SWA - Guidlines on the Administration of the Mortgage Interest Supplement (MIS) Scheme


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These Guidelines contain:

  1. The provisions in the primary legislation, sections 187 and 198 of the Social Welfare (Consolidation) Act, 2005, as amended, relating to the mortgage interest supplement scheme. ( Section 1)
  2. The provisions in the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations, as amended, relating to entitlement to mortgage interest supplement (S.I. 412 of 2007). ( Section 2)
  3. Explanation and guidance on the application of the provisions in the primary legislation in determining entitlement to mortgage interest supplement. ( Section 3)
  4. Explanation and guidance on the application of the provisions in the Regulations (Article 10) in determining entitlement to a mortgage interest supplement. ( Section 4)
  5. Explanation and guidance on the application of Article 38. ( Section 5)
  6. Guidance on supports for borrowers i.e. (i) the Statutory Code of Conduct on Mortgage Arrears issued by The Financial Regulator and (ii) the Money Advice and Budgeting Service (MABS). ( Section 6 and Appendix A)
  7. Guidance on the assessment of means for purpose of entitlement to mortgage interest supplement and retention of entitlement. ( Section 7, Appendix B and Appendix C).
  8. Legislation and guidance on provision of information and prescribed time for making a claim. ( Section 8 and Appendix D).
  9. Legislation and guidance on determinations and review of claims.( Section 9)
  10. Guidance on recording of claims. ( Section 10).

Provisions in the Social Welfare (Consolidation) Act, 2005, relating to the Mortgage Interest Supplement Scheme

1.1: Section 187 of the Principal Act, as amended, provides that " 'mortgage interest' means the proportion of any amount payable by a person to a mortgage lender which is for the time being attributable to interest payable under an agreement entered into by that person with the mortgage lender for the purpose of defraying money employed in the purchase, repair or essential improvement of the sole or main residence of that person or to pay off another loan used for that purpose but does not include interest payable in relation to such agreement by virtue of a delay or default in making a repayment under that agreement."

1.2: Section 187, as amended, also provides that " 'mortgage lender' has the meaning given to it by section 2(1) (as amended by section 2 of, and Schedule 3 to, the Central Bank and Financial Services Authority of Ireland Act 2004) of the Consumer Credit Act 1995." (Definition of 'mortgage lender' inserted into section 187 by section 14 (1) of the Social Welfare (Miscellaneous Provisions) Act 2008.)

1.3: Section 192 of the Act provides that a person shall not be entitled to an allowance (other than an allowance under sections 201 and 202) under this Chapter unless he or she is habitually resident in the State at the date of the making of the application for the allowance. The Habitual Residence Condition (HRC) for SWA purposes is determined in accordance with Section 246 of the Principal Act. Further guidance is provided in DEASP Guidelines on HRC and SWA Circular 08/09.

1.4: Section 198 (1) of the Principal Act provides that, subject to this Chapter, in the case of a person whose means are insufficient to meet his or her needs, Regulations may provide for a weekly or monthly payment to supplement that person's income.

1.5: Section 198 (2) provides that Regulations under subsection (1) may prescribe the class or classes of persons to whom and the conditions and circumstances under which a payment under subsection (1) may be made and the amount of such a payment (either generally or in relation to a particular class or classes of persons).

1.6: Section 198 (5) as amended, provides that, without prejudice to the generality of subsection (1) and subject to subsection (6), regulations under subsection (1) may provide for the payment of a supplement towards the amount of mortgage interest payable by a person. (Amended by the deletion of "in respect of his or her residence" by section 14 (2) (d) of the Social Welfare (Miscellaneous Provisions) Act, 2008)

1.7: Section 198 (5A) provides that, without prejudice to subsections (2) and (5), regulations under subsection (1) may prescribe the conditions and circumstances under which, and the periods for which, the supplement referred to in subsection (5), is payable. (Subsection (5A) inserted by section 14 (2) (e) of the Social Welfare (Miscellaneous Provisions) Act, 2008.)

1.8: Section 198 (5B) provides that, the amount of a supplement payable in accordance with subsection (5) shall be limited to the amount and duration determined by the Executive to be appropriate, having regard to the family circumstances of the person concerned and subject to the conditions and circumstances and the period for which the supplement is payable, as may be prescribed. (Subsection (5B) inserted by section 14 (2) (e) of the Social Welfare (Miscellaneous Provisions) Act, 2008.)

1.9: Subsection (6) of section 198 as amended, provides that a person shall not be entitled to a supplement referred to in subsection (5), during any period, where that person or his or her spouse, is engaged in remunerative full-time work.

Provisions in the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations, 2007 (S.I. No. 412 2007), as amended, relating to entitlement to Mortgage Interest Supplement

2.1: Article 6 (1) of the Regulations provides that "Section 191(1) (Section 191 (1) provides for the exclusion from entitlement to SWA of persons in full-time employment.) shall not apply to a person on becoming engaged in remunerative full-time work until the expiration of a period of 30 days after the commencement of the engagement or the date on which the claimant first receives remuneration, whichever is the earlier."

2.2: Article 6 (2) of the Regulations provides that "a person shall not be disqualified for receiving supplementary welfare allowance while engaged in remunerative full-time work where that person is participating in—

  1. a scheme, known as the Area Allowance Enterprise Scheme, approved by a company, known as an Area Partnership, in consultation with the Minister,
  2. a scheme, administered by An Foras Áiseanna Saothair and known as Community Employment, or
  3. a scheme administered by the Minister and known as the Back to Work Allowance Scheme.

2.3: Article 6 (3) of the Regulations provides that "a person shall be regarded as being engaged in remunerative full-timework where he or she is so engaged for not less than 30 hours per week."

2.4: The conditions and circumstances which must be satisfied for entitlement to a mortgage interest supplement are contained in Article 10 of the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations, 2007 (S.I. No. 412/2007).

2.5: Article 10 (1) (a) provides that "subject to paragraph (b) and these Regulations, a person shall be entitled to a supplement towards the amount of mortgage interest payable by him or her in respect of his or her residence."

2.6: Article 10 (1) (b) provides that "a person may be entitled to a supplement towards the amount of mortgage interest payable in respect of his or her residence provided that:

  1. The loan agreement was entered into at a time when, in the opinion of the Health Service Executive, the person was in a position to meet the repayments.
  2. The residence in respect of which the loan is payable, is not offered for sale."

2.7: Article 10 (2) provides that "subject to sub-article (3), it shall be a condition of any claimant's entitlement to a supplement under sub-article (1) that the Executive is satisfied that—

  1. the amount of the mortgage interest payable by the claimant does not exceed such amount as the Executive considers reasonable to meet his or her residential and other needs, and
  2. it is reasonable to award a supplement having regard to the amount of any arrears outstanding on the loan."

2.8: Article 10 (3) (a) provides that "notwithstanding sub-article (2) and subject to paragraph (b), the Executive may award a supplement where the amount of mortgage interest payable by the claimant exceeds such amount as the Executive considers reasonable to meet his or her residential and other needs."

2.9: Article 10 (3) (b) states that "no supplement referred to in paragraph (a) shall be paid in respect of any period more than 12 months from the date on which the claim therefor is made."

2.10: Article 11 (1) provides that a mortgage interest supplement "shall continue to be payable for the period in which the beneficiary resides continuously in the residence in respect of which the supplement is awarded."

2.11: Article 11 (2) provides that "in determining whether a beneficiary resides continuously in a residence for the purposes of sub-article (1), any period of absence from his or her residence by virtue of his or her temporary residence, for any period which does not exceed 13 weeks, in an institution, shall be disregarded."

2.12: Under Article 3 of the Regulations 'institution' means a hospital, convalescent home or home for persons suffering from physical or mental disability or accommodation ancillary thereto and any other similar establishment providing residence, maintenance or care for the persons therein, a prison or place of detention.

