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Question At Issue:
whether the appellant is entitled to a mortgage interest supplement in respect of a property purchased in 2006.
Background:
The appellant purchased his
former parental home from his brother in July
2006 for €300,000, using a 100% interest only
investment mortgage. In October 2009, he
applied for Supplementary Welfare Allowance
(Mortgage Interest Supplement) and was refused
on grounds that the mortgage had been obtained
for investment purposes. In May 2010, he
submitted a letter from the lending agency stating
that it had agreed to treat the mortgage as a home
loan. (The appellant had ceased self-employment
at the end of 2007 for health reasons and has been
in receipt of Disability Allowance since then.)
Oral hearing:
The appellant reported that his
brother had decided to sell the former parental
home at a time when he was living in a one
bedroom apartment provided by the Respond
Housing Association. He had applied previously
to a lending agency for a mortgage but had been
refused in view of his health. Subsequently,
however, he said that the estate agent handling
the sale had advised that he could get a mortgage
with a different lending agency. He said he had
not been aware that the mortgage was made
available on the basis that it was for a residential
investment. The Appeals Officer asked whether
this had not become apparent when he signed the
application but the appellant insisted that he had
focused wholly on saving the family home and
not on the nature of the mortgage application.
The appellant said that he moved into the house
in mid 2006 when the sale had been completed.
The appellant stated that the mortgage
repayments had been met in full until early in
2010. He said that he had cashed in an
occupational pension (€13,000) and used this and
other savings. He had also received help from his
family to meet the repayments. Since then, he
had agreed to pay €200 per month. The Appeals
Officer asked about the income stated for the
mortgage application and that returned for
income tax purposes. The appellant said that
€65,000 had been stated in the context of the
mortgage application and indicated that the estate
agent had advised him that an income at that
level was required. In relation to income tax, he
was unable to state the amount involved but
thought it had been between €400 and €800 each
year. The Appeals Officer suggested that this
amount did not appear compatible with declared
earnings of €65,000 and he invited the appellant
to submit a copy of the mortgage application and
a copy of his tax returns for the period at issue.
The appellant subsequently provided these
documents.
Consideration of the Appeals Officer:
The
Appeals Officer noted that the appellant’s initial
application for a home loan had been refused as
the lending agency did not consider his health
would allow him to continue in employment and
so be in a position to service the loan. He
considered that this assessment had, regrettably,
been borne out by subsequent developments. He
noted also that, at the suggestion of the estate
agent, the appellant had applied to a second
lender for an investment mortgage.
Having examined the documentary evidence
submitted by the appellant, the Appeals Officer
noted that the statement of the appellant’s
earnings supplied to the lending agency by the
appellant’s accountant was sufficient to support a
mortgage at the level sought but was not
consistent with the income declared for income
tax purposes. In the circumstances, he indicated
that he was not prepared to accept that the
information supplied to the lending agency
represented an accurate reflection of the
appellant’s income or demonstrated an ability to
service the loan on an ongoing basis. He took
into account also the fact that the accommodation
was in excess of the appellant’s needs as a singe
person and that he had not been in need of
accommodation in 2006. He considered that
there did not appear to be any prospect of the
appellant being able to service the mortgage at
any stage in the future.
The relevant social welfare legislation (S.I. 412
of 2007) provides that Mortgage Interest
Supplement is payable where:
_____‘the amount of the mortgage interest payable
by the claimant does not exceed such
amount as the Executive (HSE) considers
reasonable to meet his or her residential and
other needs’.
In determining whether a supplement is payable,
account is taken of the accommodation
requirements of the applicant, the level of
mortgage repayments, the age of the mortgage,
whether the mortgage was affordable when taken
out, if it is solely related to the provision of
housing or incorporates other debts, the level of
arrears, the prospects of the applicant being able
to service the mortgage within a reasonable
timescale and how the interest payable relates to
the equivalent rental income for the family size in
question. Having carefully considered the
evidence and the circumstances of the case, the
Appeals Officer concluded that the application
should not be approved.
Outcome:
Appeal disallowed.
End of Document
