EDUC Mortgages. Sean Couch

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1 EDUC Mortgages Sean Couch

2 Mortgages Just because you have a mortgage This does not mean you will receive a new mortgage, even if it is for the same or less than the current mortgage. New Central Bank Rules and tighter bank rules have reduced the amount you can borrow. Do not sell your current property before receiving loan approval.

3 Loan Approval You should have approval before you start looking for property - this way you will know your budget. Most Auctioneers will not accept offers without seeing a copy of the loan approval. Delete from the approval the amount you have approval for. The approval is for a mortgage amount and it can be with drawn by the provider. It is not legally binding and you should still manage your bank accounts as if you have not received loan approval,

4 The 6 Month Plan Decide how much you need to borrow. See if you qualify for that amount. Work out the affordability for the amount required. Save this amount in equal amounts each months. Try reduce loans

5 Affordability for all mortgage applications Banks need you to prove affordability for repayments proposed mortgage plus 2%. Affordability is a combination of: Current mortgage repayments and or loan repayments that will be finished when you get new mortgage. Current rent and or savings. Maximum age to repay mortgage is between age 65 and 70 depending on providers.

6 Affordability for each 100,000 borrowed to age 68. Age Age Age Age Age Age Age 60 1,300 Per Month

7 Don t Withdraw cash on your Credit Card. Withdraw from your savings. Miss any direct debits payments. Have referral charges on your bank statement. Do not miss any loan payments or direct debits.

8 Do Save equal amount each. Pay rent by Direct Debit including rent to Parents. Clear your Credit Card every month Do a Credit Check

9 First time buyers Max loan to income is 3.5 times combined income Max loan to value 90% from January 2017.

10 First Time buyers help to buy. Incentive not available to cash buyers or investment property buyers. Mortgage must be 70% of purchase price/ property value If you are buying the property with somebody else they must also be a first time buyer. You must occupy the property for a period of five years from the date it is habitable.

11 How It Works First-time buyers either purchasing newly built homes or building their own can apply for rebates via a form available at the website of the Revenue Commissioners revenue.ie. The scheme allows purchasers to claim back a rebate on income tax or Deposit Interest Retention Tax (Dirt) on bank savings paid over the four years prior to the year they are buying or building their first home. If they have worked in Ireland for fewer than four years, or have paid only limited income tax, the amount available in any rebate will be lower

12 Help To Buy Scheme Limits The maximum rebate is 5 per cent of the value of the property, up to a maximum of 20,000. The rebate is available only on properties valued at 500,000 or less after an original, higher limit of 600,000 was reduced during the ongoing passage of the measure through the Oireachtas.

13 Help To Buy Scheme Applicants must be borrowing at least 70 per cent of the value of the property. Under revised Central Bank rules, first-time buyers can borrow up to 90 per cent of the value of the property, so the rebate means most firsttime buyers will need a deposit of just 5 per cent to secure their home.

14 Home Movers second time buyers Maximum mortgage 80% of purchase price. 20% Deposit required. 3.5 times salaries. 80% of Site Cost.

15 Self Builds first time buyers If you already own the site mortgage free the bank will give you: 100% of build cost but they will require that you have 10% to cover over runs Bank will do one on Title and Two on mortgage ( including non self builds) If purchasing site bank will give 90% of build and 90% site cost but again you have to show you can cover over runs of 10%.

16 Self Builds home movers second time buyers If you already own the site mortgage free the bank will give you 100% of build cost up to 80% of the final finished valuation. But they will require that you have to factor 10% into loan approval to cover over runs. If purchasing site bank will give 80% of site cost.

17 Self Builds Items required Cost of Construction application completed by your Architect/Engineer. Educ Mortgages will supply form. Copy of the Architect/Engineers PI Insurance. Copy of final grant of planning permission. Folio Map and Site Map. Copy of plans for property.

18 Documents for all application Proof of address. Salary Cert from Athlone and from employer of second applicant. Last 3 pay slips. Copy of P60 for Last 6 months bank/credit Union statements all accounts. Last 3 Credit card Statements. Current Loan or Mortgage Statement.

19 Time Frame and reason for delays From date of receiving complete application 1-2 weeks. Documents must be in order: Bank Statements must be for same period. ( not 1 set from July to December and second set May to November. No Gap in statements. No Gap in Pay slips. Loan statements ( close finance) Proof of address must be same as application address. Explain regular payments from bank accounts

20 Purchase and Renovate If you wish to purchase a property that requires renovation the lender will give you 80%/90% of purchase price and 80/90% of renovation cost. The total loan amount when finished must be 80/90% of the value of properties in the area. IE if the average property in the area is 300,000 and you wish to purchase a property for 300,000 and spend 70,000 renovating it the lender will not give you the money.

