# Key PostHow to calculate Mortgage Interest Supplement - updated Jan 2010

#### gipimann

##### Registered User
The general formula for calculating mortgage interest supplement is as follows:

1. Calculate total weekly income - this can be SW payments, part-time earnings, assessed savings or other property.

2. Subtract the SWA rate for the family size from the total weekly income. This is the income in excess. As a guide, SWA rates and full-rate JA/JB rates of payment are the same (€204.30 for a single person)

3. Calculate the weekly interest on the mortgage.

4. Entitlement is calculated as - weekly interest on mortgage minus income in excess minus minimum contribution (€24).

If the amount reached at no 4 is positive, then that's the entitlement, if it's negative, there is no entitlement.

There may be other factors which affect entitlement - if the interest is considered very high, then entitlement (if any) may be based on a lower amount rather than the full interest paid, or if there's a non-dependant adult child residing, they are expected to contribute towards the mortgage as well.

As this is a Social Welfare Allowance, it is a payment of last resort and relies on the judgement of the Community Welfare Officer to some extent.

You can find the full, detailed rules on the Social Welfare website

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What is Total Weekly Income?

• Net Income from employment (But employment must be part-time i.e. less than 30 hours per week)
• Most Social welfare payments
• Most HSE payments
• Family Income Supplement
• Cash Income (for example, maintenance)
• Capital (for example, savings, investments and property but not your own home)
• All income and the value of all property of which you may have deprived yourself in order to qualify

Example

Single person on Job Seekers Benefit – no other income

1) Job Seekers Benefit €196 per week
2) Social Welfare Rate for this person =€196
Excess = 0
3) Annual interest on mortgage €300,000@3% = € 9,000
Weekly interest: €173

The calculation
Weekly interest:| €173
Less income in excess:|0
Less €24: | €24
Maximum Mortgage Interest Supplement: |€149
However the law says that the amount of the mortgage interest payable by the claimant does not exceed such amount as the Executive considers reasonable to meet his or her residential and other needs

However, there is no further guidance on how much is "reasonable interest", it's a grey area. The max rent limit for a single person would be far less than €173 so they might not qualify for MIS at all.

Real examples
Example 1
Example 2

Can I claim it if my partner/spouse/joint mortgage holder is working?
[FONT=&quot]If you are living together as man and wife, whether married or not, and one is working, you cannot get MIS.
If you have bought the house as two friends e.g. two girls, then the income of the other person is ignored[/FONT]

Is there a maximum amount payable?

The law says that the amount of the mortgage interest payable by the claimant does not exceed such amount as the Executive considers reasonable to meet his or her residential and other needs

However, there is no further guidance on how much is "reasonable interest", it's a grey area. The max rent limit for a single person would be far less than €173 so they might not qualify for MIS at all.

For how long is it payable?
There is no specified limit on the duration of Mortgage Interest Supplement. The supplement is generally reviewed after a year, sometimes more often, when SW increases or other budget changes come into effect, or if interest rates or other circumstances change.

Sometimes if a very large supplement is granted, it may be subject to a time limit to allow the person time to re-negotiate or make other arrangements. An example would be the granting of a supplement to a single person who lives in a 3 or 4 bed house for 3 months to give them time to rent a room to help with the mortgage. This limit is permitted by legislation, but again, there is no specific duration or amount mentioned, so can vary from area to area.

There is one exception. The HSE may award MIS, even though the "amount of mortgage interest payable exceeds such amount as the Executive considers reasonable to meet his or her residential and other needs."

If MIS is granted under this condition, it can only be paid for a maximum of 12 months.

A short-term payment of this nature may give the applicant time to make other arrangements (e.g. renegotiate the loan, rent rooms).

How long does it take to get the first payment?
This depends on the individual claimload of the local Community Welfare Officer, who is also dealing with applications for Supplementary Welfare Allowance (e.g. basic weekly payment while waiting on SW, Rent Supplement, Exceptional Needs Payments). If MIS is granted, payment is backdated to the date of application.

Does it matter if I am in negative equity?
No. The MIS calculation looks at the interest portion of the mortgage, not the value of the house. The application form does not ask for the house value.

Does it matter if I have a lot of positive equity in the house?
No - same as above.

What are the main exclusions?

-
If your house is for sale, MIS is not payable
- The interest paid must be reasonable, so a lot of sub-prime loans are excluded

- Ability to repay the mortgage when taken out - again sub-prime loans are often excluded

- Existing arrears​

What happens if I have other assets?

The capital value of property (except your own home), savings and investments will be assessed on a weekly basis as follows:

First €5,000| Nil
Next €10,000 |€1 per €1,000
Next €25,000 |€2 per €1,000
Any capital over €40,000 |€4 per €1,000
So if you have €50,000 in a deposit account, your MIS will be reduced as follows:

First €5,000| 0
Next €10,000 |€10
Next €25,000 |€50
Next €10,000|€40
Total reduction|€100

Redundancy payments
A redundancy or lump sum payment will be assessed as capital, unless it has been used to reduce the balance of your mortgage or other outstanding loans.

What are the major sources of income which are not included when calculating means?

Household income disregard is a certain amount of your household income which is not taken into account. €75 of any additional household income is not taken into account. Also, 25% of additional household income over €75 is not taken into account. There is no upper limit on the amount that can be disregarded.

