The National Asset Management Scheme's so-called negative equity mortgages are very limited and will only be available on a select number of properties in Dublin, Cork and Meath.
The initiatives is designed to encourage buyers to buy 115 houses in 12 developments in Dublin, Meath and Cork, while at the same time protecting them from potential fall in value of up to 20%.
It is however ground breaking and NAMA homes it could stimulate sales in a property market that has gone into freefall with continuing price falls, blamed on a combination of lack of credit and consumer expectations that prices will fall further.
Three banks - Bank of Ireland, AIB (through their subsidiary EBS) and Permanent TSB bank will participate in the initiative.
NAMA says that potential buyers interested in houses available under the scheme should approach one of the nominated banks
Under the rules, 80% of the agreed sale price of the property has to be paid over upfront. The remaining 20% will only be due in five years’ time. How much, if any, of that 20% is then due will be calculated on the basis of an independent assessment of the property’s value at that point.
So, on a sale price of €200,000, a purchaser would seek a mortgage of €180,000 and pay a deposit of €20,000.
NAMA then agrees to defer the payment of 20% of the current value of the property, in this case €40,000. Should the property be worth €200,000 or more after five years the buyer's repayments will continue to cover the €40,000.
"This is a targeted initiative aimed solely at potential home buyers who may have a concern that house prices may fall further and are consequently postponing their purchase," NAMA said in a statement.
Where are the properties?
There are 35 properties available in Dublin 18, 22 and Naul village and 18 in Dunshaughlin, County Meath.
The remainder are in Cork in Cobh, Douglas, Crosshaven, Ballincollig and Carrigtwohill.
Delvin Banks, Naul Village, Co Dublin: 29 properties
Browns Barn Wood, Dublin 22: 2 properties
Carrickmines Manor, Glenamuck Road Dublin 18: 4 properties
Loughmore Square, Kileens Castle, Dunshauglin, Co Meath: 18 properties
Cul Ard, Carrigtwohill, Co Cork: 13 properties
Old Quarter, Ballincollig, Cork: 14 properties
Drakes Point, Crosshaven, Co Cork: 3 properties
Brightwater, Crosshaven, Co Cork: 11 properties
Rowan Hill, Mount Oval, Rochestown, Cork: 10 properties
Inis Alainn, Carrignafoy, Cobh, Co Cork: 7 properties
Highfield Park Development, Ballincollig, Co Cork: 1 property
- Ardfield, Grange, Douglas, Co Cork: 3 properties
Permanent TSB confirmed that it will be taking part in the scheme, offering a variable rate of 3.69%. The bank says that it has constructed the product to ensure that even if prices don't fall after five years, the customer will not face increased repayments at that time.
Thebailed out bank has set up a dedicated hotline for queries related to the initiative - 1890 500 143.