Will the government keep the Mortgage Interest Relief in the budget?

TheFarneyman

I put an offer on a house that has been accepted, i expressed that i would like to get the deal done by the end of the year to avail of the MIR.
The house is on Nama's books apparently, will they speed it through for me or will it take an age and miss out on the interest relief?

Also is there a chance the mortgage interest relief will stay in the budget to keep the property prices stable?

Henry Ford III

Forget about M.I.R. being extended. Baldy Noonan has already said it won't be.

killers1

TheFarneyman wrote: »

I put an offer on a house that has been accepted, i expressed that i would like to get the deal done by the end of the year to avail of the MIR.
The house is on Nama's books apparently, will they speed it through for me or will it take an age?

Also is there a chance the mortgage interest relief will stay in the budget to keep the property prices stable?

I'd say your chances of completing a Nama sale between now and the last date banks issue mortgage funds before Christmas are very very slim

mikelovenotwar

I'm in a similar position to the OP. When would we have to be closing to assure we qualify for the MIR?

killers1

mikelovenotwar wrote: »

I'm in a similar position to the OP. When would we have to be closing to assure we qualify for the MIR?

Your mortgage needs to drawdown before 31/12/12. Given that solicitors don't work the 2 days between Christmas & New Years & the bank stop issuing mortgage cheques a few days prior to Christmas you'll need to drawdown by around 20th Dec or whatever cut off date your bank have pre-christmas.

TheDriver

Even Hayes was interviewed saying avail now or loose the chance so I would think FTBs gave their last chance now. Otherwise no one would buy and "see how the market is going" for next few years

Victor

Highly unlikely. Potentially structure your offer as €X if the sale goes through this year, €X-Y% if it doesn't

smcgiff

Mmm - i think there will be pressure to extend it.

leahyl

smcgiff wrote: »

Mmm - i think there will be pressure to extend it.

There already has been but hasn't worked - noonan said he is def not extending it

bombs away

leahyl wrote: »

There already has been but hasn't worked - noonan said he is def not extending it

Yes and with good reason too, all it was doing was artificially increasing the price of houses. Have you people learned nothing from the last property boom

gurramok

Abolishing MIR has not tempted me in the slightest to buy, i see the bigger picture whereby its a gimmick trying to hold prices up.

gaius c

smcgiff wrote: »

Mmm - i think there will be pressure to extend it.

They can apply all the pressure they want but the pressure coming from the budget deficit is considerably higher.

loyatemu

I expect it'll be replaced with some other scheme that meddles with the market - that way Noonan won't have lied but they can continue to try and prop up prices.

xper

killers1 wrote: »

Your mortgage needs to drawdown before 31/12/12. Given that solicitors don't work the 2 days between Christmas & New Years & the bank stop issuing mortgage cheques a few days prior to Christmas you'll need to drawdown by around 20th Dec or whatever cut off date your bank have pre-christmas.

Hi Killers,
Please correct me if I am wrong as you certainly know more about this stuff than me but I had read several times that the requirement to qualify for MIR is that you make your first repayment by 31/12/2012, something that would normally occur a month after drawdown so drawdown would realistically need to happen by the end of this month unless you make a special early initial payment straight away (are lenders facilitating this?).


Regardless of whether the critical event is drawdown or first repayment, I am beginning to wonder how many Sale Agreeds that appear to have been subject to panicky bidding war in recent weeks are going to fall through as the buyers realise they have missed the MIR boat. I know one purchaser who just got mortgage approval on a bid placed in early October and is now having second thoughts (walk/renegotiate?) because the seller has indicated they won't be ready to sign contracts until December.

killers1

xper wrote: »

Hi Killers,
Please correct me if I am wrong as you certainly know more about this stuff than me but I had read several times that the requirement to qualify for MIR is that you make your first repayment by 31/12/2012, something that would normally occur a month after drawdown so drawdown would realistically need to happen by the end of this month unless you make a special early initial payment straight away (are lenders facilitating this?).


Regardless of whether the critical event is drawdown or first repayment, I am beginning to wonder how many Sale Agreeds that appear to have been subject to panicky bidding war in recent weeks are going to fall through as the buyers realise they have missed the MIR boat. I know one purchaser who just got mortgage approval on a bid placed in early October and is now having second thoughts (walk/renegotiate?) because the seller has indicated they won't be ready to sign contracts until December.

You become entitled to TRS from the day your loan begins to accrue interest which is the date of drawdown. The date of first repayment is irrelevant. There will be AIB customers who close in December, have a 3 month deferred start so won't make a first repayment till April 2013 but will still be guaranteed TRS.