• part time employment
• part time self-employment
• maintenance payments in excess of €95.23
• Family Income Supplement
• Community Employment (CE)
• Back to Work Allowance
• Back to Enterprise Allowance
• FÁS course.

For how long is it payable?
Generally here is no time limit on payment of MIS, as long as the person continues to qualify for it.

There is one exception. The HSE may award MIS, even though the "amount of mortgage interest payable exceeds such amount as the Executive considers reasonable to meet his or her residential and other needs."

If MIS is granted under this condition, it can only be paid for a maximum of 12 months.

A short-term payment of this nature may give the applicant time to make other arrangements (e.g. renegotiate the loan, rent rooms).

How long does it take to get the first payment?
This depends on the individual claimload of the local Community Welfare Officer, who is also dealing with applications for Supplementary Welfare Allowance (e.g. basic weekly payment while waiting on SW, Rent Supplement, Exceptional Needs Payments). If MIS is granted, payment is backdated to the date of application.

Does it matter if I am in negative equity?
No. The MIS calculation looks at the interest portion of the mortgage, not the value of the house. The application form does not ask for the house value.

Does it matter if I have a lot of positive equity in the house?
No - same as above.

Re: Total Weekly Income

Net Income from employment

Employment must be less than 30 hours per week (i.e. part-time). If a person works 30 hours pw or more, they cannot apply for SWA (including MIS) regardless of their actual income.

Thanks Gipimann

Another main exclusion:

If the home is for sale, MIS isn't payable.

If someone gets MIS and they agree with their lender that the MIS amount will be their mortgage repayment for the time being, does this mean that they now have an agreement with their lender for the purpose of warding off repossession and the lender would then have to wait for at least 12 months after such agreement was broken to commence repossession proceedings?

Hi Liam

That proposal is just a proposal at the moment and won't be in law for some months.

But in practice, if someone is adhering to an agreement, the banks won't try to repossess. If they did, the court would be unlikely to grant the repossession.

Brendan

2012 update of first post (minor changes only)

The general formula for calculating mortgage interest supplement is as follows:

1. Calculate total weekly income - this can be SW payments, part-time earnings, assessed savings or other property.

2. Subtract the SWA rate for the family size from the total weekly income. This is the income in excess.

3. Calculate the weekly interest on the mortgage.

4. Entitlement is calculated as - weekly interest on mortgage minus income in excess minus minimum contribution. The minimum contribution (2012) is €30 for a single person/one-parent household, €35 for a two-person household with or without children.

If the amount reached at no 4 is positive, then that's the entitlement, if it's negative, there is no entitlement.

There may be other factors which affect entitlement - if the interest is considered very high, then entitlement (if any) may be based on a lower amount rather than the full interest paid, or if there's a non-dependant adult child residing, they are expected to contribute towards the mortgage as well.

As this is a Social Welfare Allowance, it is a payment of last resort and relies on the judgement of the Officer administering SWA (formerly the Community Welfare Officer) to some extent.

You can find the full, detailed rules on the Social Welfare website

Update of post 3

Example (updated for 2012 rates)

Single person on Job Seekers Benefit – no other income

1) Job Seekers Benefit €188 per week
2) SWA Rate for this person =€186
Excess = €2
3) Annual interest on mortgage €300,000@3% = € 9,000
Weekly interest: €173

The calculation
Weekly interest:| €173
Less income in excess:|€2
Less €30: | €30
Maximum Mortgage Interest Supplement: |€141
However the law says that the amount of the mortgage interest payable by the claimant does not exceed such amount as the Designated Person considers reasonable to meet his or her residential and other needs

However, there is no further guidance on how much is "reasonable interest", it's a grey area. The max rent limit for a single person would be far less than €173 so they might not qualify for MIS at all.​

Real examples
Example 1
Example 2

[/QUOTE]

Can I claim it if my partner/spouse/civil partner/joint mortgage holder is working?
If you are living together as man and wife, whether married or not, and one is working, you cannot get MIS. This also includes couples in a civil partnership.
If you have bought the house as two friends e.g. two girls, then the income of the other person is ignored

How long does it take to get the first payment?
This depends on the individual claimload of the local SWA Officer or central unit dealing with the claim. Local SWA offices also deal with applications for Supplementary Welfare Allowance (e.g. basic weekly payment while waiting on SW, Rent Supplement, Exceptional Needs Payments). If MIS is granted, payment is backdated to the date of application.

What are the main exclusions?
- You cannot apply for MIS until you have engaged with your lender and have entered into, and are complying with, an alternative payment arrangement for a cumulative period of not less than 12 months. The 12 month period commences when the alternative payment arrangement is in place, not when you first contact your lender.
- The above applies to all new claims made on or after 18th June 2012. It will also apply if you have previously received MIS but make a new application after 18th June 2012.

- If your house is for sale at the time of application, MIS is not payable
- The interest paid must be reasonable, so a lot of sub-prime loans are excluded​

- Ability to repay the mortgage when taken out - again sub-prime loans are often excluded​

- Existing arrears​

has this supplement been abolished for new appliacants by the government in the last budget?

No it hasn't been abolished.

This has now been abolished for new applicants from the 15 October 2013.