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Good news for first time buyers

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First time buyers in Letterkenny have had a tough time over recent years.

Between soaring rental costs and difficulties saving for deposits, it’s not been easy .

But this week there’s been a bit of good news. The Central Bank of Ireland has announced some most welcome changes that should help ease the pain for some first time buyers.

‘Two Key Areas’

The Bank has announced amendments in two key areas.

Firstly, as of January 1, 2017, the ceiling on the loan to value (LTV) ratio for all first time buyers will be set at 90 per cent.

That had been the case for loans up to €220,000 but for any borrowing above that it rose to 80%.

In essence, buyers now need 10% deposit for any home purchase.

And there’s another fundamental change.

‘Above the Lending Ceiling’

Banks can allow for 5 percent of all first-time mortgages to go above that lending ceiling and for 20 percent of other homebuyers – currently there’s a 15% cut off regardless of the type of lender.

The Central Bank 3.5 times loan to income restriction remains unchanged.

Marian Finnegan, Chief Economist, Sherry FitzGerald Group welcomed the changes.

“We believe the previous calibration of the macro prudential policy had placed a significant burden on the economy.

“The restrictive lending policy towards first time buyers had stifled the supply of new residential units and led to the exclusion of important cohorts from the market. The new policy is more in line with international practice and it should help underpin an increase in construction activity.”

Ms. Finnegan said attention should now switch to removing any barriers to ensuring supply of houses meet demand.

If these changes have strengthened your hand and you’re ready to start looking for your dream home, check out our step by step guide to buying a house in Letterkenny.