A.E.M.A.

€20,000 on the Line for Hundreds of Couples.

First Time Buyers Panic with Only 3 Weeks to Close on New Home

The Association of Expert Mortgage Advisers have warned that First Time Buyers have only 3 weeks to finalise the purchase of their new home, and with lenders likely to close off issuing mortgage cheques on or before, Friday the 21st December, the race is really on to qualify for the enhanced tax relief.  In some instances the relief could amount of relief available could be as much as €20,000 for a couple.

According to Trevor Grant of the Association of Expert Mortgage Advisers, “Most borrowers assume that they have up until the end of the month to close their mortgage for their new home to ensure that they qualify for the enhanced tax relief and while that’s technically correct, lenders typically stop issuing cheques a few days before the Christmas holidays and remain closed over the holiday period.   Therefore it is unlikely that any cheques will be issued post December 21st”.

Budget 2012 contained a number of tax relief measures designed to kick-start the property market, including 25% mortgage interest relief for first time buyers and 15% relief for non-first time buyers for house purchases made this year.  Mortgage interest relief for first-time buyers in 2012 is 25% for the first and second tax year in which you pay mortgage interest. You will get relief of 22.5% in tax years 3, 4 and 5. After that you will get relief of 20% but 2017 is the last year in which mortgage interest relief will be available. 

Trevor continued, “In order to qualify your mortgage must have drawn down by the end of the year so we are strongly urging all borrowers and their legal and financial advisers to proactively work with their Lenders in order to ensure that their mortgage closes on time so that they can avail of the prevailing tax relief measures”. 

The Association of Expert Mortgage Advisers say that typical delays in mortgage closings include mortgage protection and home insurance policies not being ready to issue or being incorrectly issued in the first place.  Also, some purchasers underestimate the legal issues with some of these properties. While many are straightforward, others are being sold in negative equity so the seller needs the approval of his lender to complete the sale.   The Mortgage Experts say that given the shortened timeframe in December it may not be possible to deal with/problems which arise – which could prove to be a very expensive problem!

Trevor went on to say, “The mortgage market hasn’t been this busy for the guts of 5 years and while it’s very welcome, we have some concern that those looking to buy in the New Year may be turned off if the enhanced mortgage relief is not extended”. 

Trevor concluded, "Minister Noonan has already emphasised that this mortgage interest relief measure will come to an end at the end of this year however we would urge the Minister to reconsider some form of extension to this measure.  At the very least we propose that those first time buyers with contracts signed prior to December 31 2012 and who are not in a position to close their mortgage before the deadline  may avail of the relief  in the New Year."

Note to the Editor;

Mortgage Interest Relief

Mortgage interest relief is administered via Tax Relief at Source (TRS). This means that your mortgage lender gives you the benefit of tax relief on the amount of mortgage interest paid. They do this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. Any amendments to this tax relief - for example, if there is a change in interest rates - are made automatically by your lender.

The following ceilings apply;

Who is the Association of Expert Mortgage Advisers

The Association of Expert Mortgage Advisers represents specialist advisers responsible for the arrangement of an estimated 75% of all independently secured mortgages. In addition its members are also leaders in the provision of independent advice to those seeking to restructure or manage existing residential and commercial mortgage contracts.

They develop long-term relationships with our customers who can rely on their experience, expertise and knowledge in all aspects of their mortgage (both newly acquired and existing), leading to an ultimately rewarding customer experience.  In addition, they endeavour to proactively engage with all industry stakeholders in order to improve the mortgage industry for the benefit of all participants.