2.13: Article 12 (1), as amended, provides that subject to these Regulations, the amount of a supplement payable under Part 3 of these Regulations to a claimant in respect of a week shall be the difference between his or her weekly needs less €24.00 and his or her weekly means, less the weekly amount of mortgage interest, as the case may be, payable by him or her.

2.14: Article 12 (2) provides that the amount of supplement payable referred to in sub-article (1) shall not exceed such amount as the Executive considers reasonable to meet the residential needs of the claimant.

2.15: Article 12 (3) provides that, where a person, other than a qualified adult or a qualified child of the claimant, resides with the claimant other than as a sub-tenant, the Executive shall reduce the amount of the supplement payable, by such amount, which in the opinion of the Executive, is reasonably attributable to that other person.

2.16: Article 12 (4) provides that where a mortgage supplement was awarded before, and has been continuously in payment since 2nd November 1987, "sub-article (1) shall be construed as if "€5.71" were substituted for "€24.00"."

2.17: Article 38 provides for payment of a supplement in exceptional circumstances. Article 38 is as follows:

  1. Notwithstanding the foregoing articles, the Executive may award a supplement in any case where it appears to the Executive that the circumstances of the case so warrant.
  2. Without prejudice to the generality of sub-article (1), the Executive may award a supplement where—
    1. a claimant is living alone or only with his or her qualified adult or a qualified child (within the meaning of article 15(5)) and has, due to his or her ill-health or infirmity or that of any of the persons living with him or her, exceptional needs by reason of his or her having to maintain a high standard of heating in his or her residence, or
    2. a claimant has exceptional needs other than those specified in these Regulations."

Explanation and Guidance on the Application of the Provisions in the Principal Act

3. Section 187 (i.e. definition of mortgage interest, meaning of 'mortgage lender' and ownership of sole or main residence)

Definition of 'Mortgage Interest'

3.1: It should be noted that Section 187 was amended by Section 14 (1) of the Social Welfare (Miscellaneous Provisions) Act 2008. The amended definition now includes the term "essential improvement". For the purpose of guidance in relation to what constitutes an "essential improvement" essential internal or external works to the person's sole or main residence such as, for example, an attic conversion, extension or necessary works to driveway/garden, will meet the definition.

3.2: In relation to repairs and improvements appropriate documentation should be sought to verify that the loan was used for these purposes and the nature and the cost of the work that was carried out.

3.3: In all all cases a copy of the original loan documentation i.e. loan application, loan approval and evidence of income at the time the loan agreement was entered into, should be sought and examined to establish the purpose for which the loan was taken out ( see also 5.2 below).

3.4: In this regard mortgage providers have been advised by the Financial Regulator that, under the Consumer Protection Code, their staff are required to act "with due skill, care and diligence in the best interests of its customer" and that accordingly, all requests for documentation and information should be processed promptly.

3.5: It is now re-affirmed that, in accordance with legislation, a mortgage interest supplement can only be paid on the full amount of interest payable where the loan has been taken out for the purchase repair or essential improvement of the sole or main residence of a person or to pay off another loan used for that purpose.

3.6: Where a loan has been used for expenditure not associated with the sole or main residence of the person i.e. for car, investment, holiday home or business purposes etc. the interest on the loan is not allowable for the purpose of mortgage interest supplement.

3.7: Where a portion of the loan has been used for expenditure not associated with the sole or main residence an assessment of the proportion of the mortgage or loan applicable to the sole or main residence must be made in order to determine the amount of interest allowed for the purpose of mortgage interest supplement. For example, if the claimant borrowed €200,000, and €30,000 has been used for expenditure not associated with the sole or main residence, the percentage of the loan that qualifies for MIS should be calculated as follows:

Total amount borrowed = €200,000
Amount used on main residence = €170,000
Percentage of loan eligible for MIS = €170,000 divided by €200,000 X 100 = 85%

The interest allowed for the purpose of MIS will therefore be assessed at 85% of the monthly interest payable.

Capital Repayments and Arrears

3.8: It is important that the components of monthly mortgage repayments are identified, as a mortgage interest supplement is not intended to cover the capital element of the repayment, arrears of mortgage repayments or interest on capitalised arrears ( see 1.1 above for statutory definition of mortgage interest). The capital element of the repayment is not taken into account in calculating the amount of supplement payable as it is not considered appropriate that the Exchequer should pay part of a mortgage thereby providing assistance towards the accumulation of a capital asset on the part of the individual concerned.

3.9: It should be noted that, where the % of interest allowed for the purpose of mortgage interest supplement, will give rise to an entitlement to a supplement which is substantially less than the monthly mortgage repayments, there is no provision for refusal of a supplement on this ground alone other than in accordance with Article 10 (2) (b) of the Regulations where arrears have arisen on the loan (see paragraph 8). In cases where exceptional individual circumstances exist an additional supplement may be considered under Article 38 subject to the claimant having engaged with the lender with a view to re-negotiating their monthly repayments.

It is expected that such payments would be of a short duration and not intended to be paid on a long-term basis (see paragraph 11 below).

Tax Relief at Source (TRS)

3.10: Since 1st January 2002 tax relief for home mortgage interest, referred to as TRS, is given at source. From that date TRS can be claimed in respect of qualifying loans i.e a new mortgage, a top-up loan, a home improvement loan, a re-mortgage or a consolidation of existing qualifying loans, secured on the deeds of the main residence. With effect from the 1st May 2009 the number of tax years in respect of which mortgage interest relief may be claimed is 7 years for first time and non-first time buyers.

3.11: Mortgage interest relief is given by the lender, either in the form of a reduced mortgage payment or a credit to the borrower's funding account. Where TRS is given, mortgage interest supplement should be calculated on the amount of interest allowable net of tax relief.

Meaning of 'Mortgage Lender'

3.12: In accordance with section 187 and section 2 (1) of the Consumer Credit Act 1995, as amended, 'mortgage lender' means a person who carries on a business that consists of or includes making housing loans. Payment of a mortgage interest supplement may therefore be considered in respect of the following:

  • A mortgage from a registered bank or building society.
  • A Credit Union loan.
  • A Housing Finance Agency loan. (HFA).
  • Housing Authority loans, including tenant purchase and shared ownership schemes.
Local authority mortgage allowance/mortgage subsidy

3.13: When assessing interest for the purpose of entitlement to a mortgage interest supplement in respect of a local authority mortgage the following points should be noted:

  1. a person who has a mortgage with a local authority whose household income is less than €28,000 (before tax and social insurance is taken off) in the previous tax year may qualify for a mortgage subsidy which means that his/her monthly mortgage repayments will be reduced.
  2. a person who is a tenant of a local authority who is buying the home s/he previously rented from the local authority or wants to buy an affordable home may qualify for a mortgage allowance from the local authority of €11,450 to go towards his/her mortgage. The allowance is paid over a five-year period directly to the lender and the mortgage repayments are reduced for the first five years.
  3. a person may qualify for the mortgage subsidy and the mortgage allowance scheme but can only claim for one of them. The scheme which gives the most benefit will depend on the person's income. However, mortgage allowance is not available to a person purchasing a house under the shared ownership scheme.
  4. Housing Finance Agency loans and Housing Authority loans taken out since 1986 should have death, disability, and mortgage protection cover.

Note: Mortgage allowance may also be payable in respect of a mortgage from a commercial lending agency. The allowance is paid directly to the lending agency.

3.14: Where a mortgage allowance or subsidy is in payment the interest allowable for the purpose of mortgage interest supplement will be the net interest after deduction of the appropriate amount of mortgage allowance or subsidy as confirmed by the lender.

Sole or Main Residence

3.15: It should be noted that the definition of mortgage interest refers to "the purchase, repair or essential improvement of the sole or main residence of that person". For the purpose of entitlement to mortgage interest supplement complex issues arise where the property is jointly owned and the owners are:

  1. two or more single people who entered into an arrangement to purchase a property together;
  2. a married couple who are separating;
  3. a cohabiting couple where there has been a breakdown of the relationship.

