Mortgage Interest Supplement

B1977

Can anyone answer a few questions on Mortgage Interest Supplement.

1.Homeowner is unemployed,had been working for 10 years and could afford to pay the mortgage off their own salary for that time.
2.When taking out Mortgage ,Bank insisted on a parent being on mortgage aswell,so its a joint mortgage even though parent is not paying towards Mortgage.
3.Community Welfare Officer now wants to see Parents earnings, proof of a room being advertised for rent on newspaper and for homeowner to try and arrange a moratorium or re-negotiation of mortgage.

Has anyone advice on what to do regarding the above

Annasopra

It depends on a lot of things - if you were working for 10 years did you get a redundancy payment?

snubbleste

MIS is pretty complex
I suggest you go to your local citizens information centre.
The CWO obviously had reason to ask for those answers based on the information given to him

B1977

B1977 wrote: »

Can anyone answer a few questions on Mortgage Interest Supplement.

1.Homeowner is unemployed,had been working for 10 years and could afford to pay the mortgage off their own salary for that time.
2.When taking out Mortgage ,Bank insisted on a parent being on mortgage aswell,so its a joint mortgage even though parent is not paying towards Mortgage.
3.Community Welfare Officer now wants to see Parents earnings, proof of a room being advertised for rent on newspaper and for homeowner to try and arrange a moratorium or re-negotiation of mortgage.

Has anyone advice on what to do regarding the above

Is it a wise decision to re-negotiate your mortgage with your bank,does it cost more in the long term

The_Conductor

Normally in the case of joint mortgages, or where parents have acted as guarantors- the Community Welfare Officer does not approve Mortgage Interest Supplements. If you go ahead and apply anyhow- they will assess the total income of all parties involved- i.e. your income and that your parents will be assessed to determine whether you and/or your parents are financially capable of paying the mortgage without assistance. There is no way around this- by virtue of your parents being on the mortgage, or acting as guarantors to the mortgage- they have a legal obligation associated with that mortgage. Its unfortunate, but it is fact, and the parents could potentially be pursued by the financial institution if you are incapable of meeting your obligation to them.

Banks do allow renegotiations of mortgages- and if you purchased the property 10 years ago- there is a reasonable assumption that it is not in negative equity yet, so there is an asset which can be used to your advantage. You have to be clear what your intention is though- and why you are pursuing a particular course of action. You need to draw up a list of your total income and your total expenditure (and no cute accounting- you need to be realistic). You need to show how much income you can reasonably pay towards the mortgage and how much your parents can afford to pay. You need to organise to sit down with your mortgage advisor and give him/her the cold hard facts. It is not in their interests for your mortgage to go into arrears- we have over 3.6% of all mortgages already over 90 days in arrears- lending institutions are actually bending over backwards to try to keep these numbers as low as possible.

Do you want to change the term of your mortgage to reduce the monthly payments, do you want to try to get them to go interest only, do you want to try to use the equity built up in the property to try to negotiate a better interest rate? Know what you are looking for- and investigate the options before you go in- so you have a reasonable understanding of what you're talking about (and also how likely it is!!!)

I would also seriously advise contacting MABS who will give you good advice on budgeting and how to organise your finances (along with tips on how to approach your bank).

Critical to all of this- unfortunately- is the fact that your parents are on the mortgage- the fact that they were not making payments, is wholly irrelevant. Their income is going to be assessed by the CWO and taken into account when calculating any MIS payment (any income they have over the threshold will be deducted from any possible MIS payment- even if its a pension payment etc).

Do report back and let us know what transpires. There are a few not dissimilar threads in the Accommodation & Property forum that may be of interest to you.

Shane

B1977

Im the sole name on the Mortgage now, parents name was taken off some time back.
My main question is, if you go to re-negotiaite the mortgage will you lose out on any chance of receiving the mortgage interest supplement?

The_Conductor

B1977 wrote: »

Im the sole name on the Mortgage now, parents name was taken off some time back.
My main question is, if you go to re-negotiaite the mortgage will you lose out on any chance of receiving the mortgage interest supplement?

No- the determining factor is how 'affordable' the mortgage was for you when you originally took out the mortgage.

Example:

Jane was earning 50k (and can prove it) and bought an apartment for 300k. She also got a bonus and undertook to use the rent-a-room scheme to assist her pay the mortgage. Her LTV ratio when she took out the loan was 85% and her mortgage was 6 times her basic salary. She availed of the rent-a-room scheme and made a tax declaration declaring the income.

Jack was on 60k (and can prove it). He bought an apartment for 480k. He also got a bonus and undertook to use the rent-a-room scheme to assist in paying the mortgage. His LTV when he took out the loan was 100%, and his mortgage was 8 times his basic salary. Jack did not bother to use the rent-a-room scheme.

Presuming the rules determining 'affordability' are similar across the board- Jane would qualify for MIS- Jack, would not.

Renegotiating your mortgage would not normally affect this- its a measure of how affordable the mortgage was to the mortgagee when they originally took out the loan. Renegotiating your loan is simply exercising prudence.

B1977

when I took out my mortgage I had a job paying over 30k a year and I earned this for atleast 8 years.my mortgage was around 9k a year so I had no problem affording it on my own for those years.Now Im unemployed and receiving 10k on the dole.If I receive mortgage interest supplement i wont need to re negotiate my mortgage, but the CWO has told me to try re nego my mortgage so that i can be considered for the interest supplement.

advice

The_Conductor

Unfortunately- your idea of affordability and the CWO's are not necessarily the same. You are advising that you put 1/3 of your income (roughly) towards servicing your mortgage. When you originally took out the mortgage you required a guarantor/co-lender to sign on your behalf- what were the lending terms at the time, and in what manner did you fail to meet them?

The CWOs are not approving all mortgage interest supplement applications- affordability- and how they determine affordability are where you need to go.

I take it your mortgage providor has been advised of your change in circumstances? It is reasonable to request a meeting with them to renegotiate the terms of the mortgage (and/or any other obligations you may have towards them). The idea of the renegotiation is probably to extend the term of the loan out into the future- so a much smaller amount of the principal comes due on a monthly basis. At present a significant and growing portion of your repayment is principle- the MIS does not cover this. Once this element of the mortgage has been addressed- it is up to you to supply income statements for you and your parents (or whoever it was who acted as guarantor on your mortgage initially), to the CWO- who will make a decision as they determine, based on the income statements. You need to be aware that your application may be decided based on these income statements- if you fail to supply them, your application may be dead in the water.......

You really need to get the paperwork together and chase and chase on this.