Government-Backed 'Top-Up' Mortgage Loans Discussed

The Irish government could be about to step-in and offer 'top-up mortgages' to thousands of first-time buyers, struggling to get a foot on the turbulent property ladder.

The move would coincide with the growth of county council mortgages - aimed at low-income buyers.

Officials are said to be assessing the merits of an equity loan scheme, where small mortgage loans would be topped-up by the government.

This would stimulate the number of potential buyers in the ailing housing market.

In the agreement, the government would hold a stake in the property until the 'top-up' loan was repaid.

The scheme would be aimed at low to medium income groups - providing support to those having difficultly securing credit.


This system would offer an alternative to the current shared ownership scheme, where the local authority attains at least 40% of the house.

Commentators have suggested a 'top-up' deal would, for example, see the buyer of a €250,000 house take out a €175,000 bank mortgage, with the remaining €75,000 lent by the government.

By stumping up 30% of the capital for the homes the state would then gain a 30% stake in the property, until the loan is paid-off.

Similar scheme have previously worked in Northern Ireland and the UK.

There is reluctance by lender to offer high-percentage mortgages in the current economic climate.

This is in stark contrast to the housing market 'boom' two years ago, when many banks offered-up 100% mortgage loans to potential buyers.

As a result, the turnover of mortgage agreement has fallen dramatically, and with stricter credit controls and fewer affordable mortgage packages available, many first-time buyers are finding themselves shutout from the market.

According to government sources, details of the proposed 'top-up' scheme are still to be finalised.

Should the equity loans scheme get the go-ahead, it would be expected to appear in the next Budget.

(PR/JM)