A couple with mortgage approval have been refused their loan drawdown because one of them is now in receipt of the State’s Covid-19 wage subsidy.
Their financial institution told the pair, who both have jobs, that it will review their situation again when the employer can meet the full affected salary without the support of the State.
The couple, who have been renting for nine years, have signed papers with the house vendor, gave notice to their landlord, and paid fees to valuers, engineers, and a solicitor.
They say they now face “substantial financial risk”, and fear the house sale could fall through and are worried about losing their substantial deposit.
Their lender approved their mortgage application weeks before the Covid-19 outbreak, and funds were due to issue in early April.
Since the approval, the husband changed employer, moved to a similar role, and got a pay rise.
However, his wife’s employer has had to avail of the State’s wage subsidy scheme.
She is still employed but, like thousands of others, the State is covering 70% of her salary, with her employer topping it up.
The lender said their circumstances have materially changed since their mortgage application.
It added that it must be satisfied that no other matter comes to light which in its opinion could be inconsistent with the basis on which it made the original mortgage offer.
The couple say they have proven their ability to repay far in excess of the loan and could meet repayments even if their income dropped 20%.
They raised their plight with Fine Gael TD Colm Burke, a solicitor, who has now asked the Banking and Payments Federation Ireland (BPFI) to investigate the case.
Mr Burke said: “Both they and the vendor have signed the contract. It is now unconditional.
"I would request that financial institutions should not be allowed to renege on letters of loan offer and in particular where there are binding unconditional contracts in place.”
BPFI guidance says customers who secured mortgage approval but who can not find a home because of travel restrictions can have their period of offer extended.
For those who have lost income due to Covid-19, a lender can keep their mortgage application open for review.
However, Mr Burke said that, in this couple’s case, a contract was already in place.
The BPFI said it is keen to reassure customers that lenders are facilitating normal drawdowns.
“However, it’s important to bear in mind that some delay may occur due to factors beyond the lender’s control, for example, the ability of valuers to conduct a full inspection of a property or of legal practitioners to access everything that is required for them to complete all steps,” it said.