| Home Loans - Family First Home Loan
What
are the tax implications for the parents and first time
buyers?
Each
child has a gift tax threshold of €422,000. Therefore,provided
that the loan amount has not brought the total gift amount over
this threshold, no gift tax is applicable.
What are the tax implications for parents
and firs time buyers with regards to mortgage relief?
First Time Buyers can claim Mortgage Interest Relief on the
amount that they have borrowed. Parents can not claim additional
relief on the portion they borrow to contribute towards their
child's first home.
If the first time buyers default are
the parents liable?
The parents are only liable for the amount of money borrowed
against their own house i.e. the €20k deposit for the period
of time that their names are on the loan.
Whose name is the new house in?
The new house is in the child's name.
Is there an upper age limit for the
parents to participate in this scheme?
The parents current age plus the term of the loan can not exceed
70 years.
Do parents have
to undergo a medical examination for this loan which is used
to help their child?
The following Life Assurance options are available:
- offers Free Life Assurance up to €30,000 for
customers under the age of 50 provided that the customer
has not already availed of the maximum amount of free
life assurance with .
- Parents over 50 can choose to sign a waiver for their
life assurance.
- Customers can assign an existing policy to .
Do the Building Society advise
that a legal agreement should be entered into?
recommends that both parties (the parent and the child)
seek independent legal advice before availing of this package.
Is there a maximum amount that can
be borrowed by the parents?
If the parents want to avail of the option not to make any payments
for the first three years of the loan, then the maximum amount
they can borrow is € 50,000. If the parent wants to make
standard monthly repayments, then the maximum loan amount is
determined under standard lending terms and conditions.
Is there a maximum number of times
the parents can participate in this new scheme?
No, a parent can participate in this scheme for more than one
child. Standard lending terms and conditions will apply to each
new application.
In the case of a couple, can parents
from both first time buyers participate in this scheme?
Yes, each set of parents could take out a loan secured against
their own homes and contribute this towards their childrens'
first home.
Are there legal charges involved for
parents who wish to get involved in this scheme?
will pay or contribute to the legal fees in the following
two circumstances.
- The first circumstance is where the parent refinances
an existing mortgage to and the first time buyer
also takes out a new mortgage with .
In this case will pay or contribute towards the
legal fees associated with the refinancing of the parents
loan only. This is subject to a maximum legal fee of € 900 including VAT and outlays. has negotiated
this special rate for you with a range of solicitors.
Please ask your local office for details.
You may wish to use your own solicitor and will
contribute up to € 900 towards the legal costs.
Your solicitor will invoice your local office directly.
The loan amount being refinanced must be at least € 40,000 to be eligible for this legal fee contribution.
In addition to refinancing your existing mortgage to
, you must also obtain additional finance to help
towards the cost of the first time buyer's property.
This product is seen as an entire package designed to
help parents contribute towards their childs' first
home.
- The second circumstance is where the parent is an
existing customer of who avails of a top up loan
in order to contribute to the deposit of their child's
home. The first time buyer must also take out a new
mortgage with .
will pay the legal charges associated with registering
the additional top up loan proportion only. This applies
only if the choose to register the legal charge
over the loan. This is only available provided the first
time buyer also takes out a new loan with .
Any other legal fees associated with this product are
the responsibility of the customer.
Are there extra charges/penalties
if the first time buyer or the parent wishes to pay off
the loan that was borrowed by their parents before the end
of the loan term?
If the loan is on a variable rate there are no charges.
If the loan is on a fixed rate then the normal fixed rate
breakage
charges apply.
As a parent, do I need to make
normal monthly repayments on the loan used to help out my
child?
As the parent, you have the option to make normal monthly
repayments on this loan or you can choose not to make any
repayments for the first three years of the loan. During
these first three years, interest will be calculated and
added to your loan amount on a monthly basis. Each month,
interest will be calculated based on the new loan amount
(loan amount at beginning of previous period plus interest
accrued during the period). Therefore, the loan amount at
the end of the payment holiday will be higher than the loan
amount at the beginning of the period. The following example
shows the comparison
between making loan repayments during this three year period
and not making any payments for the first three years.
Consider
this example:
The parent borrows € 30,000 over 7 years. The standard
variable rate of interest at the time is 4.1%.
| |
Loan details if no payments made for 3 years |
Loan details if standard monthly repayments |
Loan Amount |
€30,000 |
€30,000 |
Term |
7 |
7 |
Payment Holiday |
3 |
N/A |
Rate |
4.1% |
4.1% |
Monthly Repayment yr 1-3 |
Zero |
€411.45 |
Loan Balance
after 3 years |
€33,919.42 |
€18,186.42 |
Monthly Repayment after yr 3 |
€767.39 |
€411.45 |
Total amount repaid |
€36,834.59 |
€34,561.51 |
|
What
happens after the three years?
If you, the parent has availed of the three year no payment
option, then will contact you in the third year with
details on the following options:
-
The loan can convert to a standard annuity loan and
you can start making monthly repayments.
-
You can choose to pay off the loan from savings.
-
Your son or daughter may wish to take out an additional
loan to pay off the balance on your loan. This loan
will attract a competitive interest rate. The current
variable interest rate is 4.1%. If a revaluation is
required on the first time buyer's property, will
pay this amount on behalf of the customer.
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