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Mortgage Support

Mortgage Interest Supplement (Closed)

Mortgage interest supplement was a short-term support for persons in payment of mortgage interest repayments.  Mortgage interest supplement applied to interest on mortgage repayments less mortgage interest relief.

The scheme applied only to the interest part of the payment.  It did not cover capital or payment of life/mortgage protection policies, etc.

After June 2012, the applicants must show that they have availed of the mortgage arrears resolution process (MARPs). It is possible to obtain relief after 2012, even if the property is for sale.

Qualification

In order to qualify for mortgage interest supplement, the applicant must

  • meet the means test.
  • have entered into or complied with an alternative repayment arrangement with the mortgage lender for at least 12 months
  • be able to afford the repayments when the loan was first agreed.
  • the amount of mortgage interest must be no more than the Department considers reasonable to meet residential and other needs.
  • only the part of the loan that relates to the purchase, repair, or maintenance of the property is taken into account.
  • arrears must be reasonable
  • the applicant must be habitually resident in the State.

Exceptionally the Department may award the supplement where the amount of the interest payable exceeds the Department’s assessment of what is reasonable.  This is payable for a maximum of 12 months.

Disqualification

There were disqualifications for mortgage interest supplement as follows:

  • unlawfully present in the State
  • attending full-time education
  • involved in a trade dispute
  • subject to exceptions, the applicant, spouse or civil partner works more than 29 hours a week
  • the applicant has been a resident in an institution for more than 13 weeks.

Strictly, full-time employment disqualifies mortgage interest relief.  If one of a couple is in full-time employment, both are excluded.

Income Ignored

Persons participating in community employment schemes, back to work/enterprise allowance with income below €317.42 per week are not excluded. Persons in receipt of back-to-education allowance may also retain a mortgage interest supplement.

Family income settlement, reasonable travelling and childcare, expenses and childcare allowance payable on Sola’s training courses are not taken into account in considering gross household means above €317.43 per week.

Under these arrangements, applicants may continue to receive 75 per cent of the mortgage interest supplement during the first year of employment, 50 per cent in the second and 25 in the third and fourth years of employment. The retention arrangements apply to persons unemployed for 12 months who return to full-time employment provided household income does not exceed €317.43 per month.

Means Test

The mortgage interest supplement is means-tested.  It takes account of the following:

  • income from employment
  • social welfare payments, subject to exceptions.
  • cash income, including maintenance
  • income and value of property
  • capital

There is a test in respect of deemed income from property. The first €5,000  is disregarded.  This increases steadily to 5.2 percent for the next €10,000 Euro, 10.4 percent for the next €25,000, and 20.8 percent for everything over €40,000.

Certain income is disregarded, including

  • supplementary welfare income,
  • child benefit,
  • mobility allowance,
  • certain Gaeltacht rental income,
  • accommodation income,
  • respite care payments
  • guardian’s payments,
  • carer’s payment.

Determination

The Department of Social Protection’s local officer determines eligibility.  They take account of the remaining income and household contribution used to determine the contribution to mortgage interest.  The standard social welfare allowance rate (for single persons with or without adult dependents or child dependents) is subtracted.  This is the monthly contribution.

The mortgage interest supplement is the difference between actual mortgage interest and the above contribution as long as the difference between the two is reasonable to meet residential needs.

The maximum rent limits for rent supplements are a guide as to what is reasonable in the circumstances.  The objective is to ensure that income after paying interest does not fall below a certain minimum level.  This level is the supplementary welfare allowance minus €30.

Earlier MIS

An earlier version of the Mortgage interest supplement was a short-term support to help with mortgage interest repayments.  It was paid by the Health Services Executive through the Community Welfare Officers. It covered interest payments only.

The scheme was generally not available to individuals who worked more than 30 hours a week. Subject to limited exceptions, the scheme applied to the interest part of the mortgage only. It was intended to be granted in conjunction with a capital deferment/holiday. It did not cover non-housing acquisition debts rolled into the loan.

The Community Welfare Officer considered the amount of interest reasonable in the circumstances. He or she assesses income after loan payments. Mortgage interest supplement is intended as a short-term support only.

Mortgage Interest Supplement, as administered by the Health Service Executive, was a branch of supplementary welfare allowance. Subject to conditions, it might be made available to persons who were unable to pay their mortgage. Supplementary welfare schemes were administered by community welfare officers as an ultimate social safety net.

Former MIS Conditions

The schemes only cover interest. It applies only to loans for the purpose of acquisition or essential improvement of the person’s main residence. Strictly speaking, loans which were not for the purpose of acquiring the house, for example top-up of loans for other purposes, do not qualify. Reapplication arrears are similarly outside the definition.

The amount payable is limited to the amount and duration as determined by the HSE, having regard to the family circumstances and subject to such conditions as may be prescribed.

