Question about mortgage unepmloyed vs social welfare

Coldoutside

I am due to finish up my job this week. And start a new job in six weeks. The new job is permanent and pays considerably more.

My partner and I are half way through saving out deposit and hope to apply for a mortgage in the next 18 months.

My partner would prefer that instead of getting SW for the next 6 weeks. My partner would prefer I not register for SW and just live off my savings for the next six week. She is worried that reciving SW will look bad on a mortage application. Someone told her that we would have to wait three years before applying for a mortgage.

But if I just have a period of unemployment and dont claim SW it looks better and we wont have to wait as long.

Is that true?

jimmycrackcorm

You should apply for SW to ensure you accumulate PRSI credits towards the state pension and possibly needing benefits in the not too distant future. When you do apply, SW may disallow up to nine weeks actual payment because you are leaving your job, but maybe not if you can demonstrate a valid reason for having to leave six weeks earlier than necessary.

From the banks POV, SW is irrelevant as they'll look for payslips and that you pass probation, hence it'll be likely six months after you start your new job. At that point having been on SW won't matter.

Edit: just re read to see someone suggested you have to wait three years. That's utter nonsense. If you are self employed then the banks tend to look for two to three years audited accounts, but an employee only has to pass probation. As you're only going to apply in 18 months, nothing to worry about. Enjoy your time off.

Coldoutside

jimmycrackcorm wrote: »

You should apply for SW to ensure you accumulate PRSI credits towards the state pension and possibly needing benefits in the not too distant future. When you do apply, SW may disallow up to nine weeks actual payment because you are leaving your job, but maybe not if you can demonstrate a valid reason for having to leave six weeks earlier than necessary.

From the banks POV, SW is irrelevant as they'll look for payslips and that you pass probation, hence it'll be likely six months after you start your new job. At that point having been on SW won't matter.

Thank you.
My partner is convinced that any period of SW is a black mark and automatic three year strike from the banks before we can get approved for a mortgage.

tigger123

Coldoutside wrote: »

Thank you.
My partner is convinced that any period of SW is a black mark and automatic three year strike from the banks before we can get approved for a mortgage.

I've never heard of this before; where is your partner getting this from?

Coldoutside

tigger123 wrote: »

I've never heard of this before; where is your partner getting this from?

Her friend, and it is bugging the **** out of me.

SW bad, but having zero income for six weeks good.

niniboots

Hey there, if you are looking for banks to take Bonus & Overtime into account to bump up your 3.5X salaries, they will ask for 3 years of overtime/bonus payslips. Finance Ireland and ICS required this length to take partner bonus/overtime into account.

Maybe that is where the 3 year thing is coming from, the other poster quite rightly identified that if you have consistent savings and employment contract outside of probation (6 mth) then that timeframe is all they will look at for the gross salaries.

Just as an FYI, I had a cross over of 9 weeks from starting new contract 2.5 years ago and obtained Unemployment benefit for the 9 weeks. It made absolutely not a jot of difference to our mortgage approval. I don't have bonus and overtime in my current employment so they just looked for the 6mths. As an FYI, there are two types of Job Seekers, Benefit and Assistance. One you will have worked your stamps/time served in employment and the other means tested. It is there for a reason and you should be availing of this while out of work.

Darc19

Unemployment benefit / jobseekers allowance is fully taxable, so if starting new position in 6 weeks and assuming that the overall income for the year is over €35,000, then the net benefit will be about €100 a week

And you have to be actively seeking work. (Though they don't really check this)


I'd also look at doing some volunteer work for the period to fill the gap.


But I've never heard of it counting against you if it's a fixed and planned gap.

Samuel T. Cogley

I was on social welfare for a period before we got our mortgage - no issue - and it was substantially longer than six weeks.

rostalof

Darc19 wrote: »

Unemployment benefit / jobseekers allowance is fully taxable, so if starting new position in 6 weeks and assuming that the overall income for the year is over €35,000, then the net benefit will be about €100 a week

And you have to be actively seeking work. (Though they don't really check this)


I'd also look at doing some volunteer work for the period to fill the gap.


But I've never heard of it counting against you if it's a fixed and planned gap.

Jobseekers Benefit (previously Unemployment Benefit) is taxable. Jobseekers Allowance (previously Unemployment Allowance) is not. Jobseekers Benefit isn't means tested, Jobseekers Allowance is. Jobseekers Benefit is paid if you have the correct amount of PRSI contributions, Jobseekers Allowance is paid if you don't. As far as I know the first 6 weeks won't be paid if you left the job. If you were let go, or a contract ended etc., you should be paid immediately.

