What is a First Time Buyer (FTB) – Definition?
What is the First Time Buyer Definition? We are asked this question every day at Mortgage123. The answer is not as simple as you may think. In fact, the definition can vary between mortgage lenders, and also for the purposes of the Help to Buy Scheme.
Mortgage Lenders – Who qualifies as a First Time Buyer?
- Someone who has never taken out a mortgage loan either in Ireland or abroad, or has been divorced or bankrupt and does not have interest in the previous property.
- Does not own a principle private residence (PPR) in Ireland or abroad.
- Will occupy the purchased property as his/her principal private residence (PPR).
- Both applicants are FTBs.
Most Irish lenders follow the Central Bank of Ireland‘s definition of a first time buyer.
The Central Bank of Ireland states:
‘A first-time buyer is defined as a borrower to whom no housing loan has ever before been advanced. Where the borrower under a housing loan is more than one person and one or more of those persons has previously been advanced a housing loan, none of those persons is a first-time buyer.’ Since January 2023 the ‘fresh start’ perspective was added to the definition.*
*Since the latest Mortgage Measures Framework Overview in late 2022, two additions were made to the FTB category.
Divorced/Bankrupt Individuals
– From a “fresh start” perspective, borrowers who are divorced or separated or have undergone bankruptcy or insolvency may be considered FTBs for the mortgage measures (where they no longer have an interest in the previous property).
– FTBs who get a top-up loan or re-mortgage with an increase in the principal may be considered FTBs, provided the property remains their primary home.
What if I was gifted/inherited a property?
If you have been gifted or inherited a property, you will not lose your FTB status and that includes for the purposes of the Help to Buy Scheme.
Note: It is important to note that the property purchased has to be occupied by the purchaser as his/her principal private residence (PPR). Hence, if you already own a home which is your PPR, you will not be considered a first time buyer.
Simply put, a first time buyer is a person who does not own a principle private residence and has never taken out a mortgage for a property before (except if they qualify under the ‘fresh start’ perspective). In the case of a joint application, both parties must be first time buyers to be eligible for a first time buyer mortgage.
Help To Buy Scheme – Who Qualifies?
Help to Buy (HTB) incentive is a scheme for first-time property buyers. It helps you with the deposit you need to buy or build a new house or apartment. You must buy or build the property to live in as your primary home.
The Help to Buy Scheme defines a first time buyer as someone who has never owned a property whether it be by cash or mortgage; inherited and gifted properties are exempt from this rule.
In the recent budget, the HTB scheme was extended until the end of 2024. If you sign a contract for a new house or draw down on a self-build mortgage between now and December 2024, you will be eligible for the increased relief – called enhanced relief.
You can claim relief on the lesser of:
- €30,000
- 10% of the purchase price of the property
- 10% of the completion value of a self-build
- The amount of income tax and DIRT you paid for the previous 4 years
For many of us, the most difficult financial decision we will have to make in our lives is buying a home. With the mountain of information floating around on first time buyers, it can be difficult to wrap your head around the subject.
Find it confusing? That’s why we are here to help.
At Mortgage123, our expert advisors can guide you through the process of getting your first home. Take the stress out of your mortgage by contacting us today.
