Buying a second home now that we work from home
Q&A: Dominic Coyle answers your personal finance questions
Buying a second home, in the country. First-time buyers status is useful in two ways: it qualifies you for Help-to-Buy and it gives you a little more wriggle room under Central Bank lending rules.
My wife and I live and work in Dublin and own a house. Like a lot of people recently we are entertaining the idea of a second home in the countryside but would need to rent it for at least a portion of the year to avoid the burden of an extra mortgage.
My wife has recently accepted a job abroad but is free to work from Ireland, thus a second home has great appeal for us.
Our home is in my name as I bought it before we were married. Would my wife qualify as a first-time buyer if she were to take out a mortgage and purchase a house in her own name? She has never owned a property in Ireland before but does own an apartment in Canada, where she is originally from.
Mr C.E., Dublin
This period of enforced working from home has a lot of people thinking about the merits of moving away from the cities – especially those who cannot yet afford to buy a home at city rates. Of course much depends on what happens as we return to “normal”, whatever that will look like. For all the talk of “new normal”, the reality is that existing workplace structures are hard to change.
There may be a little more flexibility on remote working, but the likelihood for most of us is that we will once again be back in our offices eventually.
Not your wife, though, which is good news for her.
Apartment in Canada
But the good news does not extend to her being treated as a first-time buyer on any new home you’d buy down the country.
She may never have bought a property in Ireland but she did buy that apartment in Canada. That is enough to rule her out as a first-time buyer. The status does not just relate to property purchase in Ireland, but anywhere.
In any case, the property purchase you are considering would, in itself, rule her out of consideration as a first-time buyer.
First-time buyers status is useful in two ways these days: it qualifies you for Help-to-Buy and it gives you a little more wriggle room under Central Bank lending rules. But your wife strikes out on both grounds.
Help-to-Buy applies only to newly built properties that are used as a main home – principal private residence. By your own account, you will only occupy this property on a partial basis and will look to rent it out for the balance of the year. On that basis, it would not qualify even if newly built.
And, by the same token, as you are renting it out, any mortgage your wife secured on it would be as a buy-to-let. While the Central Bank allows first-time buyers borrow up to 90 per cent of a purchase price (earnings multiple allowing), it permits loans of only 70 per cent for investment properties, or buy to lets – more stringent even that the 80 per cent allowed for existing homeowners buying a new family home.
Yes, banks are allowed some exceptions but they’re not particularly minded to exercise them right now, given the uncertainty over people’s employment and personal finances.
If you want to pursue this home, it will not be as first-time buyers, in which case buying together might make more sense in terms of repayment capacity from the lender’s point of view.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email email@example.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.