I don't know what benefit doing volunteer work is to this situation, other than it being an admirable thing to do for your community and your own mental well being, but I do know that officially if would make you ineligible for a jobseekers payment, either benefit or allowance, as one of the main criteria for receiving these payments is that you are available for and seeking work.

Darc19

rostalof wrote: »

Jobseekers Benefit (previously Unemployment Benefit) is taxable. Jobseekers Allowance (previously Unemployment Allowance) is not. Jobseekers Benefit isn't means tested, Jobseekers Allowance is. Jobseekers Benefit is paid if you have the correct amount of PRSI contributions, Jobseekers Allowance is paid if you don't. As far as I know the first 6 weeks won't be paid if you left the job. If you were let go, or a contract ended etc., you should be paid immediately.

I don't know what benefit doing volunteer work is to this situation, other than it being an admirable thing to do for your community and your own mental well being, but I do know that officially if would make you ineligible for a jobseekers payment, either benefit or allowance, as one of the main criteria for receiving these payments is that you are available for and seeking work.

If the OP is planning a mortgage, I'd guess they would have enough prsi and it would be taxable.

So over 6 weeks, its possibly as low as a net €600 odd. Probably better in the op pocket though.

Volunteer work, yes for mental health and if there's ever a conversation about the 6 week period, its good to have something to talk about

rostalof

Darc19 wrote: »

If the OP is planning a mortgage, I'd guess they would have enough prsi and it would be taxable.

So over 6 weeks, its possibly as low as a net €600 odd. Probably better in the op pocket though.

Volunteer work, yes for mental health and if there's ever a conversation about the 6 week period, its good to have something to talk about

Definitely better in the OPs pocket, without doubt. That's my point, he's paid his PRSI, if he's entitled to a payment, apply for it.

Considering that your weekly tax credits (3300/52 = approx 65 for most people) would exceed any tax liability that would arise from the weekly payment, it's unlikely you would be liable for any tax on the payment as no PRSI or USC are due either.

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/claiming_a_social_welfare_payment/taxation_of_social_welfare_payments.html

https://www.revenue.ie/en/jobs-and-pensions/periods-of-unemployment/taxation-of-jobseekers-benefit-and-jobseekers-benefit-self-employed.aspx

Darc19

rostalof wrote: »

Definitely better in the OPs pocket, without doubt. That's my point, he's paid his PRSI, if he's entitled to a payment, apply for it.

Considering that your weekly tax credits (3300/52 = approx 65 for most people) would exceed any tax liability that would arise from the weekly payment, it's unlikely you would be liable for any tax on the payment.

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/claiming_a_social_welfare_payment/taxation_of_social_welfare_payments.html

tax is cumulative. So if OP has approx. €50k salary average, even with a 6 week gap, earnings would be 44k, so the 6 weeks sw is in the mix and whilst may not be taxable at the moment it is received, it takes from credits when he is back in employment.

Revenue will always get their euro of flesh

rostalof

Darc19 wrote: »

tax is cumulative. So if OP has approx. €50k salary average, even with a 6 week gap, earnings would be 44k, so the 6 weeks sw is in the mix and whilst may not be taxable at the moment it is received, it takes from credits when he is back in employment.

Revenue will always get their euro of flesh

My point exactly. Thats why I added those links. Even at 40% the most the op would lose is €11 a week. €203 euro, less the first €13 is €190 X .4 = €76 - €65 = €11, from the tax credits when employment recommences.

I understand that tax is cumulative, I know exactly how this works on both sides of the equation and I've taken more than my euro of flesh in my day. I worked in Revenue for 5 years and I'm in DSP the last two. Either way I think we both agree the op should apply for a SW payment. As I said, if he's paid PRSI he's entitled to JB.

One of the conditions of JSB / JSA is that you are actively seeking work. Given that you have already secured a job offer and are starting it in six weeks, are you still actively seeking work or just waiting to start the new job?

In those circumstances, if any bank questioned your six weeks without income, I would just explain it away as you used the time to take a break between finishing your old job, and starting your new one, as you would not automatically have accrued annual leave in your new job.

Mrs OBumble

I would sign on, in case something goes wrong with starting the new job eg they have a covid outbreak and delay your start date by a couple of months.

Yes you do technically need to be job hunting (so don't tell welfare about the new contract when you're signing on). But it's not enforced strongly in the first few months.