Banks seeking work-from-home proof in mortgage applications

Banks now want evidence that employees have permission to work permanently from home before approving mortgages on houses beyond a commutable distance from the employee’s workplace.

With the massive shift in the pandemic towards working from home, many urban dwellers are considering a move outside the capital or other cities to cheaper rural locations. However, banks want to see evidence from employers that their work-from-home capabilities are on a firm footing before giving mortgage approval. This can prove problematic for those whose employers have not put formal working-from-home structures in place.

In the past, someone working in Dublin and living in Carlow, for example, would have qualified for a mortgage based on the commuting distance between the two. Now, however, putative homeowners may be looking farther afield, such as a move from Dublin to Clare, while retaining their full-time employment.

Cost of living

The main advantage of moving out the capital is a lower cost of living. For example, a couple with a joint income of €100,000 could afford to buy a house worth €388,888 based on the Central Bank of Ireland's lending rules.

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This would buy a three-bed starter home in certain parts of Dublin but could buy a substantial detached home on a plot of land in many other parts of the country.

A spokesman for Bank of Ireland said it has seen some evidence of borrowers buying "well outside a normal commutable distance from their place of employment in the last year". As a result, it now looks for confirmation from borrowers that working from home is going to be a permanent feature of their employment.

On the salary certificate, which needs to be signed by a potential borrower’s employer verifying their place of employment and earnings as part of a mortgage application, the bank now asks, where relevant: “Does the employee have flexibility to work remotely on an ongoing basis as part of their current role?”

Employer confirmation

Similarly, AIB, which also owns EBS, says it may request confirmation the employee has the ability to work from home. "This is to ensure the loan is sustainable for the customer and the bank," a spokesman said.

KBC Bank said it looks for confirmation of an employee's working-from-home status from their employer, when an employee seeks to purchase in a location some distance from the employer's base. Permanent TSB says it does not typically look for such information.

While some employers, including Twitter, Indeed and Liberty Insurance, have formalised working from home on a permanent basis, many others are still considering their options.

The Government has signalled its plan to introduce new legislation which will give employees the legal right to request remote working. However, employers will still be able to turn down such requests.

Ireland has had one of the highest rates of working from home in the European Union during the pandemic. Labour market think tank Eurofound reported that about 47 per cent of paid hours worked by employees in Ireland were performed from home at the height of the crisis, compared with an EU average of 40 per cent.