Vol. 494 No. 5
41 Mr. N. Ahern asked the Minister for Social, Community and Family Affairs the situation in relation to any recent policy decision to refuse mortgage assistance to any mortgage holder who became unemployed on the grounds that a guarantor or parent was attached to the mortgage to give a greater loan than would normally be allowed. [18678/98]
Under the provisions of the supplementary welfare allowance scheme, a weekly supplement may be paid in respect of mortgage interest to people in receipt of social welfare or health board payments. The relevant legislation provides that a person may be entitled to a mortgage interest supplement only if the loan agreement was entered into at a time when, in the opinion of the health board, the claimant was in a position to meet the repayments.
Cases where a guarantor or parent is attached to the mortgage to give a greater loan than would normally be allowed are assessed on an individual basis. If the health board was satisfied the person taking out the mortgage could meet the repayments at the time the loan agreement was entered into, a mortgage interest supplement may be payable. However, if the amount of the mortgage is substantially higher than would normally be provided to a person at that income level and if there are no grounds to justify this other than the fact they had a guarantor, a mortgage interest supplement would not be payable on the grounds they were not in a position to meet the repayments in their own right at the time the loan agreement was entered into. There has been no policy change in this regard.
I thank the Minister for his reply. What exactly does "substantially" mean? In the case which has been brought to my attention, the health board's position is the same as that outlined by the Minister. Is the Minister aware that, in view of rising house prices, many people are experiencing difficulty in securing a mortgage? In many cases, they may be able to secure only an £80,000 loan for a house costing £100,000 and may need to ask their parents to act as guarantors. It is not intended that the parents would have any legal interest in the house. Their guarantee is simply a device used to help people to secure a mortgage and it would be a couple's intention to pay the full mortgage themselves. However, if one of the couple loses his or her job, the health board takes the view that at the time the mortgage was granted, the couple was not in a position to pay the full mortgage. Is the Minister aware of the increasing practice whereby people ask their parents or another third party to act as guarantors? There must be a change in policy to address the new cases coming before us.
If the Deputy has a particular case in mind, he should bring it to my attention and we could examine it. The health board would have considered the income of a person or a couple at the time a mortgage was taken out. Building societies or banks should not give people a loan greater than that determined under the normal rules, namely, two and a half times a person's salary. Taking on a guarantor should not mean people are given a higher mortgage as that would ultimately cause difficulties. The health board would not allow itself to be led into a situation where it would be asked to meet substantial mortgage interest repayments based on mortgages which people should not have taken out in the first instance. Strict criteria apply to the lending of money for mortgages. I will examine any particular case with the Deputy.
Has the Minister any information on file regarding the number of people affected in this area? If not, will he undertake to check with the various health boards to elicit the number of people being refused assistance? We must seek to keep people in their homes. Could the Minister indicate what progress is being made by his own Department and the Department of the Environment and Local Government with regard to the bringing together under the one heading of all housing supports ranging from differential rents to rent supplements?
I will try to find out the information the Deputy wants. I understand the Deputy is referring to the interdepartmental committee which is chaired by the Department of the Environment and Local Government. Its report is due shortly.
Is the Minister not aware that the traditional rule that a mortgage can be no more than two and a half times a person's salary has gone by the board and that the only way people can get mortgages is by producing supplementary statements in relation to real or imaginary weekend work? One such case has been brought to my attention. Should the job situation deteriorate, there will be hundreds of such cases. It is now common for people to have a guarantor in order to get a mortgage. I ask that the Department consider this matter. It may be only a handful of cases now, but there is a danger of the practice snowballing. If, after consideration, the Department and the health boards adopt a harsh attitude to this, people should be warned about getting their granny or their parents to go guarantor for their mortgage. People think this gets them over a problem, but that will not be the case. I ask the Minister to give serious consideration to this because there may be a flood of such applications.
In 20 years or more as a solicitor I have never once come across a building society requiring a guarantor for a house loan.
The Minister has been out of the business for a long time.
When I practised it was even more difficult to get a loan because many more people were out of work than there are now and would not have had the income to support a mortgage.
Houses were cheaper.
That is one reason I ask the Deputy to bring the case in question to the attention of the Department. It is not the fact of having or not having a guarantor that would be taken into account by the health board in deciding to refuse a mortgage interest supplement but the ability to pay when the mortgage was taken out. If people use devices to get mortgages which are larger than their wages allow, the taxpayer should not be asked to bail them out when they get into difficulty.