21 Negative Equity Mortgages If you are in negative equity you are exempt from the new Central Bank mortgage lending rules with regards to 3.5 times salary and 20% deposit once you sell the property in negative equity. Lets assume you have a property worth 200,000 and have an outstanding mortgage of 225,000. You wish to purchase a new property for 300,000. You get a 90% mortgage on the property you are purchasing 270,000 and the bank add on the 25,000 shortfall from sale of negative equity property. New combined mortgage is 295,000.

22 Purchasing with Friends/Partner What happens if you meet some one or you break up.? Will the Bank allow one person to come off the Mortgage? Will you be in a position to get another mortgage? What happens of one person wants to sell? Negative Equity Draw up a legal agreement

23 Insurance and INTO Salary Protection You can add on Critical/ Serious Illness cover to both Life and Mortgage Protection Insurance. If you are diagnosed with a specified Critical/Serious Illness the policy pay out the amount insured. All members should take out the INTO Salary Protection plan. With or without a mortgage.

24 EDUC Mortgage Offer. Reduced Legal Fees of 500 plus VAT and outlays or: 300 towards legal fees Free Advice we charge no fees Same rates and conditions as if you approach the banks directly

25 Save on your mortgage. Look at reducing the term on your mortgage. Check your current rates and move banks. If you are not in negative equity you can save. 300,000 mortgage on interest rate 4.25%. Lowest Rate 3.2% Save 170 per month. Based on loan to vale of less than 80% Look at our online calculator Moving mortgage is Free and Easy

26 Over Paying Your Mortgage Repayments is 1297 per Month total interest 167,064 If you have a 300,000 mortgage over 30 years at 3.2% If you over pay 100 per month you reduce term by 26 months and save 12,065 on interest payments 200 per months reduce term by 47 month and save 22,739 If you had 300,000 mortgage over 30 years on an interest rate of 4.25% and you switched to the cheapest provider on the market at 3.2% but kept repayments the same you could reduce term by 6 years.

27 Important Points to note For affordability spend child allowance and save from salary. For sole traders transfer money from sole trader account to a savings account each month. Do not lodge grinds money onto bank account After receiving Mortgage Approval you still need to keep bank accounts in order. Banks Forensically check all you bank accounts. Do not borrow money before you get your mortgage cheque. Do your credit check.

28 Calculators Check out our calculators on line to see: How much you can save by over paying Mortgage. How much you can save by switching providers. Find cheapest interest rates.

29 Thank You Sean Couch

30 Personal Tax Damian Wilson

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32 Agenda Why File a return? Tax Credits & Rate Bands Tax Reliefs and Allowances Non-PAYE Income Inheritance / Gift Tax

33 Why File a Return?

34 In 2016, the average tax rebate for PAYE was 1,090! Estimated 1 billion Per year overpaid In PAYE

35 Tax Credits & Rate Bands

36 How to calculate Income Tax Gross Income (Salary, Pension, Rental Income etc.) Less Top Line Deductions (Pension and/or Income Protection contributions) = TAXABLE INCOME USC & PRSI charged here Apply Rate Bands (20% & 40% ) Less Tax Credits = INCOME TAX LIABILITY

37 Standard Rate Bands Personal Circumstances 2016 Single or widowed 20% 40% Single or Widowed Lone Parent 20% 40% Married with one income 20% 40% Married with two incomes* 20% 40% *Transferrable Maximum with one spouse - 42,800 Minimum with other spouse - 24,800

38 Personal Tax Credits Personal Circumstances 2016 Single Person Credit 1,650 Married Persons Credit 3,300 PAYE Credit 1,650 Single Person Child Carer Credit 1,650

39 Widowed Tax Credits Personal Circumstances 2016 Widowed Person Credit (Increase) 2,190 Widowed Parent-(Bereaved in 2015) Tax Credit due ,600 3,150 2,700 2,250 1,800

40 3 Methods of Assessment Single Assessment Separate Assessment Joint Assessment Taxed as a single person Cannot transfer or receive any unused allowances Married, but elect to be taxed alone Unused allowances may be transferred after year end Taxed as a married couple Allowances may be shared during the year

41 Allocation of Rate Bands Are your Rate Bands correctly allocated between spouses and your employments?

42 Tax Reliefs and Allowances

43 Flat Rate Expenses Full-Time Teaching Principal Teacher Teaching Council - 65 Tax Relief available at your marginal rate.

