Saturday 23 September 2017

Home Economics: Will gambling debt affect mortgage?

Sinead Ryan

Sinead Ryan

We are first-time buyers and are completing application forms. We have a good savings record and are in secure jobs.

We only have one other loan which we are paying in full. However, two years ago my fiancé ran up a debt with an online gambling company. He doesn't gamble now and has paid it off – will this be a problem?

Banks are going into incredible detail to scrutinise every single issue regarding the finances of first-time buyers. A gambling debt would probably come under the spotlight.

Karl Deeter of Irish Mortgage Brokers says: "It's really a judgment call. On one hand there is a 'healthy past-time' gambling hobby, but if it involves large amounts going in and out of a person's account, that may be suspect.

If there's additional evidence of, say, large ATM withdrawals late at night in the city centre, then you are into a different area yet again.

The refusals that we see of late are not always well explained and some banks can refuse a mortgage many years after an indiscretion.

Using an experienced mortgage broker keeps the surprises to a minimum as they check finances much like a bank does.

However, there doesn't need to be much reason and a bank can say 'no' these days."

Be upfront with the bank, disclose the information, and get a letter confirming the debt is cleared.

In addition, show that the online account has now closed.

I separated from my wife six months ago and we are only now getting around to organising our financial affairs. We bought a house a few years back that we now rent out – can you let me know what happens to the tax relief we receive on this property as we are both landlords?

Firstly, it is important to clarify the type of tax relief you are receiving. Tax Relief at Source (TRS) for mortgage interest on a home loan can only be given in respect of your main residence.

Barry Flanagan, taxation expert with www.taxback.com explains: "If you are renting out what was your family home, it is now considered an investment property and, as you are no longer residing there, you are not entitled to this TRS relief.

"You should advise Revenue immediately using a TRS 4 form or by contacting the Revenue TRS Helpline 1890 46 36 26.

"However, landlords are permitted to take a deduction in respect of the mortgage interest against their taxable rental income, at a rate of 75pc of the interest paid and it may be this you are referring to.

"Assuming the house is jointly owned, your rental profit or loss should be calculated as normal, and each line item divided in proportion to the ownership.

"This is regardless of whether you are jointly or separately assessed – the proportion of the rental income received and expenses incurred should be shown separately for each spouse.

"It may also be important to consider your stamp-duty position, as in certain circumstances you may need to pay such duty where relief had previously been obtained as owner-occupiers."

Irish Independent

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