Decision Time For First Time Buyers as Mortgage Relief Set to End - News

Decision Time For First Time Buyers as Mortgage Relief Set to End - News - Irish Mortgage

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Decision time for first time buyers as Mortgage Interest Relief set to be abolished sooner than expected.

Mortgage Interest Relief for first time buyers is now set to be abolished sooner than expected under the Programme for Government.

Mortgage interest relief is a special scheme in which mortgage holders receive back a proportion of the interest they pay on their mortgages.

Currently, a qualifying first time buyer has up to the end of the year to complete the purchase of their new home and begin paying their mortgage in order to qualify for the generous relief, which is available for up to 7 years after buying.

Under the new Programme for Government, mortgage interest relief is now set to be abolished for new buyers beginning this June.

The deal is managed through what is known as Tax Relief at Source (TRS), first time buyers are the biggest beneficiaries where up to €416.67 is repaid directly back to mortgage holders bank accounts each month.

The maximum qualifying interest amount for a first time couple is €20,000. In year 1 and year 2 of purchasing, the maximum interest relief is 25% or €5,000 annually. This reduces to €4,500 in years 3, 4 and 5 and to €4,000 in years 6 and 7.

Over a 7-year period, a qualifying first time buyer couple could receive a maximum relief of €31,500. It means that a first time buyer who purchases a home up to June 2011 will be in line to qualify for (up to) a massive €31,500 over a 7-year period. However, a first time buyer who completes their home purchase after June 2011 will receive €0.

The Programme for Government plans to also increase mortgage interest relief up to a maximum of €500 per month for first time buyers who purchased between 2004 and 2008.

First time buyers now make up the majority of new mortgages in Ireland with four in ten mortgages in the 4th Quarter 2010 being for first timers.

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