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Local authorities issue 99 mortgage approvals this year

If you have been turned down for a bank loan you can apply for a loan from your local authority.

IN 2012, LOCAL Authorities approved 174 mortgage approvals. To date, there have been 99 mortgage approvals by local authorities this year.

This is an increase of just under 50 per cent in comparison to 2008 figures.

Under law, if you are unable to get a loan from a building society or bank, you may be eligible for a mortgage from your local authority.

Loans

The loan can be up to 97 per cent of the price of the house subject to a maximum loan of €220,000 and subject to repayments which are no more than 35 per cent of the household net income.

The number of mortgage approvals by local authorities has risen since 2008. A parliamentary question from Kevin Humpreys TD to the Minister of the Environment, Community and Local Government Phil Hogan revealed that although figures have increased, many local authorities only approve a minimum amount per year, with some local authorities approving none at all.

You may be eligible for a local authority mortgage if you can show the local authority that you cannot get a loan from a bank or building society and you are a first time buyer and your income satisfies the income test.

You must be earning under €50,000 as a single applicant and under €75,000 as joint applicant to be eligible. If the applicant is the primary earner, they must be in continuous employment for at least two years – which can be self employment – and the second applicant must have at least one year.

Maximum loan

The maximum house purchase loan available is €220,000. Currently there are 20,000 mortgage holders on the housing loan books of local authorities nationwide.

However, looking at the breakdown, this year county councils that have not approved any mortgage approvals this year include Cavan, Galway, North Tipperary, Offaly, Roscommon, South Dublin and South Tipperary. City Councils that have not approved any this year include, Cork, Galway and Limerick.

In 2012, Fingal and Waterford County Council approved the highest number of local authoroty mortgages at 15 each. Laois County Council and Mayo County Council approved 14, while Kilkenny County Council approved 13.

City Councils

Last year,Galway City Council didn’t approve any, while Cork City Council approved two. Dublin City Council approved just 11, Limerick City Council approved three and Waterford City Council approved 15.

The full breakdown of 2008-2013 figures can be seen below:

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Arrears

The latest figures from the Department of the Environment show that almost one third of local authority mortgages are in arrears. 4,900 mortgages are in arrears of over six months, with 1,300 in arrears for three months.

Local Authority mortgage loans are issued by the local authority, but the money has to come from a  bank in one form or another.

Back in 2011, a scheme aimed at long standing local authority tenants who had in excess of ten years tenancy had the opportunity to apply to purchase the property.  Tenants were given 3 per cent discount for each year with a maximum of 45 per cent for 15 years tenancy. It too required council loans but at the time,  local councillors around the country stated that there were no council loans being given out, for any initiative, as the lack of access to credit to ordinary people was the same for local authorities.

The latest figures show that bank mortgage lending grew again in the third quarter of this year, with activity up by 12.5 per cent in the year to September 2013. 4,483 mortgages valued at €750 million were issued between July and September.

However, when put into the context of the Celtic Tiger, in the third quarter of 2006, more than 54,623 loans were issued.

Read: Banks exceeding arrears targets, but some customers have “no clarity”>

Read: Banks brought 2,300 legal proceedings against mortgage holders in Q3>

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