The loans must have been affordable at the time it was entered. The amount of mortgage interest must not be such as exceeds or is reasonable to meet his or her residential and other needs. It must be reasonable to make a supplement in regard to the amount of arrears.

A supplement may be made, where the amount of interest exceeds that considerable reasonable to meet the person’s needs for up to 12 months.

The Health Service Executive may refuse mortgage interest and the interest of good estate management or where anti-social behavior has taken place.

Interest Conditions

The payment refers only to interest and not to capital repayments. The mortgage must be in respect of monies used to purchase, repair, or undertake essential improvement on the sole or main residence of the person or to pay off and refinance another loan used for that purpose.

It does not include

  • default interest by reason of delay or default in making the payment
  • the aggregate of any tax relief due and any mortgage allowance or subsidy attributable to interest which may be payable by a local authority under the Housing Acts.

Mortgage Conditions

The HSE must be satisfied that the amount of mortgage interest relief does not exceed the amount which is considered reasonable to meet his residential and other needs. It must determine that it is reasonable to award the supplement having regard to the arrears on the loan. It may make a supplement when the mortgage interest payable exceeds the reasonable amount for not more than one year from the date on which the claim is made.

The conditions, amount and duration of payment were equivalent

The HSE must be satisfied that the following conditions apply

  • when the mortgage began, the applicant must have afforded the payments;
  • the house must not be for sale;
  • amount of mortgage interest payable does not exceed an amount the HSE considers reasonable to meet  residential and other needs;
  • it is reasonable to award the MIS having regard to arrears;
  • the applicant is a resident of the State.

It is not available in the following circumstances;

  • spouse or partner works more than 29 hours a week (there are exceptions);
  • the applicant is in a trade dispute;
  • the applicant is in full-time education;
  • the applicant is awaiting a refugee decision.

MIS may be available where a person is in employment under special retention arrangements.  For example, while participating in the community employment scheme, the back-to-work allowance, or enterprise allowance, income must not exceed €317 per week. Under the retention arrangements, 75% of the mortgage interest supplement continues during the first year, 50% during the second year, and 25% in the third and fourth years.

MIS Mean Test

A means test applies for mortgage interest supplement. The community welfare officer assesses the applicant’s means. It considers all sources of income except certain limited excepted income.  Any capital owned is assessed as part of the means test. This includes savings and investments.

  • the first €5,000 of capital is disregarded;
  • the next €10,000 is assessed at €1 per thousand per week;
  • the next €25,000 is assessed at €2 per thousand per week; and
  • any capital over €40,000 is assessed at €4 per thousand per week

A redundancy payment will be counted as means unless it has been applied to reduce the mortgage. The following is not assessed, child benefit’s supplementary welfare allowance and certain other social welfare payments.

The applicant’s income is calculated in accordance with a means test. There is a minimum household contribution of  €24 per week. The mortgage interest supplement is the difference between actual mortgage interest and the household contribution. The difference must be a reasonable amount to meet the residential needs of the applicant.

The HSE sets maximum limits for rent in various parts of the country and decides what a reasonable amount is. These caps are also used in conjunction with MIS.

Financial Crisis Reform

The 2010 Act also provides for a new condition for rent supplement payable under the Supplementary Welfare Allowance scheme, which will require that from 1 January 2011, before rent supplement can be awarded, the landlord’s tax reference number must be supplied to the Health Service Executive (HSE).

The 2010 Act provides that the lower basic rate of Supplementary Welfare Allowance payable to people under 25 years will not, of itself, lead to any reduction in Rent or Mortgage Interest Supplements payable to people getting other social welfare payments. The 2010 Act provides for a new condition for the Rent Supplement payable under the Supplementary Welfare Allowance scheme, which requires that from 1 January 2011, before a claim for Rent Supplement can be awarded, the landlord’s tax reference number must be supplied to the Health Service Executive (HSE).

As certain landlords will not have such a tax reference number, e.g. non-resident landlords, confirmation from the landlord to that effect is required to be supplied in those cases. This section also provides that a landlord will be obliged to provide his or her tax reference number (or confirmation that he or she does not have a tax reference number) in respect of each tenancy for which a Rent Supplement is payable.

The 2013 Act clarified the operation of the income disregard, which is used for the purposes of the Rent and Mortgage Interest Supplement schemes to ensure that this income disregard only applies to income arising from prescribed employment and training, Family Income Supplement and maintenance payments, but does not apply to any other means that the person may have, such as pensions, investment income etc.

MIS Closure

The 2013 Act provided for the discontinuation of the Mortgage Interest Supplement scheme for new applicants with effect from 1 January 2014 and allowed for a winding down of the scheme for existing claimants over a 4-year period, i.e. by 1 January 2018.

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