3.16: Where there is more than one owner and each owner is residing in the property, payment of a mortgage interest supplement to the claimant may be considered subject to production of documentation verifying that the claimant has a liability and had been making mortgage repayments in respect of his or share of the property.

3.17: As a general principle, a person who is not residing in a property should not retain and accumulate a beneficial interest in that property at the State's expense. Therefore, it may not be appropriate to award a mortgage interest supplement to the claimant unless it can be confirmed that the person who is not residing in the property is continuing to meet his/her own personal liability for the monthly mortgage repayments.

3.18: Where one or more of the owners are not residing in the property enquiries should be made as to whether the parties had entered into a co-ownership agreement and a copy of the agreement and the loan approval should be requested in order to establish the claimant's liability for the mortgage repayments and the arrangements which have been made by the non-resident party or parties for mortgage repayments. If the non-resident party or parties have discontinued mortgage repayments and arrears have arisen, the claimant should be advised that s/he must consult and reach agreement with the lender in relation to the repayment of the mortgage before entitlement to a mortgage interest supplement can be considered.

3.19: In the case of a couple who are no longer living together a copy of the relevant documentation i.e. separation agreement or court order, as appropriate, should be requested in addition to other standard documentation. Where the property is the sole or main residence of the claimant, payment of a supplement may be considered having regard to arrangements which have been agreed or set down by the court in relation to the claimant's liability for mortgage repayments and future ownership of the property.

3.20 In the absence of an agreement, payment of a supplement may be considered where the property is the sole or main residence of the claimant and the claimants is making mortgage repayments subject to confirmation that the parties are engaged in negotiations in the matter. Where a supplement has been awarded on this basis, payment of the supplement should be subject to a review, no later than 12 months from the date of commencement, to clarify the position in relation the future ownership of the property.

3.21: Where a supplement has been in payment for 12 months and where;

  1. no agreement or decision has been reached in relation to the future ownership of the property, or
  2. arrangements for a buy out or transfer are not proceeding, consideration may be given, provided that all other statutory qualifying conditions of entitlement are satisfied, to the payment of a supplement subject to the condition that the value of the ownership rights and liability of the claimant's estranged spouse or partner, as appropriate, will be taken into account.

Section 4. Section 198 (6) (i.e. disqualification where person or his or her spouse is engaged in full-time work)

4.1: Under subsection 6 of section 198 a person is not entitled to a mortgage interest supplement during any period, where that person or his or her spouse, is engaged in remunerative full-time work (see however exceptions provided for in sub-articles (1) and (2) of article 6). Under Article 6 (3) of the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations, 2007 "a person shall be regarded as being engaged in remunerative full-time work where he or she is so engaged for not less than 30 hours per week."

4.2: For the purpose of Article 6 (3) the number of hours worked should be determined on the basis of the number of paid working hours as verified from the claimant's payslip. Where hours of work vary from week to week the number of hours should be determined by reference to payslips for an earlier period of employment of not less than 6 weeks or from the date of commencement of employment, as appropriate

4.3: In cases where property is in joint ownership and the mortgage is in joint names the relationship of the persons in whose names the mortgage was taken out must be established in the first instance. In the case of a married or cohabiting couple where the claimant or his or her spouse is engaged in remunerative full-time work, both the claimant and spouse will be excluded from entitlement to mortgage interest supplement where subsection 6 of section 198 of the Act applies.

Explanation and Guidance on the Application of the Provisions in the Regulations

5. Article 10 (1) (b) (i) (i.e. ability to meet loan repayments when loan agreement was entered into)

5.1 When forming an opinion as whether a person was in a position to meet the loan repayments when the loan agreement was entered into the following criteria should be considered in the first instance:

  • Date when loan was advanced.
  • Has there been a change in circumstances since the loan was taken out i.e. unemployment, redundancy, illness, separation.
  • Whether the claimant's income at the time the loan was advanced can be confirmed on INFOSYS or by other documenatary evidence.
  • Prior to the change in circumstances, the claimant's repayment track record in terms of a minimum of 12 continuous monthly repayments having being made on the loan. In the case of a loan which was advanced within 12 months of the MIS claim, that no arrears have accrued and monthly repayments were being made in full for a minimum of 6 months prior to the change in circumstances.

5.2: In all cases a copy of the original loan documentation i.e.

  1. loan application,
  2. loan approval, and
  3. evidence of income at the time the loan agreement was entered into

should be sought and examined. ( See also 3.3 above)

5.3: Where a decision is made to refuse the claim on the basis of an opinion that the claimant was not in a position to meet the loan repayments when the loan agreement was entered into, the factors on which the opinion is based should be recorded on the file and set out in the letter of refusal.

Guarantors

5.4: If the applicant's income on its own is insufficient to meet the criteria for the mortgage amount required lenders may allow another party (usually a parent) to provide a guarantee or become a co-party to the loan. In the case of an applicant who has obtained a mortgage on the basis of a guarantee or indemnity by another party the claimant should be requested to provide a letter from the lender clarifying the terms of the guarantee and the laibility of the guarantor.

5.5: Entitlement to a mortgage interest supplement in such cases should be determined by reference to the guarantor's liability and the claimant's repayment track record. Where a guarantor has guaranteed to make a contribution to the monthly repayments and the claimant's income would not have been sufficient to meet the criteria for the full mortgage in the absence of a guarantee, the condition in Article 10 (1) (b) (i) may not be satisfied.

5.6: Where it is considered that Article 10 (1) (b) (i) is satisfied but the letter from the lender clarifying the terms of the guarantee indicates that the guarantor is responsible for the mortgage repayments where the borrower is not in a position to do so, it may not be appropriate to award a mortgage interest supplement unless there is evidence that the claimant is liable for the repayments.

5.7: Where there is evidence, however, that the the guarantor has experienced a change in circumstances such as illness, unemployment, retirement such that s/he would not be in a position to service the loan, consideration may be given in the normal way to payment of a mortgage interest supplement subject to the claimant's track record of repayments and to all other statutory qualifying conditions being satisfied

Rent a Room Scheme

5.8: Many first time buyers seek to add to income by renting out rooms in their newly acquired houses. Most lenders will take the potential for such income into account when assessing borrowing capacity. The original loan documentation should be examined in order to determine if the income declared by the claimant for the purpose of the loan approval included potential income from renting a room which was taken into account by the lender when assessing the claimant's borrowing capacity. Such income will be assessable as means for the purpose of entitlement to a mortgage interest supplement.

5.9: Where the claimant has not declared receipt of any such income it may be appropriate to determine, subject to the period which has elapsed and the claimant's repayment track record, that the condition that s/he was in a position to meet the loan repayments when the mortgage agreement was entered into will not be satisfied unless s/he has entered into an arrangement to rent a room and can provide documentary evidence of such income.

6. Article 10 (1) (b) (ii) (i.e. property not offered for sale)

6.1: The requirement for entitlement to mortgage interest supplement that the property should not be offered for sale may be interpreted and applied on the basis that it excludes entitlement where the property was already placed on the market for sale by auction or private treaty at the time the claim for MIS is made.

6.2: In the case of a person in receipt of mortgage interest supplement who has come to an arrangement with the lending institution or has been advised to consider the option of the sale of the property, this provision should not be applied in such a way as would hinder or restrict the person from pursuing the recommended course of action. In such cases payment of a supplement may be continued for a maximum period of 12 months subject to on-going review having regard to prevailing market conditions and subject to any limits imposed or agreed with the lending institution.

7. Article 10 (2) (a) (i.e. reasonable amount of interest)

7.1: In the first instance it should be noted, that sub-article 10 (2) (a) refers to the amount of interest payable and not the rate of interest chargeable. Where the rate of interest being charged is significantly in excess of the standard variable interest rate this is a matter between the borrower and the lender. Where other conditions of entitlement to mortgage interest supplement are satisfied there is no legislative basis on which a supplement may be refused due to a high rate of interest being charged. However, CWOs should advise clients who are being charged interest rates in excess of standard market rates to seek appropriate advice i.e. MABS.

