Monday 20 November 2017

The options if you can't meet your mortgage payments

An Oireachtas committee has called for a radical overhaul of the mortgage interest supplement and its inconsistent allocation to out-of-work homeowners in arrears, writes Charlie Weston

Cash-strapped homeowners get assistance with the interest portion only of their mortgage repayments
Cash-strapped homeowners get assistance with the interest portion only of their mortgage repayments

MORE than 15,100 homeowners are receiving money from the State to help them pay their mortgages, the latest figures show.

This is up 267pc since the end of 2007 when the number of those obtaining mortgage interest supplement (MIS) stood at just 4,111, according to the Department of Social and Family Affairs.

At the end of 2008 there were 8,090 struggling homeowners receiving the state aid.

The average amount now being paid out in mortgage interest supplement is €367.40, the department said.

But what is it and how do you qualify for it?

Mortgage interest supplement provides short-term support to help people pay mortgage interest repayments.

Cash-strapped homeowners get assistance with the interest portion only of their mortgage repayments.

However, an Oireachtas committee has concluded that this system for assisting mortgage holders in arrears is not working properly and needs to be radically overhauled.

The operation of the mortgage interest supplement scheme is now being reviewed by the Department of Social and Family Affairs.

Part of the review is set to look at why there is no reliable data on how many people are applying for help under the scheme. The only statistics available are the numbers eventually granted aid.

However, figures obtained by the Irish Independent at the end of last year indicated that more than 1,000 homeowners a month were being turned down for the mortgage payment support.

The Oireachtas committee's report, penned by Fianna Fail TD Thomas Byrne and Fine Gael TD Olwyn Enright, recommends that the reasons for approval or refusal should be collated, while the numbers applying should be recorded.

"There is a number of serious difficulties with the way in which the scheme is operated at present," the committee's unpublished report says.

The report points out that there is no uniformity in the way the scheme is administered. Claimants are turned down for the support if it is considered they overpaid for their home, or the mortgage they took out was too expensive for them.

The report states a two-income couple may have been able to afford a big mortgage during the boom, but if one of them loses their job, they will no longer be able to meet the mortgage repayments.

But a homeowner will not get the mortgage interest supplement if either the owner or his or her spouse or partner works more than 29 hours a week.

The report condemns the fact that the decision on whether or not a homeowner took out a mortgage that is too expensive for them is at the discretion of the community welfare officer assessing the application.

The Joint Oireachtas Committee's report implies that there should be a broader response from the Government to the issue of homeowners in arrears rather than just tinkering with mortgage interest supplement.

To that end, the committee recommends that lenders and/or the State should be forced to take a stake in a home where a borrower is unable to meet repayments.

MIS is administered for the Department of Social and Family Affairs by community welfare officers employed by the Health Service Executive.

To qualify for MIS you must have a means test done by state officials to determine your income and expenditure.

You must also satisfy the community welfare officer that the loan agreement was entered into at a time when you were in a position to meet the repayments.

Your home must not be for sale. Also, the interest you are paying on your mortgage must "not exceed such amount the community welfare officer considers reasonable" to meet the homeowner's needs. You don't have to have re-negotiated your mortgage agreement with your lender to get MIS, but you may be asked to do this by the community welfare officer. This may involve changing the term of the loan or paying the interest only for a period.

As stated before, another condition is that the homeowner must not be in full-time work -- that is, employment for more than 29 hours a week.

According to the department: "Mortgage interest supplement is normally calculated to ensure that a person, after the payment of mortgage interest, has an income equal to the rate of supplementary welfare allowance, appropriate to family circumstances, less a minimum contribution, currently €24, which recipients are required to pay from their own resources."

The department added that its review was also considering "whether alternative approaches to achieving the scheme's objectives are warranted in the light of recent changes in the economic climate and the mortgage market".

The full review is expected to be completed early this year.

Irish Independent

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