You could save up to €23,000 by buying before the end of the year

You could save up to €23,000 by buying before the end of the year

You could save money by buying before the end of the year

Did you know you could save yourself up to €23,000 by buying a home between now and the end of the year?

That’s because the current Mortgage Interest Relief Incentive will end on 31st December 2012. Those who qualify before then will benefit from interest relief until 2017, with huge savings available for first time buyers in particular.

Under the scheme first time buyers receive mortgage interest relief at 25%, while non first time buyers receive relief at 15%.

For example, if you bought a €450,000 house at a mortgage rate of 92% then your loan would amount to €414,000. Taking an interest rate of 5.35%, based on a current five year fixed term rate of 30 years, you could save up to €23,333.

That figure is available to a couple who are first time buyers, while a single first time buyer can avail of savings of €11,667.

A non first time buyer couple can make savings of €4,500, while a single non first time buyer can make savings of €2,325.

With that in mind would you consider buying before the end of the year?

If you’re on the look out be sure to keep an eye on the Property On View section of MyHome and our price change feature to ensure you don’t miss out on the home of your dreams.

There are 14 comments for this article
  1. Damien at 3:28 pm

    Prudent lending and prudent borrowing!!!

    Average industrial wage is 32000 approx, prudent lending would be 3 times this so a mortgage of 96000, prudent borrowing would be 3 times the after tax version which would be around 22000 so 66000, so for a single person the price range of a property should be between 66000 and 96000, and double it for a couple!

    Have a look around for houses at those prices, it is a cash buyers market at the moment and when they dry up, then we will see true value in the market and removing this tax incentive will get us there faster, as all the addtional taxes come in the quicker prices will be reduced to more affordable and sustainable mortgage plans that do not bankrupt the country!!

  2. Fool at 2:26 pm

    “For example, if you bought a €450,000 house at a mortgage rate of 92% then your loan would amount to €414,000. Taking an interest rate of 5.35%, based on a current five year fixed term rate of 30 years, you could save up to €23,333.”

    Seems like the banks are again appealing to those who they wish could and not those who ‘can’!
    How many people in Irlenad are still looking at houses at this price..let alone FTB? I think if you’re considering buying a house at this price then the benefit is a bit of a white elephant.
    The advertisement is not for the majority of FTBs?

  3. Fiona at 1:43 pm

    Just wondering what is the situation if a non resident wants to buy a holiday home in Ireland / would it have to be outright or would any bank give a mortgage in these times??

    • jamesrogers at 1:47 pm

      Fiona, you would have to speak to the banks and/or a broker but ultimately the decision is based a lot on your own personal finances

  4. FTB + Second Time Buyer at 12:54 pm

    Just wondering if people know what the situation is for a couple where one person has previously bought properties(2) and partner is a first time buyer.

    What is the best way to manage the mortgage interest relief?

  5. tom at 12:27 pm

    LOL, 450k house, and 5.35% interest rate? With normal house prices less than 200k you can afford higher deposit and lower interest rate of 3.06%. Then you not going to save more than 4000. So if I wait until next year price will drop even further in some cases for 20-30k, because there is just not enough of buyers.

  6. Smiley at 12:07 pm

    So the buyers will have circa €23,000 less affordability next year. So, in addition to all the other downward pressures on prices, house prices will have to drop an extra €23,000 next year for FTBs to be able to afford them. This means prices must fall even further next year.

  7. Brian Buckley at 11:50 am

    Beware if you are separated. The Revenue make a big deal about newly separated people meeting the requirements for FTB status but in reality if you have EVER owned a property more than 7 years ago you DO NOT qualify in spite of what their website says!

  8. mysocialspidersphere.blogspot.ie at 11:46 am

    Dear Sir,
    The example you describe is likely written for a select type of purchaser. There are very few ordinary people that can consider borrowing such a sum in today’s environment.

    Even those that fit the income bracket, how can they be certain of future employment, or of future interest rate rises etc. Moreover, it would not take much of a interest hike (consider also future property price reductions likely, property tax, water tax or perhaps the impact of further income reduction)or otherwise to erode the 15 -25% interest relief benefit in real terms. There is no bargain here to my mind.

    Northern Ireland property sector is flat-lining presently too – there cost base is too high according to the Financial Times.

    Ireland has the same problem. Property needs to reflect what people can pay and not what everyone else hopes for (i.e., the mantra that the price of property will rebound. People in the ‘know’ were on TV a year back talking about the bounce…! Perhaps the individual didn’t notice that the air had been well and truly let out of the ping pong ball. Moving on to address cost base issues:

    Until equilibrium is established between demanded properties (which is all time low) and price (which is too high still) I personally would be hesitant to take on the responsibility of any debt. Interest rates rose to 18% in the 1980s

  9. Pako at 11:14 am

    What needs to be considered is the still falling prices and the fact that property tax and water rates are all going to cancel out the benefits of this tax relief as it exists today. If you stack it all up, the incentive as a FTB to keep renting is still there thanks to those impending extra charges that are coming. The scale of the charges are unknown and probably will depend on the area you live in. They won’t factor in tight budget you may have to live on after buying a house in 2012 so planning for the worst case of future costs would be wise rather than focusing on just the tax relief today.

  10. Paddy the Prophet at 11:12 am

    Possibly worth considering if the mortgage is large enough to maximize the tax savings on offer, less so should one has a substantial deposit, in that case it could be better to wait till 2013. In any case sellers are currently seeking to price-in the tax relief thereby usurping the buyer’s tax relief.

  11. orla at 11:12 am

    hi, how does that apply to building your own home, is is a similar interest releif for same?

    • jamesrogers at 11:52 am

      Hi Orla,
      It’s the same criteria as the interest relief is based on your loan not how you acquire a property (build, new, second hand etc)

  12. Niall at 11:05 am

    Strange that they are getting rid of this incentive. I could understand when the property market starts its recovery but not until then.

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