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Relief for Struggling Homeowners and GOOD News for First Time Buyers!

Posted on by Stephen Hamilton

In a blog post earlier this year titled “Relief for struggling homeowners but bad news for first time buyers” I outlined the Fine Gael plans to increase mortgage interest relief for Homeowners and reduce the relief for First Time Buyers. In Budget 2012 Michael Noonan has stuck to the programme for government plan to increase relief for struggling homeowners. This is not going to solve the mortgage arrears problem but is a welcome extra relief for struggling homeowners who bought between 2004 and 2008.

In a surprise move Minister Noonan has also increased the relief for First Time Buyers who buy a home in 2012. I have to say, although I strongly agree with this course of action, I did not see it coming. The original Fine Gael plan was to increase relief for homeowners and reduce the relief for home buyers. So its good news all round. Homeowners and Homebuyers will have extra money in their pockets.

So what does all this mean for Homeowners and First Time Buyers?

Starting with Homeowners, Budget 2012 has increased mortgage interst relief to 30% for First Time Buyers who bought between 2004 and 2008. The relief is restricted to the first 10,000 mortgage interest per person. For a joint First Time Buyer mortgage of 300,000 on a interest rate of 4%, bought in 2006 this will mean a new monthly relief payment of €300. This is an increase of €100 per month.

For prospective First Time Buyers, Budget 2012 has increased mortgage interest relief to 25%. It was widely expected that mortgage interest relief would be gone altogether for new First Time Buyers so this is an unexpected but welcome bonus. For a new 2012 First Time Buyer mortgage of 200,000 on an interest rate of 4.5% this will mean a monthly interest relief payment of €188. This is a big incentive for First Time Buyers to buy in 2012.

To sum up it really is good news all round for Homeowners and Homebuyers alike. For Homeowners this extra relief is of course not going to solve the huge mortgage arrears problem but it will at least put some extra money in the pockets of those who bought at boom-time prices. For Homebuyers this is an unexpected bonus and could be the kickstart the property market needs.

Only time will tell if Michael Noonan’s mortgage relief gamble will pay off. It could be argued that its not really a gamble at all. If the property market continues to trundle along and few people buy in 2012 then the new First Time Buyer relief will not cost the government much, however if it gives the property market a boost and more buy then the extra outlay will be offset by the boost to the economy. Its a no-brainer really!!, Why didn’t I think of that!

Please feel free to use the comments below if you have any questions on the changes to mortgage interest relief in Budget 2012.

Posted in
First Time Buyer, House and Home, Mortgages
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  • Sarahsom

    If I bought my 1st house in 2004 but traded up in 2007 due to expanding family I now have a massive mortgage to pay due to that boom period ,will I be entitled to some sort of interest  relief too?

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Sarah,
      you should currently be getting mortgage interest relief at 15%. This will increase to 30% so there will be an increase for you. However as you are not considered a first time buyer anymore your relief will be capped on the first 3,000 of your mortgage interest. (the first 6,000 if a joint mortgage). So my understanding is that the max monthly relief you will get is 75 per month for a single mortgage or 150 per month for a joint mortgage.

  • Chris

    I’m hoping to be a first time buyer in 2012. While this is good news, it would have been good to see them put pressure on the banks to approve more than 2 in 10 mortgages

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Chris,
      mortgage lenders are very strict at the moment and the extra tax relief wont change that, however I find that most applications that are turned down can be fixed in a 3 to 6 month period. The most important thing is to seek mortgage advice early. If you cannot get a mortgage now we will let you know what you need to do over the next 3 to 6 months so that you will qualify in the future.

      • Chris

        Thanks for the reply Stephen. Hopefully I won’t have the problem but it tends to be bad news rather than good i’m hearing. Seems the 8% isn’t enough even if you have saved every single cent yourself. Ah well, we will see what happens

        • Stephen Ryan

          The required deposit has gone up to 10% in most banks now with the likes of KBC now requiring 20%.

