Council needs extra loans for home-buying scheme
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Author: Stephen Corrigan
~ 3 minutes read
From this week's Galway City Tribune
From the Galway City Tribune – Galway City Council has had to draw down further loans to keep up with demand for the Local Authority Home Loan Scheme.
At a meeting of the City Council, Director of Services for Housing, Brian Barrett, said they had initially sought approval from councillors for a loan of €4.1 million but such was the demand that they required a further €1.4 million.
A renewed Local Authority Home Loan was announced in December last year and provides for Government-backed mortgages for first-time buyers and ‘fresh-start’ applicants – those who are divorced or separated, or who have undergone personal insolvency or bankruptcy.
The scheme was introduced to provide lower interest rate mortgages to those who are creditworthy but would otherwise find it difficult to access sufficient finance.
Mortgages up to 90% of the value of the property are available, with a limit of €320,000 applicable to Galway. An income ceiling of €65,000 applies to single applicants, or €75,000 in the case of a joint application.
Mr Barrett said since the original scheme was launched in February 2018, 277 applications had been received by Galway City Council and 120 had been approved.
Twenty-three of those loans applied to the Tenant Purchase Scheme for local authority tenants buying-out their homes.
“In February, councillors approved a loan of €4.1 million and we need another €1.4 million . . . we require €5.5 million,” said Mr Barrett, who explained this applied to 2022 applications only.
The funding would be borrowed by the Council from the Department of Housing, Local Government and Heritage.
Cllr Declan McDonnell (Ind) raised the issue of joint applications in the case of parents and an adult child who wished to buy out a local authority house under the Tenant Purchase Scheme.
“There is a situation arising where a parent with a son or a daughter in the house and the parent is in their 60s. After getting approved, they go to the Housing Finance Agency and they’re told they can only get a four-year mortgage – they waste five months getting approved to be told that,” he said, explaining that money would not be loaned for a period beyond when the parent turns 70.
“That information was not relayed to the Council,” added Cllr McDonnell.
Dermot Mahon of the Council’s Housing Department said he was aware of this issue, but it was part of the scheme.
“The loan scheme specifies that the maximum age of the eldest borrower is 70,” said Mr Mahon.
Councillors agreed to increase the loan, bringing it to €5.5 million.
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