The Mortgage Shop - Frequently Asked Questions

General

• Can I borrow money to build a house?

  Yes, all lenders have different lending criteria, however you can borrow the full cost of building a property, subject to income. If you are looking to buy a site to build your dream home on

• Do I need any insurances with my mortgage?

  Mortgage Protection

  This repays the mortgage in full in the event of your (or your partner's) death during the term of the mortgage. A mortgage protection policy covers the amount outstanding at any given time during the life of your mortgage. So, as your borrowings reduce, so does the level of cover. We can pick and help you choose the most competitive Mortgage Protection policies available for you.

  Alternatively, you could (and we would recommend should), take out a Life Policy instead. A Life Policy differs from Mortgage Protection in that the amount of cover does not reduce with the amount owing over the life of the mortgage term. So, should you die in say Year 24 of a 25 year mortgage, the same amount will pay out which will pay off the last year's loan repayment and the balance goes to your family or estate. The main point is that Life Cover is very affordable when you are young and healthy and gets progressively more expensive as you get older. Therefore, it makes sense to buy it as cheap as you can get it.

  Serious Illness

  Choosing to include serious illness cover with your mortgage protection will help repay your mortgage if you are diagnosed as sufferring from a range of specified conditions during the term of the plan. Serious illness can strike at any time and the statics are frightening.

  Men have a one in four chance of becoming seriously ill before the age of 65. For women that figure is one in five. The average age for a claimant under serious illness cover is 50 for males and 45 for females. The most common illnesses are cancer, heart attack and stroke.

  House Insurance

  The loan cheque will not issue until there is adequate insurance on your property. It is also advisable to insure your contents. Our own branded house insurance policy is rated independently as first in the market for value. For more details click home insurance.

  Income Protection

  This is not compulsory but, depending on your employment situation, could be a very prudent investment by you. If your income reduces drastically or stops altogether due to you being sick or otherwise not able to work for a long time or if you were made redundant, this policy will kick-in and pay your mortgage for up to 12 months. That's a big thing off your plate while you concentrate on getting better or getting a better job!

  For any further questions our expert advisors are only a phone call away and will be glad to help you.

• How much can a first time buyer borrow?

  The maximum you can borrow is up to 100% of the purchase price of the house, subject to terms and conditions of the lender. You may have to put down a deposit depending on your circumstances which leaves you to come up with your additional costs like Stamp Duty and Solicitors Fees.

• How much can I borrow?

  Your current income (which includes commission, bonuses, overtime - i.e. any additional money that is subject to tax) will determine how much you can borrow. Some lenders calculate borrowing ability by a straightforward multiple of your income while others will work out your net disposable income and then allow you borrow a percentage of that. We will help you calculate how much you can borrow.

• How much does getting a mortgage cost?

  (1) Fees & Charges

  There are some standard fees and charges that you will come across. A good mortgage advisor can substantially reduce some or all of these.

  Valuation Fee

  All lenders require a Valuation to be carried out on your property to confirm its market value (as opposed to its structural soundness). The current cost of this is approximately €130 to be paid directly to the valuer. If you are buying off the plans or a house in need of substantial repair, it is likely a second valuation will be required which will cost in the region of €65.

  Structural Survey

  This would only apply to a second-hand house and consists of a complete and thorough inspection of the property by a qualified Surveyor or Engineer. It is not compulsory but recommended if the property has not been well maintained or if you have any doubts whatsoever about the soundness of the house you are thinking of buying.

  The cost of this survey, which can range quite a bit in price, is borne by you and is non-refundable in the event you do not go ahead with an offer for the property. However, it will highlight expensive repairs that, if not turning you off the sale, will give you a tool to negotiate with the seller for a reduction in the asking price.
  
  Indemnity Bond (or MIG)

  This is a lender insurance that protects the lender against loss in the event of repossession or a fall in property prices where the loan amount owed exceeds the sale price of your property. It is normally applied where the loan is in excess of 75% of the purchase price and is only applied to the loan amount over that threshold. Not all lenders charge this insurance, First Time Buyers are not charged this fee by any lender.

