Banks add Covid-19 income conditions to mortgage offers
Raft of assurances are sought over bonuses, overtime and future job security
SEVERAL Irish banks and lenders are adding new conditions to mortgage loan offers, seeking assurances in relation to job and income risks caused by the coronavirus pandemic.
The Sunday Independent has seen several documents issued by banks in recent days, outlining additional loan requirements for new and existing applications.
Mortgage brokers said there was concern that borrowers could lose their deposits and face the possibility of legal action if they could not proceed with house purchases late in the process.
The Covid-19 requirements vary from bank to bank.
A new clause in PTSB home loan applications said that the borrower must provide “confirmation from the employer prior to the drawdown that the income for [named borrower], including variable income — bonus, commission, overtime — is not affected in any way”.
PTSB warned: “Please consider this condition before signing contracts as we may withdraw this offer if it cannot be fulfilled.”
A spokesman for PTSB said that there was no change for any customer who has already received a loan offer and signed a contract to buy their home.
“The check is being carried out prior to issuing a loan offer and is a condition which must be satisfied before drawdown.”
AIB subsidiary Haven wrote to brokers early last week directing them to ask new and existing applicants: “Has there been a material impact in your employment and/or income as a result of Covid-19?”
The email said that some cases “for loan offer may require written confirmation from employers confirming that applicants’ income is not impacted by the current Covid-19 circumstances”.
However, a spokesman for AIB said: “We have not communicated any changes to our mortgage applications at this point.
“We continue to provide guidance to our homes advisors and intermediary partners to support customers on their mortgage journey.”
ICS Mortgages, which is part of Dilosk, wrote to borrowers to warn that it may have to reassess applications which had already been approved.
Leading broker Michael Dowling, of Dowling Financial, said he was aware of some borrowers who have signed contracts and are now being asked if their circumstances have changed as a result of Covid-19.
Dowling said some borrowers were seeing income hit temporarily. “Where does that leave the client?” he said. “They have signed a contract they are willing to close, they are under penalty if they don’t complete.”
He said buyers will now have to insert a clause that the purchase is subject to funding.
He also said some banks were asking clients to delay closing the sale on a house, which is not always possible.
A spokeswoman for ICS said that a declaration on the likely impact of Covid-19 on income was required from borrowers regardless of what stage in the process they were at. “The purpose is to determine if the borrower wishes to proceed with the mortgage application, and to help us evaluate the borrower’s sustainable income. We will in turn be reviewing each application on a case-by-case basis.” she said.
Bank of Ireland said: “For new borrowers whose income may have changed during the mortgage process, we may have to carry out further reviews and assessments with the applicants, and unfortunately this may lead to delays for some customers.”
The Institute of Professional Auctioneers & Valuers (IPAV) said lenders are moving to an extreme risk-averse policy. “They are writing in loan approval conditions that are well-nigh impossible to meet for aspiring homeowners and investors.”