  • Bren

    Hi Stephen. Good post on here today. Yes some positive news is great. Just on your comment above….. “For a new 2012 First Time Buyer mortgage of 200,000 on an interest rate
    of 4.5% this will mean a monthly interest relief payment of €188. This
    is a big incentive for First Time Buyers to buy in 2012″.. Is it not actually a monthly relief payment of €208?  25% on €10,000 per year allowed for single person? I probably have my sums wrong. :)

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Chris,
      the max for a single person would be 208 if the yearly interest was 10,000 or more as you say but in the example I have used above the yearly interest would be 9,000 (200,000 X 4.5% = 9,000)
      So 9,000 X 25% = 2,250 / 12 = 187.50
      Pretty sure thats right

      • Bren

        Ok thank you Stephen. Just hope that it is 25% up to a maximum of 10,000 and not going to be a limit of 3,000 as was originally planned for next year. Fair play to you for taking the time to reply to all posts. Much appreciated.

  • Orls_dowling3

    Hi there,
    I have literally just bought a house, the deal was closed yesterday and the deeds to be signed next week. I’m just wondering with the new tax break am I entitled to it? Or are there tax breaks anymore for people who’ve bought houses between 2008 and the end of 2011

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Congrats on your new home. regarding the relief I understand that you will be entitled to the new increased 25% relief if your first payment is in 2012. You should check with your lender to see when your first payment will be.

      • Orls_dowling3

        Hi Stephen,

        Thank you for your speedy response. this is good news thank you, I will contact my lender.
        Thank you

        • http://www.mortgageline.ie/blog Stephen Hamilton

          Just to add to my last comment. Relief is currently available at 25% for first time buyers who buy in 2011 so no change if you buy in 2011 or 2012. For this reason it actually does not matter when you first payment is.

  • Mark

    I bought in 2006 (first time buyer) , Am i correct in saying that Interest releif can only be claimed for 7 years  so will finish in 2013, and what rate will I be on for 2012

    • http://www.mortgageline.ie/blog Stephen Hamilton

      For you the 7 year period does not apply. You will get the relief up to the end of 2017 as things stand and you should now be entitled to the increased 30% relief. It is intended to help first time buyer like you who bought between 2004 and 2008

      • Mark

        Thanks Stephen

  • Raymond

    Hi,bought my 1st house in 2003 and traded up to 2nd house in May 2006, An I entitled to Mortgage interest relief

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Ray,
      you should be entitled to relief alright on the 2nd home you bought in 2006. You should give the revenue a call to clarify your circumstances and make a claim for any unclaimed relief.

  • http://www.mortgageline.ie/blog Stephen Hamilton

    Hi Dan,
    I think you are wrong in Sarah’s case as above. She bought originally in 2004 and then bought again in 2007. Relief was extended past the seven year period for people who bought during the boom and so continues to 2017. There was no change to this yesterday.
    We will have to wait for the full bill to be passed to see all the finer details but this is my understanding of it from the information available to me as it stands.

  • Noreen Maunsell

    I started my mortage payments 31/12/2003. Do I have any entitlements to any relief? 

    • http://www.mortgageline.ie/blog Stephen Hamilton

      My understanding is that you would not be entitled to any further mortgage interest relief.

      There are other ways to reduce your mortgage costs however. Give us a call if you are interested in seeing if we can save you some money on your mortgage protection.

  • Finn

    Hi Stephen, I am a second time buyer. I sold my first house in 2005 and bought my second house in 2006. Will I be entitled to mortgage tax relief until 2017? Will I benefit from the new mortgage interest relief from yesterdays budget?

    Thank you,
    Finn 

    • http://www.mortgageline.ie/blog Stephen Hamilton

      You will indeed be entitled to relief but it will be capped to the first 3,000 of mortgage interest (6,000 if joint mortgage)

  • Elaine

    Hi Stepehn,
    If I signed for my house in Dec 08 and put the deposit down then, but my 1st mortgage re-payment didnt start until Jan 09 am I entitled to this increase?
    Elaine.

    • http://www.mortgageline.ie/blog Stephen Hamilton

      If your mortgage closed in 2008 then you may have a case with the revenue for the extra relief. Check with your lender to see when your mortgage closed and then give the revenue a call.

