choice Loan website is up and running following the budget announcement of new Government housing loans on Wednesday.

And the updated schemes will be run by just four local authorities, Cork, Dublin, Galway and Kilkenny. All other authorities will presumably filter their loans through these central agents.

But did this Big Four know about the new 92% loans before the budget?

Not exactly.

And while there is a need for secrecy prior to any budget, surely the Government could have put something other than a rather dead-end website in place prior to the announcement?

On the basis of what’s on offer — 92% loans for first-time buyers, on new, private houses for incomes more than €40,000 per annum — it’s a good deal.

Which means the local authorities could be flooded with applications while not geared up to process loans.

Council loans have been in existence for a considerable period but applications have dwindled over the last 10 years when money was cheap and readily available in the private sector.

Now, the banks are in no position to offer loans on the Government’s new maximum rate, needing only an 8% deposit, and with a yet-to-be-decided variable rate, they could be on a winner with the newly-branded, Home Choice Loans.

On the website, (with back-up, lo-call number), you only get to register your interest, and will receive ‘regular updates’.

However, with the local authorities in the dark, and an expected roll-out from January 2009, who’s going to run the show?

There could be further complications with the Government Equity loans, which will run alongside the existing Shared Ownership scheme, with a hope expressed in the budget that it will replace other, existing schemes.

This was the second loan provision to be announced and it’s configured to fit the breach between an applicant’s income and the cost of an affordable property.

However, unlike Shared Ownership, it appears to be linked to affordable homes only, which involves a lot more than a simple purchase transaction.

Under the older scheme you paid anywhere over 40% in mortgage finance and the rest in rent.

However, the choice included private schemes and even, a self-build project. In the new Equity offering, it appears to be restricted to affordable houses, which, for the most part, depend on housing lists and lottery-style competitions for allocation.

The Government will take a stake in an affordable property and will then recoup its share in any future sale price — presumably on a percentage basis.

Getting the system working efficiently would target the need of floundering first-time-buyers, and could be the resuscitative kick the property market needs.