EDUC Mortgages Blog

The Mortgage Schemes Helping First-Time Buyers in Ireland

by | Mortgage Advice

The current housing market in Ireland poses significant challenges for first-time buyers. With soaring demand, scarce supply, and prohibitively high property prices, accessing affordable housing had become increasingly difficult. Two government-backed mortgage schemes are currently providing much-needed support.

The Help To Buy Scheme and the First Home Scheme are designed to ease the path to homeownership. By extending financial assistance to eligible individuals, these schemes aim to empower prospective homeowners to overcome challenges around affordability and secure their first property. But what are these schemes and how do you know if you are eligible?

 

Understanding the Help to Buy Scheme

As of 31st March 2024, 46,875 applications had been made under the Help to Buy Scheme, 45,917 of which had been approved. Launched in January 2017 and originally due to end in December 2024, the Help to Buy scheme was extended as part of Budget 2024 until the end of 2025.

What Does the Help to Buy Scheme Offer?

The Help to Buy Scheme offers tax incentives and financial assistance for the purchase of a newly constructed house or apartment or for a self-build home, all valued at €500,000 or less.
It does this by reimbursing first time property buyers income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland for the 4 years before applying to the scheme up to the value of €30,000.
The amount you can claim on the scheme will be the lesser value of:
• €30,000
• 10% of the new-build market value
• 10% of the self-build valuation
• The amount of income tax and DIRT paid in the 4 years prior to applying to the scheme.

Help to Buy Scheme Eligibility

Eligibility criteria apply to areas including property ownership, property type and value, mortgage, and tax compliancy.

  • The property must be your first home purchased, either in Ireland or abroad.
  • If you are taking out a joint mortgage, the other buyer must also have never previously purchased a property.
  • You must plan to live in the property as your principle residence for at least 5 years i.e. the scheme does not apply to investment properties. Warning! if you rent out or sell within the first 5 years you will be eligible for full repayment of funds received to Revenue.
  • The property must be new or a self-build with a value of €500,000 or less.
  • The developer or contractor from whom you are purchasing the property must be approved by Revenue or, in the case of a self-build, a solicitor registered with Revenue as a ‘HTB approver” has to verify your claim.
  • Your mortgage must be at least 70% of either the purchase price of the new-build property you are buying or, in the case of a self-build, 70% of the valuation approved by mortgage provider.
  • You must have been tax compliant for the 4 years prior to availing of the scheme.
  • You must be registered for Revenue’s online MyAccount or ROS depending on your employment type.

An application to the Help to Buy Scheme is made though Revenue online (either through the myAccount service (PAYE) or ROS if you are self-assessed)

For more information, see Revenue’s Help to Buy – Summary Guide for Applicants.

 

Exploring the First Home Scheme

The First Home Scheme was introduced in July 2022, and has so far helped over 4,000 buyers secure their first property. Described by Minister for Housing, Darragh O’Brien as “the most significant intervention in housing in a generation”, the scheme has seen a surge in interest in the first quarter of 2024 with a 118 per cent increase in homes bought under the scheme. In April of last year, the scheme was extended to accommodate renters wishing to purchase their home from a landlord. It was further expanded in September to offer support to individuals seeking to embark on self-build projects.

What Does the First Home Scheme Offer?

The First Home Scheme (FHS) operates as a shared equity initiative, supported by the Government of Ireland through the Department of Housing, Local Government & Heritage, in collaboration with Participating Lenders.

Designed to assist first-time and eligible homebuyers, the scheme aims to bridge the gap between their deposit and mortgage, and the overall cost of purchasing or constructing a new home. Property price ceilings, established by local authorities throughout the Republic of Ireland, serve as benchmarks for eligibility under the scheme.

The scheme supports first time buyers or those starting afresh following separation or divorce or insolvency by providing up to 30% of the property purchase price or self-build cost in exchange for a percentage equity share in your house (20% if you are also availing of the Help to Buy Scheme). The scheme has a minimum equity share value of 2.5% of the property purchase price, or €10,000 if the 2.5% is below this threshold.

From the sixth year, if the equity scheme has not been fully redeemed, a per annum service charge is applied to with rates fixed at 1.75% for years 6 to 15, 2.15% for years 16 to 29, and 2.85% for the 30th year onwards.

The equity share can be bought back (redeemed) at any stage either partially or in full or and will be subject to the market value of the property at the time of buy back.

First Home Scheme Eligibility

Eligibility criteria apply to areas including property ownership, property type and value, and mortgage.

  • You must be a first-time buyer or be eligible under separation, divorce or insolvency criteria.
  • You must have Mortgage Approval in Principal (AIP) and borrow the maximum amount available to you from a participation lender.
  • You must have a minimum deposit of 10% of the property purchase price or build cost.
  • The scheme only applies to newly-built houses and apartments.
  • You must intend to live in the property as your primary residence for at least five years after purchase.
  • The value of your property must be below the property price ceiling set by your Local Authority

To find out if you are eligible to avail of the First Home Scheme, enter your details into the online eligibility calculator. Once you have your AIP in place, you can start your application through the First Home Scheme Customer Portal.

For more information, see the First Home Scheme’s Your Guide to First Home Scheme.

 

Importance of Expert Mortgage Guidance

Navigating the mortgage process can be tricky and, if hoping to avail of one or both government-backed schemes while dealing with lenders, it can seem overwhelming. That’s where expert guidance cannot be underestimated.

Speaking to a mortgage broker in the early stages of your home buying journey is highly recommended. Your broker works on your behalf to secure you the best product and rate to suit your needs. Depending on your unique circumstance, they can also advise you on which mortgage scheme might benefit you and what availing of the offered supports might mean for you in the longer term.

Your broker will assess your personal situation and explain all lending options available to you so that you can make an informed decision and secure your dream home under terms and conditions that favourable to you.

Navigate Mortgage Schemes with EDUC Mortgages

At EDUC Mortgages, we provide expert and tailored support to help you navigate the complexities of the mortgage process and, if desirable, to unlock the full potential of these mortgage schemes supporting first-time buyers in Ireland.

Contact us today for a free consultation and let us bring you a step closer to turning the key in your new front door!