Intertest free loan's, Whats in it for the developers

Haven't seen the precise details but from what I read on rte.ie Glenkerrin Homes expect the loan to be paid back after 7 years. And if the property is sold before then and has gone up in value, then take a share of the gain in addition to the loan amount.

So basically they're still trying to screw the buyer over.

Not sure about how useful this loan will be. If someone was to borrow say 50K the monthly repayments would be about €600 a month. Add that on top of a monthly mortgage repayment of about €1600 and it doesn't really make the purchase any more affordable.

If the developers really want to shift these units, they'd be better off just reducing the price by 15%, and not offer 15% loan with all the strings attached.
 

I was wondering about this as well. In my opinion if you can't save up at least 10% deposit + Stamp duty, if applicable (which is not supposed to be borrowed anyway) you should not be buying a house. All I can think of is that the main mortgage may be interest only for the first 7 years or until the loan is repaid. They also have a problem if it all goes pear shaped, the loan will be registered on the house and Smart (who the builders are using) will not wait around to repossess...
 
someone should take those developers outside and repeatedly beat them over the head with a stick while repeating the following mantra

"the reason your properties are not selling is because your prices are far too high"

repeat until they give in and reduce prices to clearing levels
 
Actually guys, I'm not sure that I agree with you, although my initial reaction was similar to yours. I have no connection whatsoever with any of the parties involved, but my younger sister lives in the area. She qualified as an accountant last year and is currently doing the tax exams. She's still renting in a "student" type house and is very frustrated - she has the Irish disease and really wants to buy. She has limited savings. I have been trying to put her off, and get her to wait etc.

This morning I read the papers and I think one of the schemes is particularly interesting. Prices have dropped from €585k to €470k which is pretty significant. My understanding of it (and I'm waiting for the brochure to confirm) is that the builder, instead of looking for 100% cash up front, will take 70%, and will take a second charge on the property for the balance of 30%, in lieu of cash.

The purchaser will make repayments only on the 70% for the first seven years. At the end of the 7 year period, the purchase will pay the builder a lump sum of 30% of the then market value.

The builder will only profit on the 30% if there has been capital appreciation. Given that the 70% will also have appreciated in that instance, the purchaser will have made more than twice the capital appreciation made by the builder.

Lastly, the repayments on the 70% mortgage are higher than the average rent for an equivalent property by about €200, which isn't too bad.

Now I'm assuming a lot here - I'm assuming that everything in the papers was accurate and that there is no twist in the tail ..will have to look into it properly to be sure. But for someone like my sister, I think it's an attractive proposition.

Advantage for the builder is that he gets to offload stock, reduce his debt or ideally eliminate his debt on the land in question which will stop his interest mounting up. He still has a lot of money invested in the project but his risk is significantly reduced.
 
I think she's on about €58k but she would probably buy with her boyfriend. I don't know his salary but I think it's probably €60k +
 


Thank you - that made my day.

mf
 
I believe the asking prices are still too high and the developers should drop these more if the want sales, makes you think that they believe that the market has still to fall further or they would not be offering this now.
 
nad said:
I believe the asking prices are still too high and the developers should drop these more if the want sales, makes you think that they believe that the market has still to fall further or they would not be offering this now.
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more likely their bank manager has them chained to the wall in a gimp suit while he lectures them about the contents of their loan agreements

or else they are doing this out the goodness of their hearts to 'help hard-pressed first time buyers get on the ladder'

hmmmmm
 
I agree with that..to a point. It's not just prices that are causing problems. I have clients with commercial and industrial premises for sale. They have buyers lined up with a 20 year plus profitable trading history who want to buy to operate out of the premises. They have proven repayment capacity. The best they are being offered is 50% finance. I don't know any manufacturing companies that have this kind of money tucked away.

So in effect the banks are exposed to my client for all of the money. My client is a property developer ..not a very good risk right now. Rather than provide reasonable finance of say 80% purchase price to profitable companies and at the very least, spread the risk, they are, in effect, refusing finance. Client is willing to sell at cost or lower.

Makes no logical sense to me. How to explain it? Liquidity problems maybe?
 
Kate10 said:
I think she's on about €58k but she would probably buy with her boyfriend. I don't know his salary but I think it's probably €60k +
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she'll have to buy with the young fella so (as she cannot afford to buy on her own by any sensible measure)

this scheme stinks of desperation, pure and simple
 
Kate10 said:
the purchaser will pay the builder a lump sum of 30% of the then market value.
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But if they can't save enough for 10 or 15% of the value now, before they start paying a large mortgage, how will then be able to pay 30% in 7 years after being burdened with mortgage repayments (and management fees)?

This scheme has the potential of having short term gain (developer sells property) but with the long term of people still buying property they can't afford.
 
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