  (2) Legal Fees & Outlay Costs

  Costs now vary as solicitors are becoming more aware of competition but the guideline scale fee for this service is 1% of the purchase price plus VAT. On top of that, you will bear all outlay costs. These, again, will vary depending on whether your deeds are registered with the Land Registry or Registry of Deeds. Ask your solicitor to outline all costs to you at the outset. Your legal fees will amount to a substantial sum so it is well worth shopping around for a competitive solicitor.

  We can advise you of the solicitors in your area who will be competitive with fees, if you do not have a family solicitor. Please ask a member of our staff to advise you with regard to legal costs and they will be glad to help you.

  Stamp Duty

  Stamp Duty in Ireland is a tax payable to the government. The rate you will pay is dependent on circumstances.

  Rates of stamp duty for houses and apartments for owner occupation
  Chargeable consideration (€)	First Time Buyer	Owner Occupier
  Up to 125,000	Exempt	Exempt
  Next  875,000	Exempt	7.0%
  Balance	Exempt	9.0%

   

  New houses and apartments(for owner occupation) with a floor area under 125 square metres where a valid floor area compliance certificate has been issued by Department of Environment and Local Government are exempt from stamp duty.

  New houses and apartments(for owner occupation) with a floor area greater than 125 square metres (not first time buyers) are charged stamp duty. The rate to be paid is at the appropriate residential rate. It is based on the site value or on one quarter of the total value of the total value of the house, including the site, whichever is greater. 

  How to apply

  Your solicitor will calculate how much stamp duty is due and request this from you prior to the closing of the sale. The amount is paid to the Revenue Commissioners who place a stamp on the property deeds . Without this stamp, the deeds cannot be registered.

• If I am in a shared ownership scheme can I buy out my local authority?

  If your circumstances have changed since you first puchased your home under the shared ownership scheme you may now be in a position to buy-out your local authority. If your income and value of your home has increased enough you may also be in a position to take further cashback, our mortgage staff will be able to advise you.

• If I am purchasing my local authority house do I need a deposit?

  No, if you are a tenant purchaser you may be able to include your legal costs, other fees and perhaps so cashback for home improvements. You will not need a deposit.

• What is mortgage interest tax relief?

  In the past, mortgage interest relief was given directly to you by Revenue. Since 2002, your mortgage lender gives you the benefit of tax relief on mortgage interest paid. This means, your mortgage lender reduces your mortgage repayment by the amount of tax relief you are entitled to. Your mortgage lender then in turn, claims this tax relief from Revenue. Any amendments in this tax relief, for example, if there is a change in interest rates, are made automatically by your lender on behalf of Revenue.

  Normally, you do not claim mortgage interest relief in an annual tax return because it is given directly to you by your mortgage lender. Tax relief can still be claimed from your tax office for interest paid on "non-secured" loans used for qualifying purposes.

  In the Supplementary Budget April 2009 it was announced that from 1 May 2009 mortgage interest relief will be discontinued for any mortgage over 7 years. This means that tax relief is available on the interest payments for the first 7 years of your mortgage but it is not available for the 8th and subsequent years of your mortgage. There is also a transitional measure for 2009 – see 'Rates' below. You can find further details of the mortgage interest relief changes with examples on the Revenue website.

  How the budget changes are being implemented:

  First time buyers
  First Time Buyers who are within the first 7 years of their mortgage will continue to get mortgage interest relief until the end of the 7th year of their mortgage.

  Non first time buyers
  From 1 May 2009, Revenue will temporarily stop providing mortgage interest relief to non-first time buyers. Revenue is working with the relevant lenders to identify non first time buyers and the amount of loan which now qualifies for relief.

  Where Revenue is in a position to decide with certainty from the information provided by the lender that an account holder is entitled to mortgage interest relief then this account will be reactivated for Tax Relief at Source by Revenue.

  If it is not clear that a non first time buyer qualifies for relief, Revenue will write to the account holder during the month of May requesting the necessary information. Where Revenue decides, on the basis of the information provided by the account holder, that the account holder is entitled to relief then any arrears will be credited to the account. Unless you get a letter from Revenue you do not need to do anything.

