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PRSI D class and applying for a mortgage

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  • 11-05-2021 1:46pm
    #1
    soupy mince
    Registered Users Posts: 10 ✭


    Hi,
    I'm applying for a mortgage. I am in PRSI D class which on paper puts me on a lower salary scale than a colleague of mine on PRSI A class for the same job. There is about a €7k difference per annum. However, I also know that my colleague and I come out with more or less the same net pay so it balances out in the end.

    My question is: when applying for a mortgage, the brokers I've spoken to so far are quoting 3.5 times my salary (e.g. 3.5 times €50k =€175k). My colleague also going for a mortgage is getting a higher mortgage because on paper his salary is higher (3.5 times €57k = €199.5k). However, we earn the same net pay so have the same ability to repay.

    Can anyone provide me with any advice on how to articulate this to mortgage brokers/providers as they don't seem to understand what I am talking about and I don't have enough knowledge about this to articulate it clearly enough! Surely others on class D have had a similar experience?

    Many thanks!
    Tagged:


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    #2
    Geuze
    Registered Users Posts: 13,104 ✭✭✭✭Geuze


    PRSI class D is paid by public servants hired before April 1995.

    Since then, all PS pay class A.

    That is 25 years ago.

    So banks/brokers these days may not be familiar with it.


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    #3
    [Deleted User]
    Posts: 596 ✭ [Deleted User]


    The 3.5 is also on the gross salary, before any PAYE or PRSI deductions, so if your colleague is getting higher approval in principle and your gross is the same, then there's something else at play.


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    #4
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,028 Mod ✭✭✭✭Jim2007


    soupy mince wrote: »
    Hi,
    I'm applying for a mortgage. I am in PRSI D class which on paper puts me on a lower salary scale than a colleague of mine on PRSI A class for the same job. There is about a €7k difference per annum. However, I also know that my colleague and I come out with more or less the same net pay so it balances out in the end.

    My question is: when applying for a mortgage, the brokers I've spoken to so far are quoting 3.5 times my salary (e.g. 3.5 times €50k =€175k). My colleague also going for a mortgage is getting a higher mortgage because on paper his salary is higher (3.5 times €57k = €199.5k). However, we earn the same net pay so have the same ability to repay.

    Can anyone provide me with any advice on how to articulate this to mortgage brokers/providers as they don't seem to understand what I am talking about and I don't have enough knowledge about this to articulate it clearly enough! Surely others on class D have had a similar experience?

    Many thanks!

    This is a central bank rule: 3.5 times your gross income, it does not matter that your net income is more or less the same. What the brokers are telling you is correct.

    Before the lockdown, banks could make a number of exceptions, but I understand they are not doing so at present.


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    #5
    [Deleted User]
    Posts: 5,121 ✭✭✭ [Deleted User]


    Being class D would also put you closer to retirement than your colleague. Unless you started close together, would that be making a difference?


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    #6
    Geuze
    Registered Users Posts: 13,104 ✭✭✭✭Geuze


    Jeremy Beagle wrote: »
    The 3.5 is also on the gross salary, before any PAYE or PRSI deductions, so if your colleague is getting higher approval in principle and your gross is the same, then there's something else at play.

    Some PS, after paying the full-rate of PRSI was introduced, and they had to pay pensions, were given a higher scale.

    So for each grade there exists a scale, and a higher scale.

    See examples here:

    https://circulars.gov.ie/pdf/circular/per/2013/08.pdf


    Assistant Principal Officer starts at 61966
    AP (higher) starts at 65,000

    So the exact same job can have a different gross, depending on when you were hired.

    This is not well known, and applies to sub-groups of PS.


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    #7
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,028 Mod ✭✭✭✭Jim2007


    Deleted User wrote: »
    Being class D would also put you closer to retirement than your colleague. Unless you started close together, would that be making a difference?

    Which would also mean the borrower is likely to be paying of the loan from a lower income in the future...


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    #8
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    What class PRSI you are paying is irrelevant when being assessed for a mortgage and as other posters pointed out the Central Bank rule is 3.5 times your gross salary which should be the same as your colleague.


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    #9
    soupy mince
    Registered Users Posts: 10 ✭soupy mince


    Hi,

    Thanks all for the replies. I think I did not explain myself very well when I started talking about Gross and Net Pay. We are on two different pay scales - I am PRSI scale D which is €50,000 (just using this as an example). Colleague is on PRSI scale A which is €57,000

    But we end up with the same pay at the end of the month - for the same job etc. But because my gross pay looks lower on paper than his, he gets a bigger mortgage. I was wondering how this might be taken into consideration by the Central Bank - as our ability to repay is exactly the same.

    He is actually closer to retirement than I am as he broke his service and then returned whereas I didn't.
    Many thanks.


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    #10
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,028 Mod ✭✭✭✭Jim2007


    soupy mince wrote: »
    But we end up with the same pay at the end of the month - for the same job etc. But because my gross pay looks lower on paper than his, he gets a bigger mortgage. I was wondering how this might be taken into consideration by the Central Bank - as our ability to repay is exactly the same.


    It does not just look lower, it is lower from what you have said. And as the bank only takes into consideration Gross Income, there is no way around it. Unliess the bank agrees to an exception and I understand they are not doing this a present.


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    #11
    soupy mince
    Registered Users Posts: 10 ✭soupy mince


    Jim2007 wrote: »
    It does not just look lower, it is lower from what you have said. And as the bank only takes into consideration Gross Income, there is no way around it. Unliess the bank agrees to an exception and I understand they are not doing this a present.

    Ok, thanks Jim. I suppose it would be in my interest if they considered net pay rather than gross pay. Seems a little unfair though to those on PRSI D - they are the same job and the same take home pay. Anyway - it is what it is!


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