Your queries answered by DOMINIC COYLE

Mortgage interest supplement may help

Q

My partner and I are having increasing problems paying our mortgage since he lost his full-time job. I do not work outside the home.

We have approached our bank but they are reluctant to restructure our loan unless there is some prospect of employment on the horizon.

Is there anything we can do? We don’t want to lose our home.

- Ms TR, Galway

A

So far, you have done everything right. You have approached your lender before arrears got out of hand on the mortgage.

In the panel above, you will see in detail, your lender’s obligations to you as a borrower.

The key facts you should know are that the bank is obliged to consider restructuring options, including allowing you to pay interest-only on the loan, or even less than that while you try to get back on your feet.

One thing you should consider is the mortgage interest supplement. This is a payment made by the Department of Social Protection. It is payable to people who are unemployed or on very low wages and can be used to provide short-term support in paying the interest on your mortgage. It is important that you realise that you will only get help with the interest element of your monthly repayments.

As long as the house was affordable to you when the mortgage was first agreed and the property is not up for sale, you could qualify.

Around 18,000 homeowners currently avail of the supplement which is means tested.

As I understand it, there is no set rate for the supplement. It is generally determined to be the difference between your monthly interest bill and what you can afford, ensuring you have enough cash to meet your basic residential needs.

To apply for the supplement, you need to contact the community welfare officer at your local health centre.

The Government has a committee looking at options for people in mortgage arrears and it is due to report back next month. One of the issues it is examining is reform and expansion of mortgage interest supplement to take account of the current crisis.

Will our savings be hit for tax?

Q

Both my husband and I are PAYE taxpayers. We each took out an SSIA at the time. We have letters from the relevant financial institutions confirming that tax at 23 per cent was paid on the investment gains at the end of the initial savings period.

We continued to pay into the funds as an ordinary savings account. It has now become necessary to cash in one of the savings plans.

It is worth less than the total sum invested to date. What is the situation with regard to tax?

- Ms MD, e-mail

A

It is unfortunate that, having avoided the urge to splurge your SSIA cash, you now find yourself “underwater” in that the fund is worth less than the money that was paid in. It’s obviously not ideal to cash the fund in at this stage but if needs must, at least you will not face a tax charge.

The exit charge on funds is now 27 per cent but this is only on the investment gain which, as you say, does not arise.

Unfortunately, there is no way of retrieving the tax already paid at the end of the SSIA period as you did have a gain at that time.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.