Operational Guidelines: SWA - Mortgage Interest Supplement

1.1 Purpose of Mortgage Interest Supplement

The purpose of Mortgage Interest Supplement is to provide short term income support to eligible people who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence. The supplement assists with the interest portion of the mortgage repayments only. The capital element of the repayment is not taken into account in calculating the amount of supplement payable as it is not considered appropriate that the Exchequer should repay part of the initial loan and thereby provide assistance towards the accumulation of a capital asset on the part of the individual concerned.

1.2 Administration

Applications for Mortgage Interest Supplement can be made to your local Department of Employment Affairs and Social Protection Office administering Supplementary Welfare Allowance.

1.3 Legislation:

• Chapter 9 of Part 3 and Chapter 3 of Part 10 of the Social Welfare (Consolidation) Act, 2005 (as amended)
• Part 4 of Schedule 3 of the Social Welfare (Consolidation) Act 2005 Rules as to Calculation of Means (as amended)
• Social Welfare (Consolidated Supplementary Welfare Allowance) Regulations 2007 to 2011

2.1 Qualifying Conditions

A person may be entitled to a supplement towards the amount of mortgage interest payable in respect of his or her residence provided that:

• she or he has at the time of application engaged with his or her mortgage lender in order to meet his or her mortgage repayment obligations, and has entered into and complied with an alternative repayment arrangement for a period of not less than 12 months
• the loan agreement was entered into at a time when, in the opinion of the department’s representative, the person was in a position to meet the repayments
• he or she is habitually resident in the State

The department’s representative must be satisfied in all cases that:

• the amount of the mortgage interest payable by the claimant does not exceed such amount as the department’s representative considers reasonable to meet his or her residential and other needs
• it is reasonable to award a supplement having regard to the amount of any arrears outstanding on the loan

In exceptional circumstances, the department’s representative may award a supplement where the amount of mortgage interest payable by a person exceeds such amount as the department’s representative considers reasonable to meet his or her residential and other needs. Such supplement is payable for a maximum of 12 months from the date of the claim.

2.2 Disqualification from Mortgage Interest Supplement

Certain categories of people are excluded from receipt of Mortgage Interest Supplement.

These include:

• a claimant or their spouse or partner who is engaged in full time employment, defined as more than 29 hours a week (See Section 4 for exceptions)
• people involved in a trade dispute. However, the dependant spouse and dependant children of a person involved in trade dispute are not excluded from SWA for the period of the strike
• people engaged in full time education (See Section 4 for exceptions)
• people unlawfully in the State
• people who have made an application for asylum under the Refugee Act, 1996 and such application is awaiting final decision by the Minister for Justice and Equality
• people who have made an application under the Aliens Act, 1935 to remain in the State and such application has not been determined
• people admitted to an institution for a period of in excess of 13 weeks

3.1 Standard Assessment

Rent Supplement is normally calculated to ensure that a person, after the payment of his or her mortgage interest, has an income equal to the rate of SWA appropriate to their family circumstances less a minimum contribution which recipients are required to pay from their own resources. The weekly minimum contribution is €30 for single adult households and €40 for coupled households. Many recipients pay more than this amount because recipients are also required, subject to income disregards, to contribute any additional assessable means that they have over and above the appropriate basic SWA rate towards their accommodation costs.

A further minimum contribution is also payable in respect of each non-dependent adult household member. It is custom and practice to reduce the Mortgage Interest Supplement payable by at least €30 in respect of each non-dependent household member who is in receipt of a Social Welfare payment or income from employment.

3.2 What Counts as Means:

• any income from employment, self employment or a training and educational scheme such as Community Enterprise (CE), Back to Education Allowance (BTEA) and Back to Work Allowance (BTW)
• Family Income Supplement
• the capital value of investments, savings and value of property other than the claimant's own home
• all income and the value of all property of which the claimant deprived him or herself in order to qualify for SWA
• income in cash, for example maintenance payments

3.3 What Does Not Count as Means

The following items are not counted in the means test for Mortgage Interest:

• Child Benefit, including equivalent payments from other EU countries
• Mobility Allowance
• Guardian's Payment Contributory or Non Contributory
• Payments received from the Health Service Executive for Foster children
• Payments for accommodating children under the Child Care Act
• Income from Gaeltacht students
• Domiciliary Care Allowance
• Grants or allowances arising in pursuance of a scheme promoting the welfare of blind people
• Money received from charitable organisations, for example St Vincent de Paul
• Compensation awarded by the Compensation Tribunal in respect of Hepatitis C contracted from certain blood products, compensation paid to those who have disabilities caused by Thalidomide and to those receiving compensation under the Residential Institutions Redress Board
• Maintenance grants paid by Local Authorities for Higher Education
• Respite Care Grant

