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Put on Wage Subsidy Scheme - Will this affect mortgage application?

gmannix1000

Hi All,

Employer has notified they have gotten the COVID-19 wage subsidy scheme last month.

My wages haven't changed but was hoping to apply for a mortgage in the next 3 months and was wondering if this would affect my mortgage application/amount in any way?... if anyone knows?

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brisan

Dav010 wrote: »

The experts are right, some may not survive, you on the other hand are wrong to conclude that any business that applies for the subsidy is in difficulty. There are many employees receiving the wage subsidy who work for businesses who are not in difficulty and though income is down, are at no risk of closing.

The Government were very clear that applying for the wage subsidy did not indicate insolvency or the potential to be so.

i never said they were insolvent or would close down
I said they were in financial difficulty and by asking the Government for handouts they have admitted this.
If the Government stops the TWSS what will the company do
Lay off all its employees and close
Lay off some employees and try to carry on
Most will try option 2 and the banks know this.
The subsidies will stop eventually and unfortunately people will lose their jobs.

greengrass88

Kh1993 wrote: »

Down the line some banks surely might have to take a more nuanced view on the subsidy, especially with an extension in some form well into 2021.

For example, today the IT reported how the childcare sector will be given a sector wide exemption to remain on the subsidy. Now when it comes to state funded childcare, it’s a case of they were being funded by Tulsa, Department of Children etc, and are now being funded by Revenue essentially. Moving of deckchairs etc. Quite harsh that this essentially bars you from any loan.

Exactly, if the new scheme shows up on payslips until april/may 2021 and then you need 3 months payslips without it on it, that's a very long time for some people to wait

brisan

DubCount wrote: »

No. I want people who are in employment and still receiving the same net pay as they always did to be allowed draw down a mortgage. Unless you are a civil servant, anyone can work for a company that can run into difficulty and be let go. This does not mean that such a person will not be able to find another job or continue to repay a mortgage. Besides, there is a 10% deposit at minimum, so the bank would need a default and a reduction in the property value by 10% or more to have a problem. This is not 2007 with 100% mortgages and no stress testing of ability to repay.

p.s. I'm not drawing down a mortgage myself, so this only reflects what I believe is fair, not what suits me.

Until this pandemic settles no one knows the economic outcome.
Even if a vaccine is found soon and in two years there is herd immunity there will still be economic scarring from this recession .
The banks know this and are being cautious
People on TWSS are still receiving their full net pay correct,but their employer has stated that he cannot afford to pay the full amount and the banks are taking note of this

brisan

greengrass88 wrote: »

Exactly, if the new scheme shows up on payslips until april/may 2021 and then you need 3 months payslips without it on it, that's a very long time for some people to wait

Personally I cannot see the Government forcing the CB or the banks to change their rules regarding lending

Thierry12

brisan wrote: »

Personally I cannot see the Government forcing the CB or the banks to change their rules regarding lending

All they have to do is take the subsidy off the payslip in most cases?

State owned banks AIB, PTSB should be doing what we tell them anyway, cheeky gits

greengrass88

Read that the scheme was getting a "major revamp" and that it would move to a payroll subsidy support...but sounds like everyone here thinks it will be more or less the same as the TWSS?

random_banter

brisan wrote: »

i never said they were insolvent or would close down
I said they were in financial difficulty and by asking the Government for handouts they have admitted this.
If the Government stops the TWSS what will the company do
Lay off all its employees and close
Lay off some employees and try to carry on
Most will try option 2 and the banks know this.
The subsidies will stop eventually and unfortunately people will lose their jobs.

Firstly, I think this is a really unfortunate situation for people to be in and I have endless sympathy for people who are experiencing this. But I see where the banks are coming from. We are on the cusp of a big recession and all the ingredients are in place.

End of the day, to an underwriter, a person who's employment is currently being subsidised by the government is a red flag. The company may not be going under but has had enough of a loss to make the cut for the scheme - and in many cases they are going on the scheme as the loss equates to potentially having to lay off a number of staff rather than closing the business. With the scheme, they don't have to lay off the staff and jobs are kept, although subsidised.

