I am on my way to purchasing a 2 bed apartment in Dublin. It cost me around €200,000 from the council. The market value (as the council estimated) was around €400,000. Therefore the clawback if I sell the place within 10 years is 50%. (see below for more details on Clawback)
The reason it was worth it for me is that if I had to buy the place with someone else I would only be getting 50% anyway if the apartment was sold. Also I can rent out the other room to go towards the mortgage, so for me it is better than buying with someone else.
The council will give you up to 5 times you salary (so around 132,500). The council buys the property for cost value and pass it onto to you for somthing similar. I would advise you to ring the sales team for you councils Affordable housing scheme. They can tell you what type of property you can expect in your area for that amount. For Fingal i was told at the time a 1 bed was around 135,000+, 2 bed 150,000+ and 3/4 bed 180,000+ depending also on the location - by the time I accepted a place that had gone up but at least you will have some idea.
You can also ask them how many people on are on the list (for me it was around 300 and I will have the keys within 10 - 12 months since applying)
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Tel. Nos.: 4924015 & 4924402
I think the limit for Mortgage Subsidy is around €28,000 so you would qualify for that (not sure how much it is but I think it is decent enough). Also you would get the Mortgage Interest Relief of about €50 a month.
The rest of this is a little bit long and detailed but I found it difficult to get info about the scheme so I think a single post here might also answer some other posts on the issue that I have seen - if its in the wrong
place, my apologies, but being my first post I'm sure the modorators will forgive me.
The way it works:
(based on my experience was with Fingal Co. Co. for the Affordable Housing Scheme and not the Affordable Housing Initiave, which I think may be similar but couldn't be sure)
The infomation from the Council was not that great so it took me a while to figure some of this out.
Savings - you have to save around €700 a month from the time you apply to the time you take ownership of the house. You can include any documented rent, SSIA's as part of this. Pension AVC (Annual Voluntary Contributions) cannot be used as I tried this but they were having none of it.
Debts - I was lucky in that I had none at the time to complicate things, but I belive you can't have any. I think you can have up to €500 on a credit card.
Documentation - Fill in all the documents, the P21 from the Tax office can take a while so apply for this first.
If your lucky you might even get a few euro back from them.
Loan Approval - Presuming you have provided all the documentation correctly, you will be called for a provisional
loan interview. Here they will go throughn all the bank documentation you provided any query some of the transfers. You will then be sent a provisional loan approval letter which will be about 5 times you salary. So for you (janedoe06) they will approve a mortgage of about €130,000. Which might not seem a whole lot in the current market but the council get the house at cost price.
Also good information to have going into this interview is if you can get a GIFT (not a loan) from any other source, ie family or friends. This all goes towards the property they will ofer you. So if you could get say €20,000 (eg SSIA's) from somewhere the property offered could be for €150,000, you have to at least have a min deposit of about €10,000
You then go on a waiting list. There was 300 people on my list and I got the apartment within a year from the time I applied.
You will recieve a phone call to go for a viewing. If the council has a number of properties within an estate/apartment block all viewings will be together with other people. There will be an property for everyone.
NOTE: YOU HAVE TO MAKE A DECISION on whether to take to property on the spot that day. Alwasy say you will take a property as you can back out any time before the Final Loan Approval without penatly.
If you refuse at any stage or back out before the final loan approval you remain at the same place on the list. There is no penalty for refusing a property.
Back to the viewing - you may be shown a number of places, if there are other people there then at the end of the viewings you will be asked to choose a property based on you place on the list. So if you are at the top you get first choice. After you select a property I would advise you to have a look again at the place you selected and take photos, measurements etc as you wont have access again until the Snag.
For the viewing the council will have some information based on how much the mortgage will be depending if you go Fixed, or Variable over a certain number of years. It will also tell you the minimium deposit for the property.
For me the min deposit was €10,000. This is only for guidance as this is will be based on info at the Final Loan Approval.
You will then be called in for the Final Loan Interview, and will need uptodate copies of payslips, bank details, P21 - basically everything you provided at the start. You will decide on the mortgage and this will be based on a max of (I think it was) 35% of salary They will only use the information provided from payslips and will require a letter from the bank manager (if someone is giving you a gift) stating that they have the amount in their account or that they would be approved for a loan of that amount (again the money to you has to be a GIFT not a loan) and
they will want a letter from the person stating that they will give you this gift.
On the clawback - the clawback is applied in the following fashion 100% of the Clawback percentage for the first 10 years, if you sell, if you mortgage or if you rent the property (you can take advantage of the Rent a room scheme without penalty)
After 10 years the percentage is reduced by 10% each year for the next 10 years. So after 20 years you fully own the property.
The clawback is calculated as the
"Sale price to Applicant" / "Market Value at the time of sale to applicant" x 100
The market value from the council is not the actual market value but an estimate from a valuer as to what the market value is. I have been told this this can be more or less than what the properties are being sold for
privately. In my case the valuation was more and even though there was still a couple of unsold 2 bed apartments the councils market value was about €20,000 more than what they were being sold for.
My understanding (as I couldn't get a straight answer from the council - they insisted this was a market value and not an estimation ) is that they sell the property to the applicant for the cost price (in my case €200,000) and after that the just use the valuation as a means to calculate the clawback. Seems a bit strange that that dont just use the actual market value but there it is.
After that is the Snag - I recommend getting a professional to do it. If you do it yourself at least buy a
Snagging Checklist. I got one from Snagging.org and it was well worth the €20