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

gmannix1000 · 21-05-2020 7:54am #1

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?

Dav010 · 21-05-2020 8:00am

https://www.google.ie/amp/s/amp.irishexaminer.com/breakingnews/ireland/families-reveal-how-mortgage-draw-downs-being-refused-if-in-receipt-of-covid-19-wage-subsidy-1000314.html

coughdrops · 21-05-2020 9:19am

Banks are being more cautious and some are not allowing anyone receiving any of the Covid payments to drawdown. I don't know if they will stop people applying (time between applying and actual drawdown is so long, by then chances are Covid subsidy will be finished), but they are all over it at the moment.

In our case, we can't drawdown now, just as we were about to, because I am getting the Covid top-up (still on same take-home wage).
It's all a bit of a mess at the moment!

I'd suggest chatting to a broker, they should have an idea on which banks are going ahead, as I think some still are.

Del2005 · 21-05-2020 10:12pm

To claim the subsidy your employer has to declare that they are insolvent. Any bank loaning money, espically a mortgage, to someone working in an insolvent company is not doing it's job properly.

silent_spark · 21-05-2020 10:18pm

Del2005 wrote: »

To claim the subsidy your employer has to declare that they are insolvent. Any bank loaning money, espically a mortgage, to someone working in an insolvent company is not doing it's job properly.

This is not true. They have to declare a percentage drop in revenue.

Dav010 · 21-05-2020 10:18pm

Del2005 wrote: »

To claim the subsidy your employer has to declare that they are insolvent. Any bank loaning money, espically a mortgage, to someone working in an insolvent company is not doing it's job properly.

What? That is totally ill informed.

The wage subsidy is designed to keep people in employment and is open to any business which has suffered a 25% decline in income/orders as a result of the pandemic.

From Government website:

“The Minister pointed to Revenue’s further guidance on the Scheme published yesterday which stated that the declaration by the employer is not a declaration of insolvency and that an employer that has been hit by a significant decline in business but has strong cash reserves will still qualify for the Scheme. Revenue have also said that they will continue to review and update guidelines as appropriate.”

Edgware · 21-05-2020 10:22pm

gmannix1000 wrote: »

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?

Theres evrry likelihood the Covid payment will be reduced. I would say that the banks will not give out mortgages in these uncertain times.

Del2005 · 22-05-2020 4:38am

Dav010 wrote: »

What? That is totally ill informed.

The wage subsidy is designed to keep people in employment and is open to any business which has suffered a 25% decline in income/orders as a result of the pandemic.

From Government website:

“The Minister pointed to Revenue’s further guidance on the Scheme published yesterday which stated that the declaration by the employer is not a declaration of insolvency and that an employer that has been hit by a significant decline in business but has strong cash reserves will still qualify for the Scheme. Revenue have also said that they will continue to review and update guidelines as appropriate.”

Still a risk for banks to lend when we don't know what the outcome* of the pandemic shut down will be.

*how big is the recession/depression will be and how long it'll last (not helped by Brexit in a few months)

Lewis_Benson · 25-05-2020 2:34pm

I am on this also, and will be looking at a mortgage towards the end of the year..
Whats supposed to happen come June 21st when its meant to end?

gnr vr fan · 31-05-2020 5:36pm

Dav010 wrote: »

https://www.google.ie/amp/s/amp.irishexaminer.com/breakingnews/ireland/families-reveal-how-mortgage-draw-downs-being-refused-if-in-receipt-of-covid-19-wage-subsidy-1000314.html

Son of a b***h. I have gone sale agreed on a property. My employer is availing of the wage subsidy scheme. I have approval in principle from SDCC. Rebuilding Ireland HomeLoan.

Dolbhad · 31-05-2020 6:58pm

I was AIP approved with BOI and Ulster Bank. We were both moved to subsidy payment and told we would not be able to move to loan offer until we are off the subsidy payment. They require a month’s payslips showing we are off the payment. If you did get a loan offer pre COVID and now on subsidy seems to be mostly be same if you request funds but that’s a bit more on a case by case basis.

anplaya27 · 31-05-2020 8:08pm

Ye wont get it, full stop. Happened to me a few days ago.

gnr vr fan · 02-06-2020 10:58pm

anplaya27 wrote: »

Ye wont get it, full stop. Happened to me a few days ago.

Hello,

What happened to you a few days ago?

lomb · 03-06-2020 5:46pm

It's obvious what's happening on a macro level. Banks don't know what anyone's income is. With the likely hood of future shutdowns due to covid likely half the credit is going to evaporate from the market and prices are going to crash 30% over the next 2-3 years. We're also at the end of an economic cycle and so everything is due for correction. In recessionary times with no credit unless your flush wherever you are is where you are. This looks like one of the greatest recessions in economic history. Corona is going no where and is only 10% established in an affected area of New York. With people unwilling to accept catching it and no sign of accepting it the economy is going to crash and burn over the next few years until it is accepted.

Renjit · 07-06-2020 1:55pm

The employers will take advantage of covid subsidy as long as they can.

greengrass88 · 26-07-2020 11:08pm

I'm also in the same predicament with the mortgage and wage subsidy issue...I see the wage subsidy is now changing to the employment support scheme, only explanation I could find is: "It will change from an income replacement measure to a payroll subsidy support". Can anyone hazard a guess what this will mean for people on the scheme going forward in terms of payslips and mortgages?