It's better for the majority of staff to get to keep their job during this time but the effect on the potential buyer is definitely upsetting. Underwriters don't care if you're upset however; they only care about risk calculations.

lomb

Jizique wrote: »

And if income and/or orders are down (at least) 30% the business is facing some challenges

On an annual basis most businesses would be down 30% . Lets say your were shut for 3 months thats 25% there, and another 5% in the remaining time is no big deal. The thing is if the wage bill is paid by the state largely which it was then your overheads may or may not be much. It depends on what other fixed overheads you have other than labour. Some business owners are just looking at this as a holiday, sure some are badly affected and will be. It all depends on the sector that your in.

brisan

greengrass88 wrote: »

Read that the scheme was getting a "major revamp" and that it would move to a payroll subsidy support...but sounds like everyone here thinks it will be more or less the same as the TWSS?

No matter what name they call it the banks will want to ensure that if you are applying for a mortgage that your employer is not getting the subsidy/support/assist

north south east west

Out of interest can an employer remove one employee from the scheme? or does a company need to avail of the scheme for all staff?

[Deleted User]

brisan wrote: »

he was still getting his full wage because the state was paying him the portion of his wages his employer could not afford to pay due to a loss of revenue.
When the state stops paying their portion of his wages his employer may not be in a position to make up the difference.
By applying for the payment his employer has admitted he is in financial difficulty regarding the business
If your friends employment is insecure then the bank is only being prudent in not allowing him to draw down a mortgage

You can’t state this as fact across the board. I only know one or two people on the scheme and at least one of them still has a very secure job their employer just went on the scheme as it’s saving them money and you can be damn sure this is the case in many other jobs. This is not a normal recession, in most cases all the work that was there for business is still there once things start to get back to normal. Which would happen a lot faster if people stayed at home.

It’s a disgrace that the backs are messing up people’s lives like this denying them mortgages at the last minute etc when they can clearly afford them.

brisan

Londyn Hallowed Duet wrote: »

You can’t state this as fact across the board. I only know one or two people on the scheme and at least one of them still has a very secure job their employer just went on the scheme as it’s saving them money and you can be damn sure this is the case in many other jobs. This is not a normal recession, in most cases all the work that was there for business is still there once things start to get back to normal. Which would happen a lot faster if people stayed at home.

It’s a disgrace that the backs are messing up people’s lives like this denying them mortgages at the last minute etc when they can clearly afford them.

As someone else stated earlier in the thread the employer has to show at least a 30% drop in business to qualify for TWSS
Therefore the employer cant just apply for TWSS for the cracic or just to get a few free punts

brisan

Thierry12 wrote: »

All they have to do is take the subsidy off the payslip in most cases?

State owned banks AIB, PTSB should be doing what we tell them anyway, cheeky gits

Did you ever consider how and why they became to be state owned and the circumstances that led to it

cubatahavana

Has anyone on the subsidy been able to get the loan? Would a letter from employer help maybe?

flipflophead22

Yes some are approving on a case by case basis e.g ptsb, you need a letter from your employer saying they intend to take you back on and at the same wage you were on originally.

cubatahavana

flipflophead22 wrote: »

Yes some are approving on a case by case basis e.g ptsb, you need a letter from your employer saying they intend to take you back on and at the same wage you were on originally.

That’s good news for those affected. All lenders should do something similar

The_Conductor

cubatahavana wrote: »

That’s good news for those affected. All lenders should do something similar

Its an additional risk though. While most companies will fully intend to take people back (at their current salary)- many will quite simply be incapable of surviving- the pandemic payment scheme is a life support of a good number of companies- and despite the best of intentions- if the plug is pulled, many will fail.

Most lenders quite simply, unless they have a relationship with the company in question that you work for- are incapable of even beginning to quantify the risk associated with specific companies.

I don't mean to rain on anyone's parade- I'm simply pointing out the obvious.

L1011

flipflophead22 wrote: »

Yes some are approving on a case by case basis e.g ptsb, you need a letter from your employer saying they intend to take you back on and at the same wage you were on originally.

