Q&A: Confused by changing rules on Help-to-Buy scheme

Q: I am little bit confused about how much I need to save up. A new-built house I liked is priced at €300,000. I am getting mortgage approval of €218,750. I need to pay €81,250 including the grant (subject to approval) of €15,000.

In this case I am getting roughly a 72 per cent loan of the house price. Will I be eligible to get a grant? I am not sure if I need to get a loan of less than 70 per cent.

– Mr MK, by email

You can rest easy. You will be eligible for the rebate – assuming you have paid sufficient tax here over the past four years to qualify for the full rebate of €15,000. If you have paid less income tax, then that will determine what lower amount you receive.

I am aware it can be confusing to work out how these schemes work, not least because the rules keep changing as the proposal works its way through the Oireachtas to become law. This is especially true for the many new Irish who have come to this country over the past number of years and are now looking to buy a home here.

Originally, when the Minister first announced this scheme in the budget, you had to have a mortgage that was greater than 80 per cent of the value of the home you want to buy. However, after the Central Bank told the Government it was not happy with this as it would encourage some people to borrow more than they needed to, or should, the Minister lowered the threshold to 70 per cent.

This means that anyone who has a mortgage that is equal to or greater than 70 per cent of the value of the property is eligible to apply for a rebate under the scheme when the Revenue opens its doors for applications in January. As your mortgage will be 72 per cent, you will be eligible.

One other change the Government has made more recently to the scheme is that it will now apply only to properties that cost €500,000 or less. Previously, it was €600,000 but it was felt by some politicians that this was too high. This obviously will not affect you as your property is valued at €300,000 – well below either the original or the revised upper limit.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.