The Local Authority Home Loan

In a bid to help new homes purchasers, the State has introduced a new initiative which is intended to make it easier to get on the property ladder.

The Local Authority Home Loan (LAHL) is intended to help single homebuyers who have a good savings record but are finding it difficult to get enough finance to commit to a purchase.

Local authorities will now be able to lend money to successful applications who would not be able to secure a mortgage large enough to complete a purchase.  The mortgage repayments will be a percentage of net monthly income rather than the 3.5 times income multiple rule which applies to traditional lenders.

Applicants must provide proof of insufficient mortgage offers of finance from two regulated financial providers.  They must also be able to prove a “strong savings history”, which means a savings record of at least 12 months’ duration immediately prior to making an application.  These cash savings must also make up at least 3 per cent of the value of the property.  The remaining 7% needed for the deposit can then be made up of gifts or unborrowed funds.

The scheme is open to those who are single, separated or divorced and applicants can also avail of the Help To Buy scheme which provides a tax rebate and further adds to the budget available.

While there will undoubtedly be some drawbacks to the scheme for applicants in certain categories, the scheme will hopefully provide an opportunity to purchase for those who would otherwise find themselves outside the lending market.

You can find out more about the scheme here.

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