That's relevant for people on PUP not TWSS though - those on TWSS are generally still working and at full salary as it is.

My employer is on TWSS; so I fall in to that category. I've been in the office the entire time (essential worker in one of the totally non-obvious categories until you think about it) and my salary has not been affected at all - but from a banks perspective, my employer needed state support and was otherwise not in a position to meet all salaries, so I'm a higher lending risk.

Thankfully I'm not looking for a mortgage currently.

cubatahavana

Is TWSS not supposed to end at the end of August? Probably people will be ok after this?

L1011

cubatahavana wrote: »

Is TWSS not supposed to end at the end of August? Probably people will be ok after this?

Only after the 3/6 months or whatever of bank statements that the lender requests. And its entirely possible that salary certs will suddenly grow a field about whether the employer receivers the TWSS replacement EWSS.

greengrass88

https://www.thejournal.ie/mortgage-wage-subsidy-5170246-Aug2020/

Sonrisa

L1011 wrote: »

Only after the 3/6 months or whatever of bank statements that the lender requests. And its entirely possible that salary certs will suddenly grow a field about whether the employer receivers the TWSS replacement EWSS.

Could they ask that? Like that's not unlike asking whether your employer has an overdraft or any other business loans.

revoke12

Londyn Hallowed Duet wrote: »

You can’t state this as fact across the board. I only know one or two people on the scheme and at least one of them still has a very secure job their employer just went on the scheme as it’s saving them money and you can be damn sure this is the case in many other jobs. This is not a normal recession, in most cases all the work that was there for business is still there once things start to get back to normal. Which would happen a lot faster if people stayed at home.

It’s a disgrace that the backs are messing up people’s lives like this denying them mortgages at the last minute etc when they can clearly afford them.

Agree with you totally on this aswell, my friend her partner in questions job was never in jepordy due to covid but the employer put him on the scheme and this is what jepordised their chances of getting the first draw down. cant paint everyone with same brush some employers took the scheme and employees should not be penalised in my eyes.

Wildly Boaring

How can a job be secure and a company be down 30% turnover at the same time?

You may be indispensable to your employer. No use if your employer goes bust.

Some of the posters seem to think employers are availing of the scheme for the craic.

[Deleted User]

Why would a lender ignore that a customer's employer had taken at least a 25% hit to revenue when that information is available to them? They analyse the level of risk based on the evidence presented, and a customer with a job in an industry adversely affected by the pandemic is of course going to be a higher risk customer than one whose employer has not been affected.

cubatahavana

Pharmacy with two pharmacists and 3 staff. Due to covid owner needs to reduce hours of second pharmacist (not the supervising) and let one of the general staff go until they recover. Everyone is on the TWSS. The pharmacy operating with one staff less and less hours for the second pharmacist has reduced their revenue by 30% but it still is enough for the other staff members to be perfectly safe (especially the supervising pharmacist). They would receive TWSS and be in a safe job.

cubatahavana

And I’m sure some accountants are doing some creative accounting to make some companies less profitable and be able to avail of the TWSS even if not needed

CrabRevolution

Wildly Boaring wrote: »

How can a job be secure and a company be down 30% turnover at the same time?

You may be indispensable to your employer. No use if your employer goes bust.

Some of the posters seem to think employers are availing of the scheme for the craic.

While I agree with the general gist of your post, you're deluded if you think employers aren't doing their utmost to fall within the requirements for the scheme even if they've been untouched financially. For some businesses it will be covering the vast majority of their wage bill while they're still taking in near normal income. It's effectively free money, how would they not try to get in on it?

brisan

CrabRevolution wrote: »

While I agree with the general gist of your post, you're deluded if you think employers aren't doing their utmost to fall within the requirements for the scheme even if they've been untouched financially. For some businesses it will be covering the vast majority of their wage bill while they're still taking in near normal income. It's effectively free money, how would they not try to get in on it?

And by getting it they are affecting their employees chances of getting a mortgage

cubatahavana

brisan wrote: »

And by getting it they are affecting their employees chances of getting a mortgage

Can’t see them worrying about this