THE Local Authority Purchase and Renovation Loan (LAPR) is a Government-backed mortgage and loan that helps you to buy and renovate a derelict or uninhabitable home.
The loan is for first-time buyers, and ‘fresh start applicants’, who have been unable to get funding from commercial lenders. It is an extension of the Local Authority Home Loan.
You must qualify for the Vacant Property Refurbishment Grant to get this loan.
The loan has two parts: a fixed rate mortgage loan and a variable rate bridging loan. The interest-only bridging loan is for the amount you’ve been approved for the Vacant Property Refurbishment Grant. You pay the bridging loan back as soon as you get the grant.
How do I qualify for the Vacant Property Refurbishment Grant?
To qualify for the Vacant Property Refurbishment Grant, you must meet the following criteria:
• The property must have been vacant for two years or more. You will not qualify if the property has been left unreasonably or purposely vacant so you can get the grant.
• The property must have been built before 2008. (Before May 1st, 2023, only homes built before 1993 qualified.)
• You must own the property or be in the process of buying it.
• You must live in the property as your principal private residence when the work is completed or make it available for rent. If you are going to rent the property when the work is done, you must register the tenancy with the Residential Tenancies Board.
• You must have tax clearance from Revenue and your tax affairs must be in
order.
• You must have paid your Local Property Tax, if applicable.
• You must not be a registered company or developer.
You can only get the grant twice. You can get one grant to refurbish a home to live in, and another for a home you are going to rent out.
You can get up to €50,000 to renovate a vacant property and up to €70,000 if the property is derelict. The grant is inclusive of the VAT cost of the works.
How much can I borrow?
The amount you can borrow depends. You need to show that you can afford your monthly mortgage repayments, which must be less than 35% of your net household income.
The loan to value for the home you are buying is also taken into consideration, as well as the Vacant Property Refurbishment Grant amount you have been approved for.
You need to show the level of renovation work you need for your home and the project viability, and you need to show the estimated value of your home.
The value of your home for this loan is taken as the projected value of the property after the renovations are done. This value cannot exceed the maximum market property values for the Local Authority Home Loan in your area.
The maximum value is different depending on where your home is located. It is €330,000 in Cork.
There are also three project types for the loan:
• Vacant property and minor works: you can apply for 90% of the purchase price and renovation work for these projects.
• Vacant property and major works: you can apply for 85% of the purchase price of the home and 90% of the renovation costs for these projects
• Derelict: you must qualify for the derelict top-up of the Vacant Homes Refurbishment Grant for this type. You can apply for 80% of the purchase price of the home and 90% of the renovation costs.
There are different maximum amounts you can borrow depending on the project type you are applying for. These limits can be seen on the Local Authority Purchase and Renovation Loan
website.
A calculator on the Purchase and Renovation Loan website will give you and estimate of how much you can borrow and what your repayments will be.
What are the interest rates
The Local Authority Purchase and Renovation Loan is made up of two parts, a mortgage and a bridging loan. The mortgage and the bridging loan have different terms and interest rates.
Interest rates for the mortgage part of the loan are fixed at 4% for loans up to 25 years (APR 4.07%) and at 4.05% for loans over 25 years and up to 30 years (APR 4.13%).
The interest rates for the Local Authority Purchase and Renovation Loan can change from time to time. You will get the interest rate available when you draw down your loan and this rate is set for the term of your loan.
A fixed interest rate means that your monthly repayments remain the same for the term of the loan. You can pay off all or part of your mortgage, but you may have to pay a breakage fee.
You must sign up to the local authority collective Mortgage Protection Insurance (MPI) scheme. You pay MPI monthly in addition to your loan repayments.
The interest rates for the bridging loan is 3.5% interest only variable rate for two years.
The bridging loan is an interest-only loan. You can get your bridging loan for the amount you’ve been approved for with the Vacant Property Refurbishment Grant. The bridging loan must be repaid once the grant is paid out.
To apply for the Local Authority Purchase and Renovation Loan, complete the application form and submit with supporting documents to the housing section of the local authority in the area where you want to buy and renovate your home. You can submit your application by post or in person.
You will get a decision in writing about your application.
Do I need to supply supporting documents?
You need to submit supporting documents with your application, some of which depend on your situation. The application form provides a checklist for applicants so that you can make sure you have all the documents you need before you submit your application. You can contact your local Citizens Information Centre to get further details on what is required.
The Local Authority Purchase and Renovation Loan website has information about the loan including an FAQ and a loan calculator. It is at www.purchaseandrenovationloan.ie
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