7.2: In cases where the amount of interest payable exceeds such amount as is considered reasonable due to the accommodation being in excess of the claimant's accommodation needs it may be appropriate, having regard to the family structure, composition and circumstances, to draw his/her attention to other options which may be available such as leasing, trading down or renting a room before a decision on entitlement is made.

7.3: The following guidelines should be used for the purpose of determining what is a reasonable level of interest to meet a person's residential needs:

  1. It should be noted that there is no legislative basis for the application of the statutory rent limits to the mortgage interest supplement scheme and therefore claims should not be refused solely on the basis that the amount of interest exceeds the appropriate maximum rent limit. As a guide, in the first instance, regard should be had to the appropriate maximum rent limit having regard to the family circumstances, i.e. family composition, and the location of the residence. In general, the amount of interest may be considered reasonable if it is within the range of the appropriate rent limit.
  2. In cases where the amount of mortgage interest exceeds the maximum rent limit regard should be had to the family circumstances, i.e. family composition, of the claimant and:
    1. the average cost of purchase of accommodation appropriate to the family circumstances of the claimant at the time of purchase of the residence in respect of which the supplement is being claimed, and
    2. the amount of interest currently chargeable based on a maximum mortgage of 92% (i.e. maximum loan to property value mortgage lenders will generally give) of the value of that accommodation.

7.4: In regard to (a) information on average prices for new and second hand houses are published in the annual housing statistics bulletin on the website of the Department of Heritage, Environment and Local Government ( 'www.environ.ie').

7.5: It is open to SCWOs to set down guidance for their areas on what may be considered to be a reasonable amount of interest. Where such guidance is being given it is recommended that the formula at 7.3 (ii) above be applied.

8. Article 10 (2) (b) (i.e. amount of arrears outstanding on the loan)

8.1: In determining whether it is reasonable to award a supplement having regard to the amount of arrears outstanding on the loan regard should be had in particular to the Statutory Code of Conduct on Mortgage Arrears which came into effect from 27thFebruary 2009. The Code is attached at Appendix A and a summary of the main provisions of the Code is set out at paragraph 12 below.

8.2: Each case must be examined on its merits but in general it may be reasonable to award a supplement, subject to all other statutory qualifying conditions being satisfied, where:

  1. arrears have accrued prior to the claim for mortgage interest supplement but arrangements for dealing with the arrears have been agreed with the lender which can be verified from documentation and are being honoured;
  2. no arrangements for dealing with the arrears have been made or the borrower has not entered into any agreement with the lender to deal with arrears of mortgage payments but can show that s/he has entered into discussions with the lender in relation to the arrears and there is a reasonable prospect that the discussions will be concluded with a negotiated agreement;
  3. the claimant has engaged with the Money Advice and Budgeting Service (MABS) with a view to the re-negotiation of the mortgage agreement in order to address the arrears situation.
  4. in the course of engagement with MABS, exceptional circumstances are identified which may justify payment of a once-off exceptional needs payment to assist in reducing the amount of arrears and facilitating an agreement with the lender for a deferral of the enforcement of the mortgage.

8.3: Having regard to Article 10 (2) (b) it may not be reasonable to award a supplement in the following circumstances:

  1. The 6 month period (12 months in the case of Bank of Ireland and Allied Irish Bank) as provided in the Code of Conduct on Mortgage Arrears has elapsed and legal proceedings for re-possession of the property have commenced.
  2. Where substantial arrears have accrued and where the amount of supplement to which the person is entitled, relative to the amount of monthly repayments, would indicate that it is unlikely that the person will have the resources to sustain the scheduled monthly repayments at any time in the future.

9. Article 10 (3) (a) (i.e. payment of supplement on a discretionary basis)

9.1: Article 10 (3) (a) allows for a mortgage interest supplement to be paid on a discretionary basis where the amount of mortgage interest payable by the claimant exceeds such amount as the Executive considers reasonable to meet his or her residential and other needs.

9.2: Where a decision is made that the amount of interest payable on the loan exceeds such amount as is reasonable to meet the claimant's residential needs consideration must always be given, before a final decision is made on the claim, as to whether the discretion in Article 10 (3) (a) to award a supplement should be exercised.

9.3: In general the discretion to award a supplement for a maximum period of 12 months may be exercised where any of the following conditions are satisfied:

  • There is an indication that the claimant will be in a position to re-assume responsibility for repayments in the near future;
  • Where the claimant's interest repayment liability combined with projected reduction in interest rates indicate that the interest repayments on the loan may be reduced in the near future and may come into line with local rent or mortgage interest limits;
  • In accordance with the statutory Code of Conduct on Mortgage Arrears the claimant has re-negotiated and reached an agreement with the lender for a re-scheduling of the mortgage repayments and capitalisation of any arrears which have accrued.

10. Article 10 (3) (b) i.e (12 month limit on payment of discretionary supplement)

10.1: When a mortgage interest supplement is awarded on a discretionary basis under Article 10 (3) (a), payment of the supplement may not be paid for a period of more than 12 months in accordance with Article 10 (3) (b).

10.2: The claimant should be advised at the outset that the supplement will be subject to review and the maximum duration of payment will be 12 months. No later than 3 months before the expiry of the payment the supplement should be reviewed and if there has been no change in circumstances a formal notification of the date the payment will be discontinued should be issued to the claimant. The claimant should also be advised to immediately contact the lender to discuss what alternative options may be available.

10.3: Where at the time the 12 month period expires or any time before, there is a change in circumstances such as sub-letting part of the accommodation or a change in the repayment arrangements such as an extension of the term of the loan, a review of the original decision on the claim may be warranted and a supplement awarded as appropriate subject to all other statutory qualifying conditions being satisfied.

Payment of a Supplement in Exceptional Circumstances (Article 38 Supplement)

11. Explanation and guidance in relation to Article 38

11.1: Article 38 is intended to enable the Executive to deal with exceptional cases by providing for general discretion in paying a supplement under the SWA scheme in exceptional circumstances. The discretionary power provided under Article 38 is for exceptional individual circumstances and is not intended to deal with a generality or category of cases where no particular special circumstances exist.

11.2: It is expected that very few such cases should arise and that such payments would be of short duration and not intended to be paid on a long-term basis. In this regard consideration should be given, in particular, as to whether the payment of a supplement will be of any benefit having regard to the amount of any outstanding arrears on the mortgage. (See also paragraph 8 above)

11.3: It is also important that the claimant is made fully aware that s/he does not have an entitlement to a mortgage interest supplement and that any conditions which apply, in particular the duration of the discretionary payment, are clearly outlined.

Guidance on Supports for Borrowers

12. Statutory Code of Conduct on Mortgage Arrears.

12.1: The Code, which came into effect from 27th February 2009, applies to all mortgage lenders operating in the State (whether authorised here or operating on a passport from another EU member state). The Code is to be read in conjunction with the Financial Regulator's Consumer Protection Code and imposes specific requirements with regards to the handling of arrears in respect of a consumer's mortgage on a principal private residence. (The Code, which is attached at appendix A, and a list of all regulated lenders can be viewed on the Financial Regulator's website 'www.financialregulator.ie').

12.2: A summary of the main provisions of the Code is as follows:

  • While a consumer will be regarded as having fallen into arrears once the first repayment has been missed, a formal demand must not be issued by the lender until the third repayment is outstanding. This formal demand must be accompanied by certain specified information (i.e. total amount of arrears, any excess interest that may be charged etc).
  • All genuine cases (e.g. where there has been a change in the borrower's circumstances) must be handled sympathetically and positively by the lender with the objective of assisting the borrower to meet his/her obligations. Other than where the borrower is deliberately not engaging with the lender where a borrower is in difficulty, the lender must make every reasonable effort to agree an alternative repayment schedule.
  • Legal action for repossession cannot be commenced until after six months from the time arrears first arise (12 months in the case of Allied Irish Bank and Bank of Ireland). Therefore, repossession is seen by the Code as a last resort.
  • The Code does not however prevent repossession by voluntary agreement or where the property has been abandoned. Where a repossession action is commenced the lender must maintain contact with the borrower and must inform the borrower of any liability for costs, accrued interest or outstanding debt.
  • The Code provides that, where circumstances warrant it, the lender must refer the borrower for guidance to his/her local Money Advice and Budgeting Service (MABS) or appropriate alternative.