DubCount · 27-07-2020 9:54am

greengrass88 wrote: »

I'm also in the same predicament with the mortgage and wage subsidy issue...I see the wage subsidy is now changing to the employment support scheme, only explanation I could find is: "It will change from an income replacement measure to a payroll subsidy support". Can anyone hazard a guess what this will mean for people on the scheme going forward in terms of payslips and mortgages?

I cant see it making any difference. There may be changes to the level of government subsidy but I don't expect a change in the mechanics of the scheme. If the banks don't want a line called "covid subsidy" on your payslip, its not going to matter whether its TWSS or EWSS. The only route to change things is to have political pressure change the banks policy.

brisan · 27-07-2020 11:02am

DubCount wrote: »

I cant see it making any difference. There may be changes to the level of government subsidy but I don't expect a change in the mechanics of the scheme. If the banks don't want a line called "covid subsidy" on your payslip, its not going to matter whether its TWSS or EWSS. The only route to change things is to have political pressure change the banks policy.

So you want the politicians to force the banks to lend money to people who may not have a job to earn wages to pay it back.
2008 anybody

revoke12 · 27-07-2020 12:36pm

Friend of Mine and her boyf have mortgage approved he was on wage subsidy scheme still getting full wage like every other week but employer had to claim it. They went to draw down mortgage to start build and wasnt allowed as he was on the scheme. Told them come back when he is 3 months clear of the payment. She couldnt believe it nor could he. I think its crazy as he was still getting his full wage.

brisan · 27-07-2020 1:09pm

revoke12 wrote: »

Friend of Mine and her boyf have mortgage approved he was on wage subsidy scheme still getting full wage like every other week but employer had to claim it. They went to draw down mortgage to start build and wasnt allowed as he was on the scheme. Told them come back when he is 3 months clear of the payment. She couldnt believe it nor could he. I think its crazy as he was still getting his full wage.

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

Dav010 · 27-07-2020 1:19pm

brisan wrote: »

By applying for the payment his employer has admitted he is in financial difficulty regarding the business

This is absolutely incorrect.

The only requirement to claim wage subsidy is that income/orders have reduced by 30% due to Covid.

Jizique · 27-07-2020 1:23pm

Dav010 wrote: »

This is absolutely incorrect.

The only requirement to claim wage subsidy is that income/orders have reduced by 30% due to Covid.

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

brisan · 27-07-2020 1:24pm

Dav010 wrote: »

This is absolutely incorrect.

The only requirement to claim wage subsidy is that income/orders have reduced by 30% due to Covid.

So if your orders/income are down by 30% then the business is not in difficulty .
Fair enough I must be in the wrong business

Reversal · 27-07-2020 1:28pm

Cannot understand how people are still surprised by this. So an employer declares a negative impact to their business that results in them being unable to pay wages without government assistance. Would you lend a six figure sum of your money to an employee of such a business?

brisan · 27-07-2020 1:34pm

Reversal wrote: »

Cannot understand how people are still surprised by this. So an employer declares a negative impact to their business that results in them being unable to pay wages without government assistance. Would you lend a six figure sum of your money to an employee of such a business?

I am baffled as to how people do not get this
i know its inconvenient but if I though my job was in trouble I would be looking for a safer job and putting the mortgage on hold.
We criticized the banks for over lending in the run up to the crash and now we are criticizing them for not over lending
The CB rules are there to protect the Banks , the Borrowers and the taxpayer

Dav010 · 27-07-2020 1:34pm

Jizique wrote: »

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

Very true, but that does not automatically imply they “are in difficulty”. Considering most businesses were closed for almost a quarter of the year, it is no surprise orders/income would be down by a similar percentage.

Dav010 · 27-07-2020 1:36pm

brisan wrote: »

So if your orders/income are down by 30% then the business is not in difficulty .
Fair enough I must be in the wrong business

Trading conditions may be difficult as a result of Covid, that is not the same as saying a business is in difficulty. Applying for the wage subsidy was not dependent on capitalisation. It is wrong for you to allege that just because a business is entitled to apply for the wage subsidy, automatically it must be in difficulty and employees should not be allowed credit from banks.

brisan · 27-07-2020 1:52pm

Dav010 wrote: »

Trading conditions may be difficult as a result of Covid, that is not the same as saying a business is in difficulty. Applying for the wage subsidy was not dependent on capitalisation. It is wrong for you to allege that just because a business is entitled to apply for the wage subsidy, automatically it must be in difficulty and employees should not be allowed credit from banks.

Well the banks have a different opinion than you do and its "Their " money to lend.
Every leading expert and even the Government has said that some businesses will not survive.
If you are applying for TWSS your business is more likely to be one of those than a business that does not need it.

Kh1993 · 27-07-2020 1:58pm

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.

Dav010 · 27-07-2020 2:05pm

brisan wrote: »

Well the banks have a different opinion than you do and its "Their " money to lend.
Every leading expert and even the Government has said that some businesses will not survive.
If you are applying for TWSS your business is more likely to be one of those than a business that does not need it.

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.

DubCount · 27-07-2020 2:08pm

brisan wrote: »

So you want the politicians to force the banks to lend money to people who may not have a job to earn wages to pay it back.
2008 anybody

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.

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

Comments