Regarding your second point, I agree there will be a lot of people either walking away from purchases at pre-contract stage due to unforeseen delays or frantic renegotiating of prices if it looks like a purchase is going to drag into the new year. Where a vendor indicates that they are in a position to close by year end the purchaser should be trying to insert a clause into the contracts that the purchase price reduces if vendors don't close in the timeframe they've indicated. If the vendor is genuinely confident they can close in time they shouldn't be too against that condition.

xper

killers1 wrote: »

You become entitled to TRS from the day your loan begins to accrue interest which is the date of drawdown. The date of first repayment is irrelevant.

Ok, thanks for the clarification (and sorry if I scared anyone!).

manbat

bombs away wrote: »

Yes and with good reason too, all it was doing was artificially increasing the price of houses. Have you people learned nothing from the last property boom

My thoughts exactly.

I'm a FTB and will have no bother waiting until the new year for this MIR gimmick to expire. I have seen some crazy bidding going on. In some areas the price of a 3 bed semi has wildly inflated by 50/60k in the last 4 months for a 300/400k house. Myself and the partner are having a right aul laugh at the circus goings on at the moment.

The_Conductor

manbat wrote: »

My thoughts exactly.

I'm a FTB and will have no bother waiting until the new year for this MIR gimmick to expire. I have seen some crazy bidding going on. In some areas the price of a 3 bed semi has wildly inflated by 50/60k in the last 4 months for a 300/400k house. Myself and the partner are having a right aul laugh at the circus goings on at the moment.

Lot to be said for waiting out until 2014- when property tax, water rates and other indirect costs of ownership filter into purchase prices. My own back of envelope calculations put water rates at a 50k reduction in OMSP for an average property- and property tax, depending on the property type and size- at a min of another 30k reduction, even on an apartment..........

OMD

smccarrick wrote: »

Lot to be said for waiting out until 2014- when property tax, water rates and other indirect costs of ownership filter into purchase prices. My own back of envelope calculations put water rates at a 50k reduction in OMSP for an average property- and property tax, depending on the property type and size- at a min of another 30k reduction, even on an apartment..........

How did you work that out? Is it just that people will have less disposable income?

sunnysoutheast

smccarrick wrote: »

Lot to be said for waiting out until 2014- when property tax, water rates and other indirect costs of ownership filter into purchase prices. My own back of envelope calculations put water rates at a 50k reduction in OMSP for an average property- and property tax, depending on the property type and size- at a min of another 30k reduction, even on an apartment..........

How do you calculate a 50k reduction in the asking price from water rates?

The_Conductor

sunnysoutheast wrote: »

How do you calculate a 50k reduction in the asking price from water rates?

Average rates that the media are suggesting- then middle ground with commercial usage rates, grossed out at a yearly amount- against how much of the residual NET income after mortgage deductions as a percentage of max net income for calculable purposes to determine max mortgages.

OMD

smccarrick wrote: »

Average rates that the media are suggesting- then middle ground with commercial usage rates, grossed out at a yearly amount- against how much of the residual NET income after mortgage deductions as a percentage of max net income for calculable purposes to determine max mortgages.

Difficult to make calculations based on reduction in net income. You have to factor in other factors such as pay rises, increased hours or promotions. In addition you need to look at the average wage of people who want to buy. I'm not sure if that information exists. There is no point looking at average wage, as this includes young people who have no immediate intention of buying in the near future. This is generally those with the lowest incomes. In addition you to exclude those with very low incomes as they will not be in a position to buy. You have to factor in other costs such as rent. If rent goes up as it appears to be, then it becomes more attractive to buy than rent especially if the perception is that house prices are unlikely to fall further. Finally you need to add in savings or other sources of income that will reduce the amount of mortgage needed. If you believe people on this site then many people have spent the last 5 years accumulating massive savings and will need a tiny/ no mortgage.

The_Conductor

Yes- its very much back of the envelope calculations.
I'm not sure how valid it is to presume any promotions, pay rises or incremental income growth in the short to medium term though- all we have is inflation eating away at our purchasing capacity Its actually one of the stated means for how the government intend to get away without cutting headline social welfare or pension rates- sure if we just don't increase them in line with inflation- they'll fall in real terms anyway........

Doing calculations trying to factor in future unknowns, is always going to be gazing into a crystal ball, come what may.

MMAGirl

I think they will want to replace it on the sly, but not continue it. They want to at least give the illusion that there is a time limit on the purchase.

Its working, they will definitely be looking for some new scheme for each year that has the same effect.

eg A buyers grant paid monthly over x number of years.

Or a certain % interest rate reduction for x number of years that they govt pick up.

Or anything else similar to above.

I'm sure they've already thought of all of the new schemes to come.