12.3: The Statutory Code of Conduct on Mortgage Arrears should be brought to the attention of all persons either making enquiries or seeking to make a claim for mortgage interest supplement particularly where there is evidence from the claim documentation that arrears have already arisen. In such cases it is expected that the claimant will have engaged with the lender under the terms of the Code to come to an arrangement as to how payments can best be accommodated. Evidence of such engagement should be sought (see also guidance at paragraph 8 above).

12.4: Claimants should be advised that it is particularly important that any re-negotiation of repayment arrangements or of the mortgage term must be brought to the CWO's attention in order to ensure that the correct entitlement to mortgage interest supplement can be determined.

13. Money Advice and Budgeting Service

13.1: MABS operate a helpline which operates from 9.00 a.m. to 8.00 p.m. Monday to Friday on 1890 283 438 which is staffed by trained Helpline Advisers who will assist people in dealing with their debt problems by discussing their money issues and providing advice. The Adviser will send out information free of charge to help a person to address his/her debt issues.

13.2: If the person still wishes to talk to a Money Advisor in a local MABS office the MABS Helpline will provide the information required to make an appointment with the person's local MABS office.

13.3: The MABS Helpline number should be displayed prominently in all CWO waiting rooms. The service should also be brought to the attention of all persons either making enquiries about or seeking to make a claim for mortgage interest supplement particularly where there is evidence of arrears having already accrued and the person is experiencing difficulties in managing their debts.

Assessment of Means for the Purpose of Entitlement to Mortgage Interest Supplement

14. Legislation

14.1: Under section 196 (1) (b) of the Social Welfare (Consolidation) Act 2005 "the weekly means of any person for the purpose of ascertaining his entitlement to supplementary welfare allowance shall be calculated in accordance with the Rules contained in Part 4 of Schedule 3 to the Social Welfare (Consolidation) Act 2005".

14.2: Further provisions in regard to the assessment of means for the purpose of entitlement to mortgage interest supplement are contained in the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations 2007 (S.I. 412 of 2007), as amended, and in SWA Circulars 05/07, 08/07 and10/07. Special rules which apply for retention of entitlement to mortgage interest supplement are provided for in SWA Circulars 03/00 and 08/00.

14.3: Clarification and guidance in regard to the assessment of means, application of income disregards and assessment of property and savings for the purpose of entitlement to mortgage interest supplement is set out at Appendix B of these Guidelines.

14.4: Clarification and guidance in regard to retention of entitlement to mortgage interest supplement is set out at Appendix C.

Legislation and Guidance on Provision of Information and Prescribed Time for Making a Claim

15. Information to be given when making a claim

15.1: Article 19 of the Regulations provides that "every claimant shall furnish such certificates, documents, information and evidence as may be required by the Executive for the purpose of deciding the claim and shall, for the purposes of making any such claim, attend at such time and at such office or place as the Executive may direct."

15.2: A checklist of documentation required for the purpose of making a claim for mortgage interest supplement is attached at Appendix D. The checklist should be included in the appropriate mortgage interest supplement claim form. Supplies of all forms should be made available to all relevant agencies and to lending institutions.

16. Prescribed time for making a claim

16.1: Article 20 of the Regulations provides that "the prescribed time for making a claim for supplementary welfare allowance shall be the day in respect of which the claim is made."

16.2: Article 21 of the Regulations provides that "subject to article 22 where a person fails to make a claim for supplementary welfare allowance within the prescribed time, he or she shall be disqualified for receiving payment in respect of any period before the date on which the claim is made."

16.3: Article 22 (1) of the Regulations allows for the backdating of an SWA claim where the claimant proves to the satisfaction of the Executive that s/he had an entitlement to SWA from a date earlier than the date of application and that there is good cause for the delay in making the SWA claim.

16.4: However, Article 22 (2) of the Regulations provides that payment of SWA will not be made for any period, more than 6 months, before the date the claim is made.

Determinations and Review of Claims

17. Determinations

17.1: Under Article 40 (3) of the Regulations, where a determination is not in favour of the claimant, s/he must be advised of the decision, the reason for the decision and his/her right of appeal.

17.2: In addition, any determination on a claim for SWA that does not award payment at the maximum amount payable under the payment type may be construed by the claimant as unfavourable and must be communicated to the claimant in writing. Such determinations also include refusals, withdrawals, suspensions of SWA, or reductions in the rate of payment.

18. Review of Claims

18.1: Article 23 (1) of the Regulations provides "that every claimant or beneficiary and every person by whom any supplementary welfare allowance is receivable on behalf of a claimant or beneficiary shall—

  1. furnish in such manner and at such times as an employee of the Executive may determine, such certificates, documents and information affecting the right to supplementary welfare allowance or to the receipt thereof as the said employee may require, and
  2. notify the Executive of any change in circumstances which may affect the right to supplementary welfare allowance, or to the receipt thereof, as soon as is reasonably practicable thereafter."

18.2: Section 251 (10) of the Principal Act provides that "where a person is in receipt of assistance or has made a claim for assistance which has not been finally determined, and his or her means have increased since the date of latest investigation of those means, or, where no such investigation has taken place, since the date of making the claim, the person shall, within the period that may be prescribed, give or cause to be given to the [Executive] written notification of the increase."

18.3: Under Article 23(2) of the Regulations, in the case of supplementary welfare allowance, the period prescribed for the purposes of section 251(10), is 7 days.

18.4: Entitlement to mortgage interest supplement should be assessed at the rate and amount of interest payable on the mortgage at any particular time and should be reviewed accordingly.

18.5: A full review of mortgage interest supplements in payment should be carried out at least twice a year. Other periodic review of claims, particularly the checking of claims to ensure that mortgage repayments are being made, should be carried out in accordance with the control procedures for the HSE area.

18.6: Where, in the course of a review evidence is obtained which shows that the monthly scheduled mortgage repayments are not being maintained and that arrears have accrued, payment of the supplement may be discontinued in accordance with Article 10 (2) (b) of the Regulations (see paragraph 8 above).

Guidance on Recording of Claims

19.1: For statistical purposes it is vitally important that all new mortgage interest claims received are recorded on ISTS. Where additional documentation is sought and awaited the claim should be recorded as pending.

19.2: Where a claim is refused, the refusal must be recorded on ISTS in every case to ensure that comprehensive statistics are available on the operation of the scheme. Cases which are not eligible should be recorded as disallowed with the appropriate reason code. Where a claim is withdrawn or not pursued, this should also be recorded on ISTS with the closure code CL 067 i.e. withdrawn/lapsed.

Appendix A

Financial Regulator

Code of Conduct on Mortgage Arrears

This Code applies to:

the mortgage lending activities of all regulated entities operating in the State, including:

  • the lending activities of all regulated entities operating in the State for which they require to be authorised by, or registered with, the Financial Regulator; and
  • the lending activities of persons with an equivalent authorisation or registration in another EU or EEA Member State when providing services in this State on a branch or cross-border basis; and
  • the lending activities that are subject to the regulation of the Financial Regulator under the Central Bank Act 1997 or the Consumer Credit Act 1995, for which a separate authorisation is not required.

This Code applies only to mortgage lending activities to consumers in respect of their principal private residence in this State.

To assist with the rectification of a mortgage arrears problem it is important that the borrower promptly advise the lender of any problems with repayments.

Lenders are reminded that they are required to comply with this Code as a matter of law.