  Rules
  To qualify for tax relief on mortgage interest repayments the interest must relate to money that you have borrowed to purchase, repair or improve your sole or main residence.

  Relief is also subject to upper limits, which will depend on your personal situation and whether you are a first time buyer.

  From 1 May 2009 you can only get mortgage interest relief for the first 7 years of your mortgage.

  First-time buyers
  From 1 January 2009, mortgage interest relief for first time buyers is 25% for the first and second year of your mortgage. You will get relief of 22.5% in year 3, 4 and 5. You will get relief of 20% in year 6 and 7. 

  The relief is subject to upper limits, depending on your personal situation.

  
  

  The following are the maximum amounts allowable for 2009:

  	Single	Widowed/Married
  First Time Buyer	€10,000	€20,000

  To calculate what this is worth to you each year, get the correct percentage of the rate above that applies to you.

  For example, married first-time buyers on the second year of their mortgage get relief at 25% of €20,000. Therefore, the maximum amount their yearly mortgage interest can be reduced by is €5,000.

  After year 7, you will get the standard relief of 15% up to 1 May 2009 - see 'Transitional measure in 2009' below. From 1 May 2009 you will not get tax relief after year 7. 

  Non-first time buyers
  From 1 January 2009, mortgage interest relief is 15% if you are not a first time buyer. The relief is subject to upper limits, depending on your personal situation. From 1 May 2009 you will not get tax relief after year 7 of your mortgage. 

  The following are the maximum amounts allowable for 2009.

  	Single	Widowed/Married
  Non-first time buyers	€3,000	€6,000

  To calculate what this is worth to you each year, get 15% of the rate above that applies to you.

  For example, married non-first time buyers on the second year of their mortgage get relief at 15% of €6,000. Therefore, the maximum amount their yearly mortgage interest can be reduced by is €900.

  Transitional measure in 2009
  If you are no longer entitled to mortgage interest relief after 1 May 2009, that is you are currently in the 8th or subsequent year of your mortgage, you will be allowed relief on a pro-rata basis for the first 4 months of 2009.  In this case the maximum relief amounts for 2009 are as follows:

  	Single	Widowed/Married
  January-April 2009	€1,000	€2,000

  For example, married first-time buyers on the 9th year of their mortgage get relief at 15% of €2,000. Therefore, the maximum amount their mortgage interest in 2009 can be reduced by is €300.

  In addition, if you are no longer entitled to mortgage interest relief after 1 May 2009 and you then take out a new qualifying loan between 1 May 2009 and 31 December 2009, you will get only a proportionate amount of the annual maximum relief limit in 2009 but you will get the full annual maximum relief limit for the tax years 2010 to 2015.

• What is the Irish Credit Bureau?

  The majority of lenders and finance companies (hire purchase / leasing / personal loans etc.) subscribe to the Irish Credit Bureau (ICB). All mortgage applicants are screened by the lender through this Bureau. The ICB record a rating of your previous repayment history with all of their subscribers. If you experienced any late or missed payments with previous loans repayments (no matter how trivial they seemed to you at the time), the chances are they were recorded and your rating affected accordingly. A bad rating could result in a refusal on the part of the lender without further explanation.

  It's best to be completely honest with us at time of application. There are many understandable reasons why a loan could fall into arrears and it's our job to help you by explaining fully to the lender what happened previously and why they should not be concerned about you as a borrower. You are entitled to view your personal record by contacting the Irish Credit Bureau at (01) 260 0388 - ICB House, Newstead, Clonskeagh Road, Dublin 14. The current cost is €6.00.

• What type of rate is best for me?

  The answer to that depends on your own personal circumstances. If interest rates going up would leave you uneasy and feeling under pressure, it may be best to fix your mortgage for peace of mind. The benefit is that your monthly mortgage repayments are fixed for the duration of the fixed term so you can plan ahead without fear of rising mortgage repayments. At the end of your chosen fixed rate term, you will automatically revert to the current variable rate but you can immediately choose another fixed rate from the selection available at that time.