SMI Loan, Charges on Lang Registry and rights?
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Lebene
Posts: 41 Forumite
Hello,
As some of you know the SMI benefits is being transferred into a loan on 8th April.
My mum and I are a bit perplexed about the rights we have regarding the 2nd charge that will be made on the property. We read that in special cases, the 2nd charge can take precedence over the 1st charge (her mortgage lenders).
We want to downsize within 3 years, but the remaining equity will mean we will have to leave London. The issue lies in my mother's benefits, as the sale of the house would mean she has equity in theory.
The problem with this is that it means she'll have to have a quick sale and buy, which is not ideal as she's elderly, low mobility and we want to be able to look at the potential new area that (maybe rent?) she'll relocate to.
Is there no way to sell the home and look for a place without all her benefits being stopped? And what rights do SERCO have regarding her wanting to sell in the coming years?
As some of you know the SMI benefits is being transferred into a loan on 8th April.
My mum and I are a bit perplexed about the rights we have regarding the 2nd charge that will be made on the property. We read that in special cases, the 2nd charge can take precedence over the 1st charge (her mortgage lenders).
We want to downsize within 3 years, but the remaining equity will mean we will have to leave London. The issue lies in my mother's benefits, as the sale of the house would mean she has equity in theory.
The problem with this is that it means she'll have to have a quick sale and buy, which is not ideal as she's elderly, low mobility and we want to be able to look at the potential new area that (maybe rent?) she'll relocate to.
Is there no way to sell the home and look for a place without all her benefits being stopped? And what rights do SERCO have regarding her wanting to sell in the coming years?
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SERCO are only doing the back office stuff. It will be HMG in the ample shape of the Secretary of State that will have a registered charge over the property.
Background paper is here
hxxp: www legislation gov uk / uksi / 2017 / 725 / pdfs / uksiem_20170725_en.pdf
You need section 7.2Unlike some here, I am not omniscient. If I am wrong correct me. I won't take offence.
The law is like an ocean - have a swim but don't drown.0 -
According to the above link
Repayment
7.23 The sum of the loan payments and accrued interest will become immediately due and payable where (i) the claimant!!!8217;s home is sold, (ii) legal or beneficial title in, or in Scotland, heritable or registered title to, the property is transferred, assigned or otherwise disposed of, or (iii) on the claimant!!!8217;s death (where the claimant has no partner) or on the death of the last member of the benefit unit (where the claimant has a partner) (regulation 16).
7.24 Recovery will only be made from either the proceeds of sale, transfer, assignment or disposition or from the relevant person!!!8217;s estate (in the event of death), but repayment will be subject to certain limitations. For example, if the Secretary has obtained a legal charge over the claimant!!!8217;s property, repayment shall be limited to the available equity after prior charges on the property have been repaid. If there is insufficient equity to repay the total of the loan payments, we will write off any amount that cannot be repaid.
The loan will have to be paid back when the house is sold but after the first charge (the mortgage) has been paid. This only applies if there is equity in the property after the mortgage has been paid.
Is the property in your mum's name only?
As regards benefits, exactly which benefits? Some may be exempt from any savings for a time if she intends to buy another house.0 -
We are aware of the conditions of repayment, what we are worried about is if they have a say in if we're allowed to sell (since we must inform them), or if we just need to let them know so proper preparations can be made for accrual of loan debts?pmlindyloo wrote: »According to the above link
Repayment
7.23 The sum of the loan payments and accrued interest will become immediately due and payable where (i) the claimant!!!8217;s home is sold, (ii) legal or beneficial title in, or in Scotland, heritable or registered title to, the property is transferred, assigned or otherwise disposed of, or (iii) on the claimant!!!8217;s death (where the claimant has no partner) or on the death of the last member of the benefit unit (where the claimant has a partner) (regulation 16).
7.24 Recovery will only be made from either the proceeds of sale, transfer, assignment or disposition or from the relevant person!!!8217;s estate (in the event of death), but repayment will be subject to certain limitations. For example, if the Secretary has obtained a legal charge over the claimant!!!8217;s property, repayment shall be limited to the available equity after prior charges on the property have been repaid. If there is insufficient equity to repay the total of the loan payments, we will write off any amount that cannot be repaid.
The loan will have to be paid back when the house is sold but after the first charge (the mortgage) has been paid. This only applies if there is equity in the property after the mortgage has been paid.
Is the property in your mum's name only?
As regards benefits, exactly which benefits? Some may be exempt from any savings for a time if she intends to buy another house.
And also, how to find out which benefits are exempt? Because once she buys a house, she won't be able to sustain herself, she was forced into retirement due to illness. The property is in her name, she bought it when I was a child.
The equity won't be enough to buy anywhere near where she lives now, which is a big downside, it would be another kick in the gut if her support is stopped too.
Thank you for your help.0 -
Could she find a property to rent? Use her equity for rent until it dries up, then claim housing benefits?0
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Seven years ago we sold up downsized and therefore stopped claiming SMI virtually certain that eventually smi would become a loan not a benefit, seems we were proved right.0
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Are you asking about what happens to her benefit when she has a big sum of money from the house sale?
Proceeds from a house sale which are going to be used to buy another property aren't counted as capital for six months. I think it can be extended if there's a good reason for not buying a place straight away - such as if you need a property that can be adapted or can only live in a bungalow.Unless I say otherwise 'you' means the general you not you specifically.0 -
Ames is correct. I had to sell my house and moved to a bungalow as my needs had changed and was advised that it was unsafe for me to continue to live in my house. I contacted the DWP to inform them - there was no problem in making this move. I sold my property and bought a bungalow 7 years ago and it was fine.Are you asking about what happens to her benefit when she has a big sum of money from the house sale?
Proceeds from a house sale which are going to be used to buy another property aren't counted as capital for six months. I think it can be extended if there's a good reason for not buying a place straight away - such as if you need a property that can be adapted or can only live in a bungalow.0 -
She does not believe in renting.marliepanda wrote: »Could she find a property to rent? Use her equity for rent until it dries up, then claim housing benefits?0 -
Are you asking about what happens to her benefit when she has a big sum of money from the house sale?
Proceeds from a house sale which are going to be used to buy another property aren't counted as capital for six months. I think it can be extended if there's a good reason for not buying a place straight away - such as if you need a property that can be adapted or can only live in a bungalow.
Thank you both for this. My mum was convinced as soon as she sells they'll stop everything and leave her destitute. She said MacMillan had advised her that all benefits would stop (who knows how many years ago) as soon as she sold but considering her memory, I didn't find that recount trustworthy.Ames is correct. I had to sell my house and moved to a bungalow as my needs had changed and was advised that it was unsafe for me to continue to live in my house. I contacted the DWP to inform them - there was no problem in making this move. I sold my property and bought a bungalow 7 years ago and it was fine.0 -
this is what it says on gov site does this mean not everyone will be changed to a loan
What type of SMI you can get
Whether you can get SMI paid as a benefit or as a loan depends on when you get, or are treated as getting, your qualifying benefit.
If you get Pension Credit
Your SMI will be paid as a benefit if you get Pension Credit before 6 April 2018.
It will be paid as a loan if you get Pension Credit on or after 6 April 2018.
If you get another qualifying benefit
Your SMI will be paid as a benefit if you get another qualifying benefit before 7 July 2017. You must have been getting the benefit for 39 consecutive weeks.
It will be paid as a loan if you get the qualifying benefit on or after 7 July 2017.0
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