Lenders must be able to demonstrate that they are in compliance with this Code.

This Code should be read as one with the Financial Regulator's Consumer Protection Code.

All terms appearing in this Code shall have the same meaning as in the Consumer Protection Code.

1. Scope

  1. This Code covers the provision of finance for the primary residence. This Code sets out a framework within which mortgage lenders (referred to in this document as "lenders") must operate, with due regard to the fact that each lender adopts a different competitive approach to mortgage lending and each case of mortgage arrears is unique and needs to be treated differently. Mortgage lenders must adopt flexible procedures for the handling of arrears cases. Such procedures must be aimed at assisting the borrower as far as possible in his/her particular circumstances.
  2. This Code sets out what the lender must do when managing mortgage arrears cases. However, the lender may enforce the mortgage in circumstances where application of this Code is not appropriate, such as, but not limited to, in the case of fraud or breach of contract other than the existence of arrears.
  3. This Code does not relieve the borrower of his/her contractual duties, except where agreed by the lender.

2. Legal Background

This Code is issued under Section 117 of the Central Bank Act 1989.

3. Avoiding a Mortgage Arrears Problem

  1. A mortgage arrears problem arises as soon as the borrower fails to make a mortgage repayment by the due date.
    As soon as an arrears situation develops, the lender must communicate promptly and clearly with the borrower to establish in the first instance why the repayment schedule has not been adhered to and, secondly, how the situation may be rectified.
  2. This Code recognises that it is in the interests of both the lender and the borrower to address a 'missed payment situation' as speedily and as effectively as circumstances allow. Failure to do so could give rise to a more serious arrears problem with negative consequences for both parties: for the lender, amongst other things greater difficulty in normalising the repayment situation; for the borrower, accumulating arrears that will affect his/her credit rating and give rise to the risk of losing his/her home.

4. Handling a Mortgage Arrears Problem

  1. Where action taken under Section 3 above is unsuccessful - for whatever reason - and the arrears situation continues, the lender must continue in its endeavours to make contact with the borrower. This can be by way of further correspondence, telephone contact or a meeting with the borrower.
  2. Once contact has been established, and assuming co-operation from the borrower, a plan for clearing the mortgage arrears can be developed that is consistent with the interests of both the lender and the borrower. In this regard, all viable options open to the borrower must be examined during which consideration must be given to his/her repayment capacity, previous payment history and any equity remaining in the property.
  3. If a third repayment is missed, the lender may issue a formal demand. With the issue of a formal demand for either the full amount due on foot of the mortgage or for possession of the property, the borrower must have been advised in writing of the following:
    1. the total amount of arrears;
    2. where applicable, any excess interest (expressed as a rate or an amount) that may continue to be charged and the basis on which this will be charged; and/or any charges that may be payable (the basis for which will have been detailed in the original contract documentation);
    3. advice regarding the consequences of failing to respond - namely, the potential for legal proceedings and loss of his/her property - together with an estimate of the costs to the borrower of such proceedings.
  4. Where the arrears situation persists, the lender may reserve the right to enforce the mortgage agreement. However, it must wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence.
  5. The lender must notify the borrower when it commences the enforcement of any legal action on repossession.

5. Addressing a Mortgage Arrears Problem

Lenders may distinguish between borrowers who are genuinely unable to pay – because of changed circumstances - and those who could pay some/all of the arrears but will not. All genuine cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her obligations.

In addressing a mortgage arrears problem, the following considerations apply:

  1. As each arrears situation is different, the lender must examine each on its individual merits and the outcome is likely to differ as a result.
  2. The lender must take into consideration the borrower's overall indebtedness in establishing his/her ability to repay. This should include full details of household income and expenditure, as advised by the borrower.
  3. The lender must explore with the borrower one or more of the following alternative repayment measures:
    • An arrangement on arrears could be entered into whereby the amount of monthly repayment may be changed, as appropriate, to help address the arrears situation.
    • Deferring payment of all or part of the instalment repayment for a period might be appropriate where, for example, there is a temporary shortfall of income.
    • Extending the term of the mortgage could be considered in the case of a repayment loan - although this may not make a significant difference to the monthly repayments.
    • Changing the type of the mortgage might be appropriate if this could give rise to a reduction in the level of monthly mortgage outgoings (i.e., mortgage and related assurance payments).
    • Capitalising the arrears and interest could arise where there is insufficient capacity over the short term to clear the arrears but where repayment capacity exists to repay the capitalised balance over the remaining term of the mortgage. This measure may be considered where a pattern of repayment has been established and where sufficient equity exists.

The appropriateness of these measures must be determined by the factors of each individual arrears case. The borrower must be advised to take appropriate independent advice.

  1. Whichever of the options outlined in (c) might be pursued; the lender must provide the borrower with a clear explanation, in writing, of the alternative repayment arrangement that is being agreed, together with details of any additional interest or administration charges that may arise.
  2. The lender must continue to monitor the repayment arrangement. To this end, the borrower must be advised of a relevant contact point.
  3. The lender must advise the borrower that it is in his/her own interests to ensure that his/her income is being maximised and that a budgeted approach to expenditure is maintained. Where circumstances warrant it, the lender must refer the borrower for guidance to his/her local Money Advice and Budgeting Service (MABS) or appropriate alternative.
  4. At the borrower's request and with the borrower's written consent, the lender will liaise with a third party nominated by the borrower.
  5. Where appropriate, the borrower must be made aware of other options such as trading down, voluntary sale or alternative refinancing through another lender.

6. Resorting to Repossession Proceedings

  1. The lender must not seek repossession of the property until every reasonable effort has been made to agree an alternative repayment schedule with the borrower or his/her nominated representative. However, where it is clear that the borrower is deliberately not engaging with the lender, or where other circumstances reasonably justify, the lender may seek repossession in the absence of any engagement with the borrower.
  2. Repossession of a property may come about by voluntary agreement with the lender, through abandonment of the property by the borrower without notifying the lender, or by Court Order.
  3. Even where legal action is being taken to obtain an Order for Repossession, the lender must endeavour to maintain contact with the borrower or his/her nominated representative. If agreement can be reached, the lender must enter into repayment arrangements and put a hold on proceedings in the event of agreed regular repayments being maintained.
  4. The lender must inform the borrower that irrespective of how the property is repossessed and disposed of, the borrower will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs, if this is the case.

7. Retention and Production of Documents

A lender must keep and maintain adequate records of all the steps taken, and all of the considerations and assessments required by this Code, and must produce all such records to the Financial Regulator upon request.

Appendix B

Standard Rules for the Assessment of Means for the Purpose of Entitlement to Mortgage Interest Supplement

Legislation

1: Under section 196 (1) (b) of the Social Welfare (Consolidation) Act 2005 "the weekly means of any person for the purpose of ascertaining his entitlement to supplementary welfare allowance shall be calculated in accordance with the Rules contained in Part 4 of Schedule 3 to the Social Welfare (Consolidation) Act 2005".

2: Further provisions in regard to the assessment of entitlement to mortgage interest supplement are contained in the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations 2007 (S.I. 412 of 2007), as amended, and in SWA Circulars 03/00, 08/00, 05/07, 08/07 and 10/07.

Standard SWA Rules

3.1: Under standard SWA rules, and as provided for by Article 12(1) of the Regulations, mortgage interest supplements are normally calculated to ensure that a person, after the payment of mortgage interest, has an income equal to the rate of SWA appropriate to their family circumstances less a minimum contribution, currently €24, which recipients are required to pay from their own resources. Many recipients pay more than €24.00 because they are also required, subject to income disregards, to contribute any additional assessable means that they have over and above the appropriate basic SWA rate towards their accommodation costs.

3.2: Under Article 12 (3) of the Regulations "where a person, other than a qualified adult or qualified child of the claimant, resides with the claimant other than as a sub-tenant, the Executive shall reduce the amount of the supplement payable by such amount, which in the opinion of the Executive, is reasonably attributable to that other person". In practice a deduction of €24.00 is made for every €204.30 of income in respect of a non-dependant household member residing with the claimant. Where the non-dependant household member is in employment, assessable income for the purpose of determining the amount of contribution to rent of a non-dependant household member is gross income less PRSI and travel costs to work.

