Personal finance: your queries answered

Mon, Dec 12, 2011, 00:00

DOMINIC COYLEanswers readers' queries

Will I qualify for the new mortgage relief rate?

Q

I am one of those first-time buyers who bought during the boom years. My house is rented out to social welfare, as I don’t live in that city anymore. I am getting much less in rent than my mortgage payments. Do I still qualify for this 30 per cent help, or indeed any, as per the new Budget?

- Ms PC, e-mail

A

Unfortunately you won’t. The rules regarding first-time buyer mortgage relief state that the relief is available only if all parties to the mortgage are first-time buyers and continues only for as long as those parties remain as owner occupiers of the property on which the mortgage is taken out. In your case, while you were certainly a first-time buyer at the outset, you no longer qualify for the relief – and thus for the new higher rate – because you have opted to rent out the property.

It does seem harsh on people, many of whom have had no choice but to rent apartments because the recession has forced them to relocate for work at a time when there is no market for their properties.

The only, albeit unlikely, hope is that the Minister will choose to include some respite for people in your position when he publishes the Finance Bill – the legislation which enacts the measures outlined in the Budget.

What are the changes in the State pension?

Q

I have seen very little coverage of the specific measures in place on State pensions, widow’s pensions etc. There has been some talk about new restrictions and about earnings above €400 disqualifying people. Can you let us know what is happening?

- Mr EM, Dublin

A

There’s been so much in the Budget that some elements have not had the sort of coverage required to properly explain them, as you say.

On the State pension, until now, anyone with an average of between 20 and 47 PRSI contributions a year qualified for the same payment, currently €225.80 a week – just €4.50 less than the full pension of €230.30 which is paid to people who have an average of 48 PRSI contributions per year over their working life or more.

The Government has decided it can no longer afford such “largesse” and will break this group into three smaller categories so that only those with an average between 40 and 47 PRSI contributions will get that rate.

Those with an average of between 30 and 39 PRSI contributions per year will receive a lower rate of €207, while those with an average in the 20s will get €196 a week – a drop of almost €30 a week.

The old €172.70 payment to people with average PRSI contributions between 15 and 19 has also been adjusted downwards – to €150 – while those with an average of between 10 and 14 will receive €92 a week, compared to €115.20 at present.

The new rates are due to come into force in September 2012, although, as with all measures outlined in the Budget, this depends on the passing of the Finance Bill which will not be published until the New Year.

A separate Budget measure means that the current option of backdating late claims for five years will narrow to just six months from next April.

On the Widow(er)’s Contributory Pension – and the Surviving Civil Partner’s Contributory Pension – the previous minimum eligibility threshold of 156 paid PRSI contributions rises to 260 in July 2012 and then to 520 in July 2013.

Over this requirement, the pension paid is determined by the other average annual number of contributions made and there has been no change to this element.

Finally, the €400 issue arises with the Invalidity Pension, the State Pension and the Carer’s Pension.

Where the spouse or partner of the person claiming the pension has a weekly income of more than €400, it will no longer be possible to claim the half-rate increase for a qualified child.

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

Please send your queries to Dominic Coyle, QA, The Irish Times 24-28 Tara Street, Dublin 2. E-mail: dcoyle@irishtimes.com