3.4 Income Disregards

The following are the principal income disregards which apply in the calculation of means for Mortgage Interest Supplement purposes:

• Pensioner Disregard
• Carer's Allowance Disregard
• Half Rate Carer's Allowance Disregard
• Additional Income Disregard
• EUR 120 of earnings from Rehabilitative Employment

Pensioner disregard

A special income disregard exists for those aged 65 years or over. Any additional income equal to the difference between the maximum rate of State (Contributory) Pension and the Supplementary Welfare Allowance appropriate to his or her circumstances can be disregarded.

In effect, any single person aged 65 or over with income equivalent to the value of the maximum rate of State (Contributory) Pension should only make the minimum contribution of €30 per week. A pensioner couple who both have a State (Contributory) Pension payable at the maximum rate - and have no other income - should contribute €40 per week towards their mortgage interest payment.

Carer's Allowance disregard

The rules governing the means test for Mortgage Interest Supplement provide for a disregard of income derived from Carer's Allowance:

• in the case of a couple, where either spouse is a recipient of Carer's Allowance, the amount to be disregarded is the rate of Carer's Allowance in payment less the SWA adult dependant rate
• in the case of a single person or a Lone Parent in receipt of Carer's Allowance, the amount disregarded is the rate of Carer's Allowance in payment less the personal rate of SWA

Half Rate Carer's Allowance Disregard

From 27th September 2007, all income received in respect of half rate Carer's Allowance made under Section 24 of the SW and Pensions Act 2007 is disregarded in full.

Additional Income Disregard

The 'additional income disregard' refers to the amount of additional income from certain sources, over and above the appropriate SWA rate, that can be disregarded.

The 'additional income disregard' was introduced with effect from 6 June 2007 as follows:

• disregard the first €75 of "additional income"
• disregard 25% of "additional income" over €75
• there is no upper limit on the amount that can be disregarded

The "additional income" is the amount of income in excess of the SWA rate, applicable to household circumstances and includes income derived from:

• part time or employment or self employment
• any employment or training scheme, that is CE, BTWA, BTWEA or FAS course
• Family Income Supplement with effect from 6th June 2007
• Maintenance Payments in excess of €95.23. The first €95.23 per week of maintenance payments is assessable in full for the purpose of the Mortgage Interest Supplement Scheme

The amount of maintenance over €95.23 per week that can be disregarded is €75 per week with 25% of any maintenance in excess of €170.23 (€95.23 + €75) also disregarded.

For persons participating in approved training courses, any lunch or travel allowances that are paid may also be disregarded. Certain training courses now provide a childcare allowance to participants on certain courses. These childcare allowances are treated in the same manner as a lunch or travel allowance and disregarded.

Rehabilitative Employment

Up to €120 of earnings from rehabilitative employment can be disregarded. However, this disregard cannot be applied together with 'the additional income disregard'. Only one such disregard can be applied, whichever is most beneficial.

3.5 Assessment of Property and Savings

Capital (savings and investments) and the value of property owned but not personally used or enjoyed is assessed as means. Where capital or property is assessed on this basis, any income received from its use (for example interest on savings, dividends from shares, rent from property let) is not assessed as cash income.

Instead, the following formula is used to establish weekly means:

• disregard first €5,000 of capital value of property or savings
• assess next €10,000 @ €1 per €1,000
• assess next €25,000 @ €2 per €1,000
• assess remaining capital over €40,000 @ €4 per EUR 1,000

4.1 Training and Employment Exemptions

Special arrangements are in place to allow a person to participate in approved employment or training schemes or engage in full time employment and retain his or her entitlement to Mortgage Interest Supplement.

The primary conditions for retaining Mortgage Interest Supplement are that:

• gross household income must not exceed €317.43 per week. Note: Any amount of Back to Work Allowance (BTWA), Family Income Supplement (FIS), PRSI, reasonable travel expenses and any childcare allowance payable on certain training courses can be disregarded in the assessment of the €317.43 weekly income limit
• the supplement is retained on a tapered basis for up to 4 years. In year 1, the amount of supplement payable will be 75% of the supplement in payment prior to commencing the scheme. In year 2, it reduces to 50% and then to 25% in years 3 and 4

These arrangements are specific to Mortgage Interest Supplement and are no longer applicable to Rent Supplement.