Assessable means

3.3: In accordance with the Rules contained in Part 4 of Schedule 3 the following income is taken into account when calculating entitlement to mortgage interest supplement:

  • Any income from employment, self-employment or a training and educational scheme such as Community Enterprise (CE), Back to Education Allowance (BTEA) and Back to Work Allowance (BTW)
  • Family Income Supplement
  • The capital value of investments, savings & value of property other than the claimant's own home ( see 3.16 below).
  • Income in cash e.g. maintenance payments.
  • The use or enjoyment of property (other than a domestic dwelling or a farm building owned and occupied, or furniture and personal effects) which is personally used or enjoyed by him or her.
  • The leasing by the person of a farm of land;
  • All income and the value of all property of which the claimant deprived himself/herself in order to qualify for SWA.

Non-assessable means

3.4: When calculating entitlement to mortgage interest supplement the means excluded under Rule 1 (2) of Part 4 of Schedule 3 of the Principal Act as set out at references 2 to 11, 18A and 19 in Table 2 to the Schedule are as follows:

  • Child benefit, including equivalent payments from other EU countries and early childcare supplement
  • Allowances under Section 61 of the Health Act 1970 i.e. Domiciliary Care Allowance or Home Care Grant
  • Mobility Allowance
  • Allowances under the Home Tuition Scheme
  • Training allowance while undergoing a course of rehabilitation training provided by an approved by the Minister for Health and Children
  • Guardian's Payment – Contributory or Non-Contributory
  • Payments received from the Health Service Executive for foster children.
  • Payments for accommodating children under the Child Care Act.
  • Payments from the Health Service Executive in respect of persons boarded out under section 10 of the Health (Nursing Homes) Act 1990
  • Income from employment as a Home Help
  • Income in respect of students under Sceim na bhFoghlaimeoiri Gaelige
  • Money received from charitable organisations
  • Compensation awarded by the Compensation Tribunal in respect of Hepatitis C contracted from certain blood products, compensation paid to those who have disabilities caused by Thalidomide and to those receiving compensation under the Residential Institutions Redress Board.
  • Maintenance grants paid by Local Authorities for Higher Education.
  • Respite Care Grant
  • Grants or allowances arising in pursuance of a scheme promoting the welfare of blind people i.e. blind welfare allowance
  • Any other income that may be prescribed received by a person or his or her spouse and in the circumstances that may be prescribed.

3.5: In accordance with Article 36 of the Regulations the income prescribed for the purposes of reference 19 of Table 2 of Schedule 3 above shall be the yearly value of all income derived from compensation awarded—

  1. to compensate certain persons who have contracted Hepatitis C or HIV;
  2. by the Residential Institutions Redress Board;
  3. to persons who have disabilities caused by Thalidomide;
  4. under the provisions of the Health (Repayment Scheme) Act 2006.

3.6: The means excluded under paragraph (b) of Rule 1 (2) of Part 4 of Schedule 3 to the Principal Act are as follows:

  • any moneys received by way of a maintenance grant,
  • any income arising from a grant or allowance in pursuance of a scheme for promoting the welfare of the blind i.e. Blind Welfare Allowance
  • any sums arising from the investment or profitable use of property (not being property personally used or enjoyed by such person or a farm of land leased by the person),
  • the amount that may be prescribed of earnings from employment of a rehabilitative nature ( see 3.7 below),
  • any moneys received by way of guardian's payment (contributory), guardian's payment (non-contributory) or respite care grant.

Rehabilitative Earnings Disregard

3.7: In accordance with Article 33 of the Regulations, up to €120 of earnings from rehabilitative employment can be disregarded. However, this disregard cannot be applied together with the 'additional income disregard' ( see 3.12 below). Only one such disregard can be applied, whichever is most beneficial.

3.8: Also, in accordance with paragraph (b) of Rule 1 (2) of Part 4 of Schedule 3 to the Principal Act, in the case of a person in receipt of a supplement under section 198 towards the amount of mortgage interest payable in respect of his or her residence the following income disregards apply:

  • Pensioner Disregard
  • Carer's Allowance Disregard
  • Half-Rate Carer's Allowance Disregard
  • Additional Income Disregard

Clarification and guidance on application of Income Disregards and Assessment of Property and Savings

Pensioner Disregard

3.9: A special income disregard exists for those aged 65 years or over. Any additional income equal to the difference between the maximum rate of State (Contributory) Pension and the Supplementary Welfare Allowance appropriate to his or her circumstances can be disregarded. In effect, any person aged 65 or over with income equivalent to the value of the maximum rate of State Pension (Contributory) should only make the minimum contribution of €24.00 per week. Similarly, a pensioner couple who both have a State (Contributory) Pension of €230.30 per week each and have no other income, should contribute €24.00 per week towards their mortgage interest payment.

Carer's Allowance/Benefit disregard

3.10: The rules governing the means test for mortgage interest supplement provide for a disregard of income derived from Carer's Allowance and Carer's Benefit. In the case of a couple, where either spouse is a recipient of Carer's Allowance/Benefit, the amount to be disregarded is the rate of Carer's Allowance/Benefit in payment less the SWA adult dependant rate. In the case of a single person or a single parent in receipt of Carer's Allowance/Benefit, the amount disregarded is the rate of Carer's Allowance/Benefit in payment less the personal rate of SWA.

Half-Rate Carer's Allowance Disregard

3.11: From 27th September 2007, all income received in respect of half-rate Carer's Allowance made under Section 24 of the Social Welfare and Pensions Act 2007 is disregarded in full.

Additional Income Disregard

3.12: The 'additional income disregard' was introduced with effect from 6 June 2007 and refers to the amount of additional income in excess of the SWA rate, applicable to household circumstances and includes income derived from:

  • Part-time employment or self-employment
  • Any employment or training scheme i.e. CE, BTWA, BTEA or FAS course
  • Family Income Supplement (with effect from 6th June 2007)
  • Maintenance Payments in excess of €95.23 ( see 3.15 below).

3.13: The 'additional income disregard' is as follows:

  • Disregard the first €75 of 'additional income'
  • Disregard 25% of 'additional income' over €75
  • There is no upper limit on the amount that can be disregarded

3.14: For persons participating in approved training courses, any lunch or travel allowances that are paid may also be disregarded. Certain training courses now provide a childcare allowance to participants on certain courses. These childcare allowances are treated in the same manner as a lunch or travel allowance and disregarded.

Maintenance Payments

3.15: The first €95.23 per week of maintenance payments is assessable in full for the purpose of the Mortgage Interest Supplement Scheme. The amount of maintenance over €95.23 per week that can be disregarded is €75 per week with 25% of any maintenance in excess of €170.23 (€95.23 + €75) also disregarded.

Assessment of Property and Savings

3.16: Under Rule 1 (1) of Part 4 of Schedule 3 to the Principal Act, capital (savings and investments,) and the value of property owned but not personally used or enjoyed is assessed as means. Where capital or property is assessed on this basis, any income received from its use (e.g. interest on savings, dividends from shares, rent from property let) is not assessed as cash income. Instead, in accordance with reference 3 of Table 1 to Schedule 3 of the Principal Act, the following formula is used to establish weekly means:

Capital & Property: Weekly means assessed:
First €5,000 Nil
Next €10,000 €1 per €1,000
Next €25,000 €2 per €1,000
Excess of €40,000 €4 per €1,000

 

3.17: It should be noted that the above formula for calculating weekly value of capital/property for SWA purposes differs from the formula used for other social welfare schemes. The standard formula for social welfare schemes (excluding disability allowance) is as follows:

Capital & Property: Weekly means assessed:
First €20,000 Nil
Next €10,000 €1 per €1,000
Next €10,000 €2 per €1,000
Excess of €40,000 €4 per €1,000

 

In the case of disability allowance the first €50,000 is not assessed and the €4 per €1,000 assessment only applies to capital/property in excess of €70,000.

