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

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.

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)

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.

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 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 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

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.

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.

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 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.

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

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

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.

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