Participation in Approved Employment Schemes

Subject to certain conditions, people participating in the approved employment schemes listed below may retain a portion of their Mortgage Interest Supplement:

• Back to Work Allowance (BTWA)
• Back to Work Enterprise Allowance (BTWEA)
• VLTU Back to Work Scheme see note following*
• Community Employment (CE)
• Job Initiative
• Revenue Job Assist
• Workplace
• Social Economy Programme (granted aided employees)
• Rural Social Scheme

*VLTU Back to Work scheme

The Programme is targeted at those who are at least five years on the Live Register. During an initial 6 weeks training, participants receive a travel or meal allowance of €44.50 per week. This allowance and any payments employers may give them during this period are disregarded.

From the seventh week, where participants opt for the Back to Work scheme, Mortgage Interest Supplements may be retained on the same basis as any other recipient of BTWA.

Participants may also receive two separate €253.95 once off payments which are disregarded in the assessment of entitlement to a Mortgage Interest Supplement payment.

*Option of standard SWA rules assessment

People participating in Back to Work and Community Employment schemes, or those on other approved employment schemes, who work less than 30 hours per week, have the option of being assessed under either standard rules or under the retention rules outlined above and will be entitled to receive payment under the more favourable option in their situation.

4.2 Changing Employment Scheme

Where a person moves from one employment scheme to another, for example from Community Employment to Back to Work, the four year cycle for tapered retention of Mortgage Interest Supplement dates from the commencement of the first scheme.

In cases where 12 months or more have elapsed since the completion of the previous scheme, claimants should be regarded as first time applicants starting a new cycle.

4.3 Full-time Employment after 12 Months Unemployed

Where a person, who has been unemployed for 12 months or more, secures open market employment they may retain Mortgage Interest Supplement on the same tapered basis that applies to those participating in employment schemes, (75% in year 1, 50% in year 2, 25% in years 3 and 4), provided that:

• he or she has been unemployed (but not certified unfit for work) for at least 12 months immediately prior to taking up employment
• he or she signs off his or her FS, Social Welfare or Health Service Executive payment
• the new job is full time, that is at least 30 hours per week
• gross household income does not exceed €317.43 per week (Family Income Supplement, PRSI + reasonable travel expenses, if applicable, are disregarded)

This option only refers to retention of Mortgage Interest Supplement and does not extend to people who were not already in receipt of the supplement immediately prior to taking up employment.

The option of a Standard SWA rules assessment does not apply in these cases.

4.4 Asylum Seekers

In general, asylum seekers are not allowed to work while their claim for asylum is being processed, however, asylum seekers who arrived in the State on or before 26 July 1999 and who were awaiting a final determination on their claim for asylum for 12 months or more were granted permission to seek employment. Entitlement to Mortgage Interest Supplement is assessed as at 5.1 to 5.3 above in cases where an asylum seeker in this category secures employment.

4.5 Payments to people not retaining Mortgage Interest Supplement when taking up employment

A person who is not entitled to retain Mortgage Interest Supplement on taking up employment may continue to receive payment of the relevant supplement for a period of up to 30 days after starting work or until such time as he or she first receives remuneration, whichever is the earlier.

The arrangements which allow for the tapered retention of Mortgage Interest Supplement for employment scheme participants do not apply in the case of those participating in the Back to Education Programme.

Participants in the Back to Education Programme are assessed for Mortgage Interest Supplement under standard SWA rules.

5.1 Back to Education Allowance (BTEA)

BTEA is payable to people participating in approved second or third level courses.

While the BTEA itself is not means-tested however additional earnings from part time employment are assessable in the normal way for Mortgage Interest Supplement, that is up to €75 per week with 25% of any additional income, with no upper limit, also disregarded.

5.2 Part-Time Education, Training and Development Courses

Part time basic education or training and development courses are not covered by the Back to Education Allowance scheme. Participants should check with their local Social Welfare office to see whether their participation in these courses affects their primary payment.

Any additional earnings from approved training and development courses are assessable in the normal way for Mortgage Interest Supplement, that is up to €75 per week with 25% of any additional income, with no upper limit, also disregarded.

5.3 Vocational Training Opportunites Scheme (VTOS)

Participants on the Department of Education and Science VTOS programme are assessed for Mortgage Interest Supplement under the standard assessment, that is up to €75 per week with 25% of any additional income, with no upper limit, also disregarded.

See this section in "Supplementary Welfare Allowance" guideline.