The disturbing aspect of this is that it would be just better to slash the price by another 15-20%, which is the kind of subsidy that the interest freeloan over the term of a mortgage involves, but this notion just seems anatema to developers.
Isn’t this all just smoke and mirrors to create an illusion of a reduced LTV ratio and take some of the risk off the banks? i.e. they wouldn’t get this effect by just reducing the price.
Ray Grehan will be on Monring Ireland around 7:45.
One of the questions will be: “Why don’t you just slash the prices?”
The greed of these guys is unbelievable.
Seems like it but the LTV is not really reduced but deferred. The bank ought to take into account the fact that the borrower will still have to finance the developer loan at some stage in the future.
Getting a “interest-free” loan over 60K from a developer who most likely is not regulated or subject to the same laws as a bank (or any other financial institution) really sounds like the way out for all who must get on the ladder now. I really look forward to see the small print in those contracts discussing the details of that loan.
The developers are of course perfectly right to do what they wish to sell the gaff, they don’t have any social responsibility - their only responsibility is to make money, and if possible loads of.
I honestly hope that the banks continue tightening their lending criteria, as this seems to be the only chance that some sort of reason gets into the property and mortgage markets. It still doesn’t look like people start thinking on their own.
The loan is coming from Simply Mortgages and the loan will be secured against the house also.
Sub-prime, boys and girls, subprime. And second lien at that too.
I wonder what the interest rate is when the interest free period is up?
Does anyone think a 2 bed in Elm Park is even worth the 329K? that you have to finance now? Forget about the rest.
-Rd
I of course haventt read that far 
So at the end it is just another mortgage in addition to the finance you need anyway. Which means, apart from not paying interest over five years and then having to come up with a lump sum it will be included in any LTV calucaltion and credit criteria. Don’t think that it will actually help the developers to sell their gaffs for the still way too high prices.
As daltonr says: A 2-bed for 329K? Are they nuts?
We can Expect that deposits will be given as a gift to buyers next.
So I’m saddled with a mortgage on 329k and on top of that I need to save or pay off 1k per month so that I have 60k to pay off this loan after only 5 years ???
screw you mr developer
you are loco!!!
I think I’ll see how much I can save myself and use that as a deposit because in 5 years i reckon i will buy the apartment you are trying to sell me for less than the 329 and with no 60 loan on top!!!
fuppin panic!!!
god help anyone who goes for it
sounds worse than getting a mortgage on the whole lot
Are they???
What ever about the loan arrangements, looking at this from the developers point of view one can only conclude that they are close to panic. If one of the big ones fails then it’s big pressure for the others as a liquidated sale will flood the market with real value, or something approaching it. They others are then forced to cut prices…at last.
Financeing is not what th builders/developers wnat to get into.
Then the recipient will have to pay tax on the gift.
They played a few snippets of an interview with Ray Grehan this morning on Newstalk - apparently the deal is that if the property value in 7 years is greater than the current price, then the developer is due an extra wedge of your new-found equity… as he said himself, if they give a 15% loan and the property goes up by 100k, it’s “only right” that they’d share in that and you now owe them an extra 15k… lovely! 
These guys are now close to panic, Grehan admitted as much by saying that they can’t cut any further from here, with some mumbling about below-cost selling afterwards. Interestingly enough Ray, Mr. Market doesn’t give two hoots about below-cost selling - if you don’t sell 'em, your bank will do it for you, it’s just a matter of time!
It is my hope that people see through this for what it is and that someone like the finance guy on RTE George whats his name (you know the one they all love to hate) tells it like it is on the box.
If people see through it the house of cards will fall and this scam will be over. I would add that the builders must be panicing and that the banks in their wisdom would be f***ing stupid to give a 70% LTV where they dont know where the other 30% is coming from, its the same as a 100% mortgage.
The Financial Regulator should get involved in this from the banking side to advise them that a 70% mortgage on a property where the other 30% has been borrowed is still a 100% mortgage and therefore they may have trouble securitising them, plus the fact it is not good business and tantemount to sub-prime lending.
The developer already owes the bank this 30% anyway, along with the other 70%… so this scheme really is a case of the developer shifting stock at 70% in order to keep the banks happy. Instead of selling at a 30% discounted price, they are looking to retain this 30% as equity in the buyers house.
(30% used for example purposes here)
The bank are probably happy with the 70% so I propose letting the developers hit the wall… sell the properties at 30% discount, the bank get’s it’s 70%, the punter gets a real 30% discount, and the developer takes a hit on their development.
Did anybody hear this? What was the answer?
The answer was that prices were as low as they were going to get.
Developers were selling just about above cost and anyway, prices were going to up once “we ride out the storm”.
The guy was clueless, which is scary because he paid the most for any site in the country.