First mortgage and social welfare payments

[Belgarion]

I'm in a catch 22 situation. I'm a 32 year old man and full time single parent. My income is a combination of lone parent allowance from social welfare and "off the book" wages from my own company that I set up earlier this year.
A freind in the mortgage broker business recently asked if he could look into finding me find a mortgage. Much to my surprise he can get me a 100% one for about €350,000.
I'm sure many will be put out at the fact that I'm in receipt of social welfare and also working but it's simply an in between phase which is a reflection of the difficulties of my situation. I do it to survive as best I can. If I had the time to run my business and work nights I'd do so, but I don't. Being a full time single parent makes that impossible.

Am I screwing the system? Yes. But only until I can stand on my own feet. I'm not a sponger looking for an easy life of government pay outs. I'm using it to work hard to build my business and generate my own future for me and my son and will no doubt pay alot in taxes through my business.

I have two options here. I can go completely legit but be unabe to afford the dream of my own home or continue as I am and buy a place and don't tell revenue/S.W. But will they find out? How linked is the info of house owners to the social welfares and revenue departments records? Aside from the moral implications I'm trying to work out if I can make this work for a relatively short period of time.

 

[MOB]

As you ask, I am leaving aside the moral implications. Regarding the practicalities of getting away with it:

1. When you buy a house, the transfer deed must be stamped; to do this, your solicitor must submit your PPS number to Revenue.

2. How well integrated are Revenue and Social Welfare right now? Not the right question. (answer: not very well, unless of course your name is Dolores McNamara, if some of the Sunday papers are to be believed)

3. The right question is "will Revenue and S.W. become more integrated, and when they do will they have data on file which lands me in deep doo doo?"

To this there is only one possible answer;

If you are a poor person, and likely destined always to remain so, there is some perverse logic to engaging in S.W. fraud. But if you ultimately intend to be a successful and affluent man of business, I think it is very foolish indeed to contemplate this action. Ditto, by the way for your "off the book" income.

It may be possible to organise your affairs so as to have your startup company but to (perfectly legitimately) continue for a while to have a small income which does not disqualify you from S.W. payments. As I understand it, once you go over a certain income, you stop receiving the lone parent allowance. There is nothing inherently wrong in you drawing a very small income from a company which is in a start-up phase. There might also be an asset test, but it is possible that your start-up company has very little value as an asset just yet. There may be other options. I think you need to have a good think about your attitude to fraud - and in saying this I am quite deliberately leaving aside the moral issue - in terms of the risks versus the rewards.

 

[SarahMc]

You are a perfect candidate for the Back to Enterprise Allowance

This allows you to retain your social welfare and ancillary benefits as follows
100% for the 1st year, 75% for the 2nd year, 50% for the 3rd year , 25% for the 4th year. Why not go for this and give yourself some breathing space whilst building up your company, without worrying about off the book wages and getting caught.

 

[Molly]

have you received written approval in principle from a mortgage lender? to my knowledge all of the lenders providing 100% will have had to see at least one years audited accounts to determine income, and therefore repayment ability.

To qualify for a mortgage of €350,000 you would of had to show an income of around €70,000 per annum.

 

[ClubMan]

and will no doubt pay alot in taxes through my business.

I don't know - somebody who engages in SW fraud now is a good candidate for engaging in tax evasion later on in my book.

I have two options here. I can go completely legit but be unabe to afford the dream of my own home

Why not compromise on your dream and buy what you can afford and then trade up when your start making money from your business? That would be a more prudent approach than the current dodgy one.