# Means test for Social welfare



## kingofblues (20 May 2009)

Hello
I have seen on other threads when you are assessed for social welfare, they also take account of your assets.And if you have a bank account and an overdraft they take the net amount as your asset. In the case of a mortgage and your house is in negative equity, is it the same case here? e.g. House worth 120k, mortgage worth 150k , net negative 30k. Or lets say you have 60k of bank accounts and 150k mortgage , is your assessment negative 90k assets?
Thanks


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## Welfarite (20 May 2009)

Have a read of this. Mortgage is deducted when assessing capital value


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## kingofblues (20 May 2009)

Hi Welfarite
Thanks for your reply. But on my reading of the document a mortgage will only be deducted if its a 2nd property,i.e. not the family house. Am I correct in saying this? The family home is mentioned and it states that this will not be counted towards a capital assessment. So am I correct in saying if you are in negative equity, this amount will not be deducted against your asset value(money on deposit)?


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## dubinamerica (20 May 2009)

I was wondering about this also - I'd heard that your own mortgage wasn't taken into account (either the amount due on it or the monthly outgoing) but then someone else told me that it should be along with any loans, such as car loans, insurance etc as they had just gone through the process..  I'd be concerned that a person has savings but a mortgage which is much greater, but due to the savings they would not be eligible for JSA.. so it may be better to get rid of savings and use to pay off mortgage in order to keep benefits ..


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## Welfarite (21 May 2009)

I'm not sure what you mean! 'Negative equity' cannot be assessed on a property that is not being assessed. Money on deposit is not related in any way to 'negative equity', its assessed for what it is; money available to spend. The thrust of the thinking behind capital assessment is that this should be used to live on before resorting to claiming a non-insurance based SW claim.


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## kingofblues (21 May 2009)

Hi Welfarite, I see where you are coming from. But this is how I see it. If you have a house worth 120k and owe 150k on it , you in effect owe 30k.This is especially true if you have to sell the house. You would have to acquire a loan to pay the bank the difference.You might say its just a notional figure because the house is not sold at the moment.But that is the reality of how much your house is worth at this present time.In my opinion this should be seen as a minus item to be deducted from your assets.


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## Welfarite (22 May 2009)

On the other side of the coin, if 'negative equity' was treated as deductaable from assets, then 'positive equity' would have to be treated as 'capital' !


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## kingofblues (22 May 2009)

You are good Welfarite! Thats a valid point indeed. But another way of looking at it is that the only constant that is there is that you will always have a mortgage and owe money on it. The value of the house can fluctuate.The house could be unsellable in current times,even far into the future. So based on that I still think that the mortgage value should be deductible. Going back to Dubinamerica's mail, he states that he knows someone who went through the JA process and the mortgae was deducted. Do you think that could be the case?


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## bacchus (25 May 2009)

www.welfare.ie Means Assessment said:
			
		

> The house in which a person resides, together with furniture and personal effects is not assessed.


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## Samantha (25 May 2009)

Regarding mean test - do you include the savings hold by your children who are dependant ?

They would be included as your assets for underage children.


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## Welfarite (25 May 2009)

kingofblues said:


> You are good Welfarite! Thats a valid point indeed. But another way of looking at it is that the only constant that is there is that you will always have a mortgage and owe money on it. The value of the house can fluctuate.The house could be unsellable in current times,even far into the future. So based on that I still think that the mortgage value should be deductible. Going back to Dubinamerica's mail, he states that he knows someone who went through the JA process and the mortgae was deducted. Do you think that could be the case?


 


Welfarite said:


> Mortgage is deducted when assessing capital value


 
I am presuming all along that this is a second home we are discussing, as Bacchus has pointed out that 1st home is not assessed.


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## dubinamerica (26 May 2009)

are the outgoings on the PPR assessed? Say would welfare take into account your monthly mortgage outgoings, insurance payments or anything like that ?  I'm worried that if things don't pick up i'll be forced to use our savings to pay a lump sum off of our mortgage (and possibly a penalty) to ensure that we meet critera to keep some benefits. both on UB at the minute and work situation not looking good but i'd like to hold onto some savings in case of emergency.


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## Welfarite (26 May 2009)

The PPR does not enter into any calcualtions when it comes to means. Perhaps I confused this whole thing by discussing 2nd properties without pointing that out?


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## dubinamerica (26 May 2009)

sorry for asking about this again but i'm still confused - say you have some savings and you also have a mortgage (on your own home not a second property).. the savings are taken into account as income.. but are any outgoings taken into account such as the monthly mortgage amount? 
If not then, it appears to make sense to pay off some of the mortgage instead so as to bring the savings in lower, so that a person can qualify for assistance.. 
I've just heard conflicting reports on what is taken into account with someone telling me that their insurance was regarded as an outgoing, and any loans (such as car payments) regarded as outgoings, but I'm not clear whether that's accurate or not .. thanks for the help on this welfarite - if you've any additional input that would be great


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## Welfarite (27 May 2009)

I am quoting form the link I posted above (highlight is mine):

*CAPITAL*

This may include:

Savings that have not been invested but are held in cash. A reasonable amount held for current needs can be ignored, but significant savings are assessable as means.
Stocks and shares of every description, which are assessed according to their current market value.
Savings certificates/bonds/national instalment savings, which are assessed according to their current market value.
Money invested in a bank, building society etc., or money on loan.
Where a person has an overdraft (e.g. on a current account) and a deposit account in the same bank, the deposit amount may be reduced by the amount of the overdraft and any credit balance is assessed as capital. Similarly the credit and debit balances in a Credit Union account are offset against one another, and only a net credit figure is assessed. *The outstanding balance on a term-loan or mortgage is not offset in this way against savings in the same institution.* An overdraft in one bank is not offset against a savings account in a different institution.

Cash out on loan to another is assessable unless there is no reasonable chance of recovery. '

So mortgage on PPR is not allowed, therefore paying off mortgage with capital above disregard that would be assessed as means is a feasible option.


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## dubinamerica (27 May 2009)

Thanks so much for this info. One other area I was wondering about regarding being regarded as capital is amounts held in PRSAs (not the weekly/monthly/ annual contribution), but the actual value of the PRSA. Is this ignored or is it taken into account?  So say you had "Person 1" with savings of 40K and no PRSA, and "Person 2" with no savings, but PRSA currently valued at 40K.. would they be treated the same in means test or would "Person 2" have no capital to take into account?  have done some digging on this but can't find anything specific. Any info would be greatly appreciated. Thanks again for the feedback


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## Welfarite (29 May 2009)

As a general rule, only capital that can be accessed or can be  liquidised is assessed.


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## jigsaw (4 Jun 2009)

welfarite does this mean if one had money in a 1 year fixed term account and it wasnt available to them, then it wouldnt count as means?


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## Welfarite (4 Jun 2009)

jigsaw said:


> welfarite does this mean if one had money in a 1 year fixed term account and it wasnt available to them, then it wouldnt count as means?


 

Only if you cannot access the money and losing interest/bonus by doing so is not a valid reason to disregard it. Otherwise, the temptation would be there for people to 'invest' their savings to avoid means being assessed.


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## jimmyd (28 Sep 2010)

Welfarite said:


> As a general rule, only capital that can be accessed or can be  liquidised is assessed.


Sorry to be pulling this old thread up but i did a search instead of a repost, Can someone explain this to me? 
If i have money in a 5 or 10 year scheme with a bank or credit union will this be accesssed by the means test?


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## dereko1969 (28 Sep 2010)

Yes - as already answered by Welfarite above - losing interest or having to pay a penalty to withdraw your money is not sufficient reason to not include it in means.


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