      • Elaine

        Thanks Stephen, looking back over the bits I have here on front of me and the closing date of the sale was the 27th Jan, I think thats me out, raging!

  • Barry

    Hi Steven, bought my house in Feb 2008 mortgage of 235,000 my wife and I are currently getting interest relief payment of around 189.00  monthly will we be due much of an increase, really thankful for any help!!

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Barry,
      you will now be entitled to the increased relief of 30%. If you let me know what your current interest rate is I can give you an estimate of your new monthly interest relief

      • Barry

        Steven its 4.5% fixed mortgage with KBC !

        • http://www.mortgageline.ie/blog Stephen Hamilton

          Hi Barry,
          if your current mortgage balance is approx 235,000 and you and your wife were first time buyers when you bought the house in 2008 then your approx tax relief would be as follows,

          235,000 X 4.5% = 10,575 (Yearly Mortgage Interest)
          10,575 X 30% = 3172 / 12 = 264

          So your new approx monthly mortgage interest relief should be €264

          Please give us a call or apply online via our contact us page if you are interested in a review of your finances to see if we can save you some money on your mortgage protection ect..

          • Barry

            Thanks Stephen for your help!

  • Guest

    Hi,
    I bought a house in 2006 but it was not my first house.  Does my interest relief change?

  • Kenny

    Hi Stephen, I’m due to close on a new house at the end of this month (Dec ’11). Should I wait now until January ’12 in order to benefit form the Mortgage Relief rate? I’m a first time buyer. 

    • http://www.mortgageline.ie/blog Stephen Hamilton

      It actually does not make a difference if you close now or in 2011 as the relief is 25% now and will still be 25% if you buy in 2012. Relief was due to end for First Time Buyers but is now extended at the current 25% rate if you close before the end of 2012.

      Best to close now as you will still have your keys before christmas.

      Give us a call or apply online if you would like a quote on your mortgage protection. Be glad to see if we can get you a better quote.

      • Kenny

        thanks Stephen, will do. 

  • Keith

    Hi Stephen,
    I am thinking of buying in 2012 and i am trying to work out what is the % of relief for yeach year if i buy in 2012. Are my Mortgage interest reliefs as follows:
    Year 2012 -25%
    Year 2013 -25%
    Year 2014 -22.5%
    Year 2015 -22.5%
    Year 2016 -22.5%
    Year 2017 -20%
    Year 2018 -20%

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Keith,
      thats looks about right but won’t know for sure till the finance bill is published.

  • Guest

    Hi Stephen,

    I bough a house in 2006 with a mortgage of 292,500.  my current rate is 2.35% (as of November 2011)  can you tell me how much this will decrease?

    Regards.

  • Johnbady28

    Hi
    would anyone know how much i would save with the 30% mortagae relief?
    i bought a house for 455,000 in 2007,interest rate of 3.25,how much will i save in jan 2012 from the budget?

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi John,
      to work out your new relief you need to do the following,

      (Current Mortgage Balance) X (Current Interest Rate) = Yearly Mortgage Interest

      (Yearly Mortgage Interest) X 30% = Yearly mortgage interest relief

      Divide by 12 to get your monthly relief amount.

      Remember that you are restricted to relief on the first 10,000 interest payments for a single first time buyer mortgage and on the first 20,000 for a joint first time buyer mortgage.

  • Marjanwieringa

    Steven, I signed off on the purchase of a house on the 1st of November, the first morgage payment took place on the 1st of December (2011), I still have to register for morgage interest relief. Does it make any difference whether I do so in December 2011 or in January 2012? Marianne

    • http://www.mortgageline.ie/blog Stephen Hamilton

      does not make a difference, the relief is 25% this year and now it will be 25% next year too for First Time Buyers

  • Andrea

    Hi Stephen.  We having just been given indication of approval for a mortgage by BOI and are hoping to take advantage of the good news for first time buyers early next year.  I notice that the variable rate for a 20yr. mortgage is 5% – it seems high in comparison wih online quotes.  Should we be shopping around before making a full appication for a mortgage.  It all seems very confusing. Andrea

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Andrea,

      First I would say that you would be crazy not to shop around. Not only for your mortgage but also your insurance. The monthly difference may not seem much but you have to look at how much extra you will pay over 20 years if you choose the wrong option.