3.18: The difference in the assessment of capital/property as outlined above means that capital/property to the value of €50,000 would be assessed with a weekly value of €70.00 for other social welfare schemes, except in the case of disability allowance, where the assessment would be nil. In the case of SWA the weekly value assessed on capital/property of €50,000 would be €100.00.

3.19: Where an assessment of capital/property has already been made for another social welfare payment, the income assessable for the purpose of mortgage interest supplement will be the actual amount of the social welfare payment plus the weekly value of the capital/property based on the SWA formula for the assessment of weekly means from capital/property as at paragraph 3.16 above.

Example: Single person with capital of €50,000 in receipt of JA of €134.30 (i.e. €204.30 less €70.00 weekly capital value) paying mortgage interest of €150.00 per week.

Income: Job seekers allowance: €134.30
Weekly value of capital (SWA assessment rules): €100.00
Total income: €234.30
Less SWA rate: €204.30
Income in excess of SWA rate: €30.00
Plus minimum contribution: €24.00
Claimant's contribution: €54.00
Weekly mortgage interest: €150.00
Mortgage interest supplement: €96.00

 

3.20: When determining the value of property for the purpose of the assessment as set out above the market value of the property, as verified by a certificate of valuation, may be reduced by the balance of any outstanding loans or mortgages charged on the property subject to production of evidence that the original loan and the balance outstanding relates to the purchase, repair or improvement of the property in question. No deduction should be allowed if the original loan or the balance outstanding was used for other purposes not related to the property which is being assessed.

Redundancy/Lump Sum Payments

3.21: Any monies received in the form of redundancy or lump sum payments should be assessed in accordance with paragraph 3.16 above unless such payments have been used to reduce the balance of the outstanding mortgage or other outstanding loans.

Mortgage Repayment Protection Policy

3.22: Any monies received or payable under a mortgage repayment protection policy, an income continuance plan or any other policy of a similar nature, is assessable as means in accordance with Part 4 of Schedule 3 to the Principal Act.

3.23: The SWA 1 A form contains a standard format for the assessment of means and the application of income disregards for the purpose of calculating entitlement to a mortgage interest supplement.

Appendix C

Clarification and Guidance on Retention of Entitlement to Mortgage Interest Supplement

Special Retention Arrangements

1.1: Rules relating to retention of entitlement to mortgage interest supplement are set out in Circulars 03/00 and 08/00. The following persons may retain entitlement to a mortgage interest supplement;

  1. persons on approved training courses
  2. participants on employment programmes such as back to work allowance, community employment and similar programmes
  3. a person who is signing off a FAS or DEASP payment to go to work provided that:
    1. the person has been unemployed (but not certified unfit for work) for a period of 12 months immediately prior to taking up work;
    2. the new job is full-time (i.e. at least 30 hours per week)
    3. the gross weekly household income (less PRSI, reasonable travelling expenses, FIS, back to work allowance and any childcare allowance payable on certain training courses) is less than €317.43 per week.

1.2: The rate payable is a percentage of the amount of mortgage interest supplement in payment at the time the applicant enters the employment scheme. The rate is set at the commencement of retention and is not re-assessed in the light of changes in mortgage interest levels or mortgage interest rates.

1.3: The amount of supplement which can be retained, subject to the gross household income limit of €317.43 not being exceeded, is a percentage of the amount in payment immediately prior to entering the employment scheme tapered as follows:

75% in year 1, 50% in year 2, 25% in year 3, 25% in year 4.

Note: From June 2007 these arrangements are specific to Mortgage Interest Supplement and are no longer applicable to Rent Supplement.

Changing Employment Schemes

2: Where a person moves from one employment scheme to another, for example from Community Employment to Back to Work, the four year cycle for tapered retention of Mortgage Interest Supplement dates from the commencement of the first scheme. In cases where 12 months or more have elapsed since the completion of the previous scheme, claimants should be regarded as first time applicants starting a new cycle.

Option of standard SWA rules assessment

3.1: People participating in Back to Work and Community Employment schemes, or those on other approved employment schemes, who work less than 30 hours per week, have the option of being assessed under either standard rules or under the retention rules outlined above and will be entitled to receive payment under the more favourable option in their situation.

3.2: However, in the case of a person who has been unemployed for a period of 12 months immediately prior to taking up employment and who signs off a DEASP payment to take up full-time employment (more than 30 hours per week) the rule which excludes entitlement where a person is in full-time employment will exclude that person's right to be assessed under standard SWA rules. This means s/he can only be assessed for entitlement to a mortgage interest supplement under the rules governing retention of entitlement and will be subject, in the first instance, to the gross household income limit of €317.43.

Payments to people not retaining Mortgage Interest Supplement when taking up employment

4: A person who is not entitled to retain mortgage interest supplement on taking up employment may continue to receive payment of the relevant supplement for a period of up to 30 days after starting work or until such time as he or she first receives remuneration, whichever is the earlier in accordance with Article 6. (1) of the Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations 2007.

Back to Education Programmes

5: The arrangements which allow for the tapered retention of mortgage interest supplement for employment scheme participants do not apply in the case of those participating in the Back to Education Programme. Participants in the Back to Education Programme are assessed for Mortgage Interest Supplement under standard SWA rules.

Back to Education Allowance (BTEA)

6: BTEA is payable to people participating in approved second or third level courses. While the BTEA itself is not means-tested, additional earnings from part time employment are assessable in the normal way for mortgage interest supplement i.e. up to €75 per week disregarded with 25% of any additional income, with no upper limit, also disregarded

Part-Time Education, Training & Development Courses

7: Part-time basic education or training & development courses are not covered by the Back to Education Allowance scheme. Participants should check with their local Social Welfare office to see whether their participation in these courses affects their primary payment. Any additional earnings from approved training and development courses are assessable in the normal way for Mortgage Interest Supplement i.e. up to €75 per week disregarded with 25% of any additional income, with no upper limit, also disregarded

Vocational Training Opportunities Scheme (VTOS)

8: Participants on the Department of Education and Science VTOS programme are assessed for Mortgage Interest Supplement under the standard assessment i.e. up to €75 per week disregarded with 25% of any additional income, with no upper limit, also disregarded.

Appendix D

CHECKLIST OF DOCUMENTATION REQUIRED FOR A CLAIM FOR MORTGAGE INTEREST SUPPLEMENT

A. The following are standard documents to be provided with an SWA claim:

  1. SWA 1 form fully completed
  2. P 45.
  3. Recent payslip.
  4. Recent bank statement.
  5. Verification of any lump sum payments received or payable on termination of employment i.e. redundancy payment, termination payment, etc.

B. The following are the standard documents required for the purpose of a claim for mortgage interest supplement:

  1. SWA4 form fully completed by claimant and lending institution
  2. Copy of original loan documentation and evidence of income provided at time of loan application.
  3. Copy of loan approval.
  4. Documentary verification of subsequent top-ups or changes to existing mortgage.
  5. In the case of a loan for repairs or improvements, evidence of purpose for which monies were used.
  6. Most recent notification of interest rate applicable to the loan.
  7. Annual mortgage statement from lending institution.
  8. Certificate of TRS.

C. Further documentation which may be required for the purpose of a claim for mortgage interest supplement:

  1. If appropriate, evidence of payments received or payable under any mortgage repayment protection policy, income continuance plan or other similar policy of this nature.
  2. If appropriate, evidence of any income under the "rent a room scheme"
  3. Evidence of value of savings and other property.
  4. Evidence of outstanding loans on other properties.
  5. Where there is a guarantor to the mortgage, a letter from the lender clarifying the terms of a guarantee and the liability of the guarantor to make the mortgage repayments where the borrower is not in a position to do so.
Last modified:05/07/2010
 

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