How to use the Help to Buy scheme for your deposit

The Help to Buy scheme has seen massive uptake from buyers since its introduction in 2016, as it helps first time buyers and self-builders get their foot on the home-owner ladder.

You can qualify for up to €30,000 or five percent of the purchase price (or value) on a new build or self build with the scheme – which is a relief for most first time buyers as the hardest part of the mortgage application is saving for the deposit.

Under Central Bank rules, first time buyers must save a 10 percent deposit on the price of their house. On a house worth €250,000, that’s €25,000 – which is a significant amount for anyone to save.

It’s good news though as the rebate under the Help to Buy scheme can be used as part of your deposit.

For example, let’s say you’re aiming to buy a house for €100,000. As a first time buyer you’ll need a deposit of €10,000. However, if you apply to the scheme, you could be applicable for a rebate of €5,000.

While the value of homes under the scheme can reach €500,000, the amount of the rebate is capped at €30,000. Bear in mind that you also may need to pay back some/all of the funds if you don’t live in the property for a minimum of five years; if you didn’t finish the process to buy the property; or you didn’t finish building the property.

The amount of Income Tax and Deposit Interest Retention Tax (DIRT) you’ve paid in the four years before your purchase or self build will also impact the amount you can claim on the scheme – as the sum you can qualify for can’t be anymore than the amount of Income Tax and DIRT you’ve paid in that period. If you’re self-employed, you’ll need a tax clearance certificate.

You can see a full list of the terms and conditions here.

Phew! That’s the tricky part – so onwards to the application process.

If you apply for the Help to Buy scheme online, you’ll have two stages to follow: the actual application itself and the claim stage.

You’ll use myAccount or Revenue Online Service (ROS) to apply for the scheme online. You’ll need to complete a declaration and choose the years you want to use for the refund. If you’re tax compliant, your application will be approved and you’ll be given an application number and a summary of the maximum amount of your claim. You’ll also be given a 6 digit access code through MyEnquiries.

You’ll need to provide your lender or qualifying contractor or solicitor with these codes.

Once you’ve signed the contract for your new home or drawn down the first part of the mortgage for your self build, you can complete the claim stage.

The claim stage has a couple of steps, via Revenue.ie:

• Step 1: Upload evidence of your mortgage and the following information – a copy of the signed contract if you’re buying a home, or proof of drawdown and a copy of the valuation report from the lender if you’re building.
• Step 2: You’ll need to confirm the details about the property, purchase price, date of completion, mortgage, and the amount of the deposit you already paid. You’ll be issued with a claim reference.
• Step 3: Once you’ve submitted your claim, you’ll need to let your developer/contractor know, or contact your solicitor if you’re building your own house. You’ll need to give them your claim reference and access code. They’ll then be asked to verify the information you’ve provided.

If that all clears, you’ll receive the rebate. While it might seem like a lot of terms and conditions, the Help to Buy scheme is seriously useful for buyers so it’s absolutely worth going through the application process.

Before you go house hunting, it's a good idea to get your mortgage arranged – or at least discussed to see where you stand. Get the ball rolling with our First Time Buyer guides.

If you'd like to talk through your mortgage options, book a 30 Minute Mortgage Meeting with one of the team in EBS. Why not try our mortgage calculator to find out how much you may be able to borrow?

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