44 Flat Rate Expenses Flat Rate Expenses 117 Flat Rate Expenses 583

45 Tuition Fees 3 rd Level Education fees & student contribution Approved College and course in Ireland & EU Capped at 7,000 per person, per course, per academic year Excess per Household Part time 1,500 Full time 3,000 Tax Relief available at 20%.

46 Qualifying Medical Expenses Doctor, consultant, GP and Hospital fees Appliances, Treatments or Medicines prescribed by a Doctor Nursing Home Fees or Home help Psychological, Speech and Language assessment or therapy Non-Routine Dental treatments (Med 2) Eye Laser surgery Ambulance transport or other transport for kidney patients Certain dietary products e.g., Coeliac or Diabetic

47 Exclusions Amounts reclaimed through your Health Insurer Amounts subject to a compensation payment Routine Dental work Prescriptions in excess of 144 per month Optical expenses

48 Rent Rent Credit Renting in private residential accommodation Must have been renting since 7 th December % tax relief on up to 600 of rent, 1,200 for over 55 s Rent a Room Relief Scheme Let a room or rooms out in your main residence Up to 14,000 (2017) per annum rent (inc.meals, laundry etc.) tax free Must be declared to Revenue in order to qualify

49 Home Renovation Incentive -HRI Tax 13.5% on Qualifying Expenditure Repair, renovation or improvements to main or rental property Combination of works between 4,405 and 30,000 (exc. VAT) Must be a qualifying Contractor Relief granted through tax credits over 2 years

50 Other Tax Credits Home Carer Tax Credit - 1,100 (income 7,200) Incapacitated Child Credit - 3,300 Dependant Relative Credit - 70 Age Credit Single 245 / Married 490 Pension and/or Income protection not paid through salary

51 Non PAYE Income

52 Who are they? Landlords Self-Assessed Individuals Why file a Return? Sole Traders Directors Foreign Income Investment income e.g., Dividends and/or interest Legally obliged to do so Self calculate liability Deadlines imposed Surcharge, interest & penalties apply ***Non-PAYE income in excess of 5,000***

53 Rental Income Sample Per Month Landlord s View Revenue s View Rental Income 1,000 Mortgage Repayment ( 1,200) Profit/(Loss) ( 200) 1,000 ( 720)* 280 *assuming 80% of repayment is interest, restricted to 75% allowable

54 Rental Income Allowable Expenses House & Contents Insurance Mortgage Protection Accountancy Fees Letting Agent Fees Repairs & Maintenance Painting & Decorating Property Management fees Private Residential Tenancies Board Wear & Tear on Fixtures & Fittings

55 Inheritance/Gift Tax

56 Gifts& Inheritances Exemption Thresholds Relationship Capital Acquisitions Tax Threshold Group A Son or Daughter 310,000 Group B Brother, Sister, Niece, Nephew, Grandchild 32,500 Group C Other 16,250 CAT 33% Includes all gifts & inheritances since 5 th December 1991

57 Gifts Small Gift Exemption 3,000 Per person, per transaction, per year. Gifts Normal Payments Money Holiday Shares House Deposit Free Rent of 2 nd property Free use of Family Home Educational Costs Free use of 2 nd property if in full time education Wedding contribution Amounts less than 3,000 DO NOT reduce lifetime threshold

58 CAT Small Gift Exemption For Example: Two parents can gift 6,000 to son or daughter per year Two parents can gift 12,000 in total to son or daughter and their partner/spouse per year Amounts OVER the allowable Small Gift Exemption reduces the lifetime threshold amount

59 Dwelling House Relief On Inheritance Disponersmain residence at date of death Beneficiary has no other property entitlement Beneficiary has occupied property for 3 years prior & 6 years after date of death A Gift Same rules apply ONLY IF the beneficiary is over 65 years of age or incapacitated

60 Exemptions & Reliefs Transfer between Spouses exempt Property transferred as a result of a court enforcement CGT and CAT offset on same transaction Benefits used for medical purposes only for permanently incapacitated individual Stand in the shoes of Relief

61 Request & review your Tax Credit Certificate Notify any amendments to Revenue Gather all your medical and other qualifying expenses File Tax Returns annually Review prior 4 years Ensure you claim Tax Relief on all pension contributions at retirement

62 Our Services Landlords Self-Employed Income outside of PAYE Fees from 180 per year Commission based service No Refund No Fee 10% of tax refund Text

63 ANY QUESTIONS?