NAMA extends 80/20 Deferred Payment Initiative to an additional 180 houses in 12 counties

The National Asset Management Agency (NAMA) has today extended its residential mortgage 80:20 Deferred Payment Initiative to an additional 180 houses in 12 counties.

The houses included in the new phase are located in the following counties:

Carlow

Clare

Cork

Dublin

Galway

Kerry

Kildare

Kilkenny

Limerick

Meath

Sligo

Wexford

The houses range in size from two-bedroom to five-bedroom with prices starting from €100,000. A listing of the properties that have been added to the initiative is attached (see note 1).

Further information on properties included in the initiative can be viewed on www.nama.iewww.daft.ie and www.myhome.ie.

The Agency is extending the initiative after a positive response from home buyers during the pilot phase, which was launched in May.

Commenting on the extension of the 80:20 Initiative, NAMA Chief Executive Brendan McDonagh said:

“This initiative is still at an early stage but it has been favourably received by prospective purchasers. It is aimed at instilling confidence in people that they can buy a home without the immediate worry of falling values and facilitating greater price discovery”.

Mr McDonagh also said the pilot phase achieved its objectives.

 “We have established that concerns over potential falls in house prices remain an issue for buyers. The extension of this initiative will help address these concerns for buyers in 9 more counties, in addition to the 3 included in the pilot phase.”

Key Features of the 80:20 Initiative:

  • NAMA does not own the properties and is not itself issuing the mortgages.
  • This is a targeted initiative aimed solely at potential home buyers who may have a concern that house prices may fall further and are consequently postponing their purchase.
  • It offers potential buyers the ability to own and move into a new home now instead of renting while they wait for the market to stabilise.
  • The product will protect buyers from decreases of up to 20% in the value of their property over the next five years.
  • Three banks – Bank of Ireland, AIB [through its subsidiary EBS] and permanent tsb bank – are participating in the initiative. Buyers should approach these banks to obtain a mortgage, which will be subject to typical lending criteria.
  • 80% of the agreed sale price of the property will be paid upfront. The remaining 20% will only be due in five years’ time. How much, if any, of that 20% is then due will be calculated on the basis of an independent assessment of the property’s value at that point (see note 2).
  • As normal, each of the three lenders will require buyers to part-fund their purchase with a deposit of at least 10% of the value of the house.
  • A key benefit for buyers is that, for the first five years, their repayments can be calculated based on a mortgage that includes the deferred payment element. If the price of their house falls over the five years and they may not be liable for the deferred payment element, they will have, in effect, been accelerating their mortgage repayment and achieving considerable savings on the interest accruing on their mortgage.
  • This is a targeted, limited initiative supported by NAMA.
  • The initiative is not aimed at buyers who cannot get a mortgage or at investors.

Note 1: List of qualifying developments

Development Name

Location

Unit Number

Castleoaks, Dublin Road, Carlow

Carlow

21

Churchfields, Clonlara, Co Clare

Clare

14

Tir Cluain, Midleton, Co Cork

Cork

10

Castle Heights, Carrigaline, Cork

Cork

3

Silken Park, Citywest, Dublin 24

Dublin

6

Carrickmines Manor, Glenamuck Road, Dublin 18

Dublin

6

Pairc na Ri, Athenry, Co Galway

Galway

18

Oakfield, Park Road, Killarney, Co. Kerry

Kerry

6

Cluain Bhearu, Athy, Co Kildare

Kildare

4

The Weir, Castlecomer Road, Kilkenny

Kilkenny

10

Castlerock, Castleconnell, Limerick

Limerick

20

Silverstream, Stamullen, Co Meath

Meath

15

Fitzherbert Wood, Slane Road, Navan,  Co Meath

Meath

5

Ardfinn, Strandhill Road, Co Sligo

Sligo

16

Elderwood, Castlebridge, Co Wexford

Wexford

26

 Additional units in these developments may be introduced on a phased basis, subject to demand.

Note 2: Sample purchases using the Deferred Payment Initiative

Based on a property currently valued at €200,000 and a buyer with a €20,000 (10%) cash deposit:

 

Today

 

 

Property Purchase Price

200,000

 

 

 

Financed By:

 

 

 

70% Mortgage (TrancheA)

140,000

 

 

 

10% Purchaser Deposit

20,000

 

 

 

20% Deferred Payment

40,000

 

 

 

 

 

Year 5 

Value  Unchanged

Value  Down 20%

Value  Down 10%

Value 

Up 10%

 

Property Valuation

200,000

160,000

180,000

220,000

Change in Value

0

(40,000)

(20,000)

20,000

Financed By:

 

Existing 70% Mortgage

140,000

140,000

140,000

140,000

Existing Purchaser Deposit

20,000

20,000

20,000

20,000

Deferred Mortgage (Tranche B)

40,000

0

20,000

40,000

Cost to buyer

200,000

160,000

180,000

200,000

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