Donegal County Council

1 Donegal County Council House Purchase/Construction Loan Who can apply? A person who is: A first time buyer and Aged between 18 and 70 years and Earning under 50,000 as a single applicant or under 75,000 as joint applicants and In the case of the primary earner on the application, in continuous employment for at least two years (this can be self employment) and in the case of the second applicant, (whose income is being relied upon to fund the mortgage repayment), in employment for at least one year and Cannot get adequate finance from a Bank or Building Society to purchase or build a house, May be eligible for a Local Authority Loan. Who is a First Time Buyer? A First Time Buyer is a person, (or, where there is more than one buyer, each of such persons): who has not on any previous occasion, either individually or jointly, purchased or built his/her own behalf a house (in Ireland or abroad) and where the property purchased is occupied by the purchaser, or a person on his behalf, as his/her only or principal place of residence and where no rent, other than rent under the rent-a-room-scheme, is derived from the property for five years after the date of the current purchase.

2 Is there provision for any special situations in relation to the scope of the definition of a First Time Buyer? Yes. There are two particular situations where a person is deemed to be a First Time Buyer. (a) The trustees of a trust (to which section 189A of the Taxes Consolidation Act 1997 applies), whose trust funds are raised by public subscriptions for the benefit of permanently incapacitated persons, in respect of the first house(s) bought after the establishment of the trust, for occupation by the beneficiary or if more than one, each of the beneficiaries. (b) A spouse to a marriage the subject of a decree of judicial separation , a deed of separation , a decree of divorce or a decree of nullity in the case of the first acquisition of a house by the spouse following the separation or divorce provided that the spouse had, in relation to the former marital home left that home; not retained an interest in that home; whose separated/former spouse continues to occupy that home, which home was occupied by both spouses prior to the separation or dissolution of the marriage.

3 Are there exceptions to the employment requirement in the case of the second applicant? In instances where the income of the second applicant is being relied upon to fund the mortgage repayments, where there is a primary income of a permanent waged/salaried nature, and where the secondary income is from the Department of Social and Family Affairs, then long term social welfare payments can be considered, provided the long term nature of the payment is confirmed by the Department of Social and Family Affairs or other relevant Government Department. Independent confirmation is required in such circumstances. Inadequate funding from two lenders Applicant(s) must have sought their mortgage from two lenders (banks or building societies) and have received inadequate funding offers or refusals from each before making application to the Local Authority for a loan.

4 How much can be borrowed? A Loan can be up to 97% of the price of the house subject to a maximum of 220,000 and subject to the applicant(s) ability to repay. What is the loan term? The maximum loan term is 30 years. In the case of a loan issued to an applicant(s) who is over the age of 40, the maximum loan term is restricted to the number of years remaining until the applicant(s) reaches the age of 70. What about a Deposit? The applicant(s) must have a 3% deposit with regular cash savings making up half of this amount. What is the Interest rate? A variable interest rate applies to housing loans. What kind of Dwelling may be purchased? An applicant approved in principle for a local authority house purchase loan may select a new or existing house or build a house.

5 It is the applicant s choice but the Local Authority must be satisfied that the dwelling being acquired is reasonably priced, of suitable size [gross internal floor area of 175sq metres (1883 sq feet) or less] and standard to cater for the applicant s household and free from structural defects. New Dwellings In the case of a new house, it must meet the following criteria: The builder and the building must be covered by Homebond or Premier Guarantee, or The dwelling must be covered by a Structural Defects Guarantee from the builder. This requirement does not always apply where the property is being sold as an affordable home. Self Builds Self Builds under Contract Where a self-build is to be completed under contract, it must meet the following criteria: Fixed price contract.

6 Appropriately supervised. Appropriate insurance. Construction covered by Homebond or Premier Guarantee. Self Builds by Direct Labour Where a local authority decides, at its discretion, to provide loans for self builds by direct labour, it must meet the following criteria: Appropriately supervised. Appropriate insurance. Where the house is being built by direct labour receipts for at least 11, from VAT registered suppliers and at least 8, for labour carried out by persons who produce a current Tax Clearance Certificate must be produced prior to payment of final instalment of the loan. Supervision of Construction The construction must be supervised by a suitably qualified person as defined under the Law Society guidelines (hereinafter referred to as the construction supervisor ) and set out in the certificate of inspection for House Purchase Loans.

7 The construction supervisor undertakes to provide a certificate of inspection in the format supplied by the local authority. This undertaking must be provided prior to loan approval. The construction supervisor must hold Professional Indemnity insurance cover of at least 1m on each and every claim basis with no aggregate cap. A copy of the certificate of Professional Indemnity must be provided prior to loan approval. Tax Clearance The Applicant All applicants approved for a loan must have a current Tax Clearance Certificate issued by the Revenue Commissioners. They must provide a PPS / Tax Reference Number together with a Tax Clearance Access Number which enables the Local Authority to verify in real time, using the online verification facility on the Revenue Commissioners Website, that a Tax Clearance Certificate has been issued.

8 In general, PAYE customers will apply for a Tax Clearance Certificate through the Revenue myAccount facility, while business customers will apply through Revenue Online Service (ROS) (although there are some exceptions to this). Further information can be obtained on or from the Office of the Collector General, Tax Clearance Section, Sarsfield House, Limerick The Vendor Where a Dwelling is being purchased, the vendor must also have a current Tax Clearance Certificate and provide the relevant numbers to enable this to be verified. The Contractor Where a dwelling is being built/acquired from a Contactor, the Contractor must also have a current Tax Clearance Certificate and provide the relevant numbers to enable this to be verified. What information must be submitted with the application?

9 A Standard Loan Application Form is available for all the major Loans including House Purchase/Construction Loan. The Application Form contains a checklist (copy attached) of requirements, which must be submitted with the application. Where an application is submitted which does not include all of the required information it will be returned to the applicant setting out the missing information. Evaluation As part of its investigation of applications, the Local Authority will arrange for Credit and Judgment checks to be carried out. For this to take place, the Local Authority requires the applicant(s) consent (the consent clause is contained within the application form). If an applicant(s) does not give such consent(s) the Local Authority may not be able to consider the application.

10 Where, on investigation, the Council considers that an application qualifies for a Mortgage, an Approval in Principal (AIP) will issue. The applicant(s) will be will then be required to submit additional information depending on the means of acquisition/construction. A Final decision will be made on the application after these additional items are furnished and considered by the Council , whereon, if successful, notification of Loan Approval will issue. What additional information must be submitted after approval in principal ( ) is issued? The type of additional information, which will be required, depends on the means of acquisition/construction of the dwelling. For example, in the case of a house purchase, a valuation report will be required whereas in the case of a new house being built by direct labour, evidence of supervision by a suitably qualified person will be required.