NAMA IS TO CONSIDER extending its experimental ’80:20′ mortgage scheme – which aims to insulate home-buyers from the possibility of negative equity – to over 600 further properties, after positive public demand for an original pilot offering.
The scheme, announced by the State-owned ‘bad bank’ two weeks ago, saw NAMA make 115 homes in selected developments in Dublin, Meath and Cork available to buyers under a scheme that split their mortgage into two traunches.
Under the scheme, buyers who provide 10 per cent of the purchase price themselves have a 90 per cent mortgage split into two loans, with the first 70 per cent released at the time of purchase.
The property is then independently valued five years after its purchase – with the second tranche of the mortgage covering only the outstanding value of the home. If the property’s price has risen, only the remaining part of the purchase price is borrowed.
The scheme means that homeowners can experience a drop of up to 20 per cent in their property, within five years of their purchase, without falling into negative equity where the value of their loan is greater than the value of the property.
Of the 115 properties originally earmarked for the scheme, 16 have already been sold outright, with a further 16 reserved for other buyers – bringing in a total of €8.4 million for the agency within the scheme’s first fortnight.
A NAMA spokesman this morning said the agency was “very pleased with the huge interest in the initiative and the very steady level of enquiries so far”.
The agency will now consider expanding the programme to 750 properties with a greater geographical spread, though the agency is not thought to have finalised its list of units which will be considered for sale.