€1m made in estate sales

More than €1 million in residential sales has been generated by the inclusion of a Clonlara housing estate in NAMA’s residential mortgage 80:20 payment scheme.

 

In fact, Tom Crosse of Golden Vale Marts said there has been a huge level of interest in purchasing quality houses in the Churchfield Estate, Clonlara at a reduced cost of €120,000 up front.

Up to 75 people flocked to see the showhouse during a two-hour viewing slot recently, which is in stark contrast to a few years ago when Mr Crosse was regularly left on his own when no one turned up for a viewing.

There are about 70 houses in the entire estate and 14 completed houses – 13 semi-detached and one detached – come under the NAMA supported scheme.

Mr Crosse confirmed six houses costing €1.2 million up front have already been sold and he expects it will not take too long for the rest to move, considering some houses in the estate were priced at €300,000 during the boom years.

Welcoming this 80:20 initiative, Mr Crosse said it had injected new life and generated a lot of optimism for residential property sales in what is a depressed market.

Bank of Ireland, AIB through its mortgage subsidiary EBS and Permanent TSB are participating in the pilot initiative.

First-time buyers who purchase one of the dwellings before the end of the year will also qualify for significant mortgage interest relief, which ends December 31.

The full price of the house is €150,000 but €30,000 is parked for five years from the date of the completion of the sale.

If the value of the property on the final valuation date has fallen below the value of the property at the completion date, the deferred amount (ie, 20%) will be reduced or cancelled depending on the level of reduction.

If there was a 15% fall in value, this would reduce the deferred amount payable to 5%. Should the reduction in value be 20% or greater, the deferred amount no longer becomes payable to NAMA and the buyer will have no liability for the payment of this amount to the lender.

The mortgage will be drawn in two instalments. The first instalment, which together with the buyer’s deposit will equate to 80% of the purchase price, will be drawn on the purchase date. The second instalment, equating to 20% of the purchase price, will be paid by the mortgage provider, on behalf of the home buyer, to NAMA five years after the first instalment. The payment of this second instalment will be subject to a final valuation of the property value.

In the majority of cases, for the first five years, the monthly mortgage payment will be calculated as follows: the paydown of principal will be on the basis of the full 90% mortgage (the combined first and second instalments) but interest is charged only on 70% of the principal, that is, the amount drawn.

In this context, the monthly payment amount will be similar to a standard mortgage but will repay the mortgage at a faster rate than a standard mortgage as interest will not be charged on the amount of the second instalment unless it has been drawn in the fifth year.