      You have two choices really when applying for a mortgage as follows,

      1/ Shop around, do your own research, prepare your application and submitt directly to your chosen bank or building society
      2/ Use a Mortgage Broker like MortgageLine who will make sure you get the best deal and manage your application from start to finish, leaving you to get on with the important part which is finding a suitable house.

      Give us a call on 1890 65 1890 or apply online if you are interested in our advice. One of our qualified advisers will be glad to help. Look forward to speaking with you soon.

  • Astazee

    i got my mortgage on my own with a parent as guarantor. how much will my relief increase by? I currently get 160e… mortgage was 400k (for a shoebox!|)

  • Barry

    Hi Steven very quick question I bought in 2008 and have been getting interest relief from my first repayment in 08 my understanding was that myself and my wife will lose interest relief in 2015 at the end of the 7 years or it is 2018? Thank for any help !!

    • http://www.mortgageline.ie/blog Stephen Hamilton

      mortgage interest relief was extended in the 2011 budget so you will get the relief up to the end of 2017 (subject to change in future budgets)

  • Nicola

    Hi Stephen,
    My partner and I have recently been approved for a first time buyers mortgage. All the qualifying criteria for the bank has been met. The contracts are with the solicitors at the moment but have not been signed yet. Should we sign and draw down the mortgage in 2011 or should we wait until 2012?
    Nicola

  • Shane09ie

    Hi Stephen,

    myself and my wife took out a 327,000 tracker mortgage with EBS in 2007 and the current interest rate is 2.40%, we are being assesed by revenue individually but both our names are on the mortgage. Do you know if the mortgage interest relief will be based on us being a couple or two individuals arrising to the same amount as a couple? i really cant get my head around it. Also any idea what the new 30% would mean to us??

    Kind regards

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Shane,
      Have a look at the calculation below

  • Paula

    Hi Stephen,
    Similar to Elaine below, I signed for my apartment in May 08, drew down my mortgage in November 08 but my first re-payment wasn’t until January 09.  Had assumed up until now that I did qualify but beginning to doubt that now.  What do you think?

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Paula,
      if your mortgage cheque issued and closed in 2008 then you should qualify for the new higher % of mortgage interest relief. Give the revenue a call when you get a chance. They are very helpful and should be able to clarify your situation.

  • Tracey

    Hi Stephen,
    I took out a mortgage with my partner in 2005 for 252,300.  We currently owe about 215,000, we are paying an interest rate of 5.9% variable.  Just wondering how much the new mortgage interest relief will help us.
    Thanks
    Tracey 

    • http://www.mortgageline.ie/blog Stephen Hamilton

      Hi Tracey,
      you should now be entitled to monthly interest relief of approx 317.

      You may also be able to make a saving on your life cover / insurance. Give me a call on 1890 65 1890 and I can do a review and see if there are any savings for you.

      Thanks
      Stephen

  • Liamhenry1

    Is the new rate of relief applied automatically or do I need to apply to Revenue. If it is applied automatically when does new rate take effect from

    • http://www.mortgageline.ie/blog Stephen Hamilton

      it should be applied automatically. Check with the revenue if any doubts

  • Nimh_kiely

    hi stepehn i bought my house in 2005 will i still get tax relife and much

  • carol

    When will this new relief take effect?

  • Fiona

    I drew down a mortgage in Aug 2004 although had approval in 2003 – will I qualify even though the 7yrs were up by the time the budget was announced?

    • Fiona

      Just to add I was a first time buyer at the time

    • http://www.mortgageline.ie/blog Stephen Hamilton

      If you were a FTByer in 2004 and still live in the property then you should qualify.

      • Fiona

        Thank you.

  • Niallquinn

    hi stephen,what if only one half of the couple was a first time buyer at that time