Is paying off a mortage depreciation of capital?

iammumtoone · 23 July 2017 at 10:12AM

Thread revisited - same question only my circumstances have changed. I didn't lose my job so the question is no longer will this be deprecation of capital to claim JSA but would it be deemed as deprecation of capital as UC is about to hit my area. As UC has a saving limit to claim, same situation applies I don't think I will entitled to UC.

Original post:
As title, I suspect the answer is yes, but if you don't ask you don't know

I have been overpaying my mortgage, it is an offset mortgage where the over-payment is available for withdrawal.

I have a repayment mortgage but also an endowment.

If I end the endowment early and combine with the over payment money, there might just be enough to pay everything off.

I am fairly sure I am not allowed to do this.

I have gone without to keep overpaying and with both combined am very nearly there to pay everything off. Now it looks like I will lose my job in a month

poppy12345 · 23 July 2017 at 10:54AM

iammumtoone wrote: »

As above, I suspect the answer is yes, but if you don't ask you don't know

I have been overpaying my mortgage, it is an offset mortgage where the over-payment is available for withdrawal.

I have a repayment mortgage but also an endowment.

If I end the endowment early and combine with the over payment money, there might just be enough to pay everything off.

I am fairly sure I am not allowed to do this.

I have gone without to keep overpaying and with both combined am very nearly there to pay everything off. Now it looks like I will lose my job in a month

Yes it does but only for Income Related benefits. If you lose your job and go onto Contribution Based JSA then savings/capital doesn't count. I'm sure someone will add to this if needed.

Alice_Holt · 23 July 2017 at 10:54AM

I am not sure I fully understand your post, or the exact question you are asking.

Here is a link to the deprivation of capital rules:
https://www.whatdotheyknow.com/request/271069/response/664932/attach/html/4/Capital.pdf.html
Para 77 on

The Key being -
"If you deprive yourself of capital in order to qualify for benefits or increase the amount
you get......"

As, I read you post who have been paying down your mortgage whilst working.
You may shortly be out of work and need to claim benefits.

Will you be able to claim contribution-based JSA?
If so capital is not relevant.

If you claim Income Based JSA or UC, because your NI contributions are insufficient for CB based, and then overpay the mortgage to reduce your savings to under £16k in order to claim an IB based benefit - that would be likely to be viewed as deprivation of capital.

If your question is -
Will the DWP count the amount you have overpaid on your mortgage (which is available for withdrawal) as savings?

I would think not (unless, of course, it sits in a separate savings account from the mortgage, and is offset that way). The DWP will only ask for details of bank / savings accounts / investments.
I very much doubt they would peer into a mortgage account to check if you could extract past overpayments.
However, the ultimate decision would be the DWP's.

As to whether the endowment would be included as savings, I would tend to think not on the basis that -
Endowments usually have a maturity date - it would be unreasonable to expect you to access it early.
It was set up to repay the mortgage. It is not intended as general savings available to you for day-to-day expenses.
(The link I posted earlier may have some info on this).

Any excess, after it had matured and the mortgage repaid, would be viewed as savings for IB benefits, as this is available to you.

Spendless · 23 July 2017 at 2:06PM

I'm sure when she sees it Iammumtoone will clarify, but I think what she is asking is

After the 6 months when she qualifies for contribution based benefits, then she will be eligible for income based benefits and at that point, does paying off her mortgage 7 months earlier, knowing she was going to lose her job classed as deprivation of assets?

It may well take the poster 6 months+ to find a suitable job due to a combination of her child's age, his additional needs, her local job market and lack of childcare help.

I hope you don't mind me stepping in Iammumtoone or trying to second guess your question. I have read a number of your threads and can understand the importance of you getting the right information.

epitome · 23 July 2017 at 7:41PM

Sorry for your job situation.

The DWP are only concerned with people who deprive themselves of capital in order to be entitled to Income Related Benefits or entitled to more Income Related Benefits than they would have been had they still had the capital.

There has to be reasoning that you, the claimant, MUST have done this in order to get benefit or more benefit. This in my opinion is entirely subjective and any decision they make is open to appeal by you.

The catch22 is that if you ask the question to the DWP or to anyone else i.e. here on this board, you are giving the DWP evidence that you are asking "If I do this, will I get benefit or no benefit" So when you do it they can say "You did this to get benefit." If you don't ask anyone about benefit implications, and you do it because to you it is logical to pay off the mortgage, then the DWP -in my opinion- should not be able to decide it was deprivation of capital.

To potentialy "protect yourself" you could decide to have Independant Financial Advice, (before claiming benefit) and ask them in your situation (not mentioning benefits) would it be prudent to pay off the mortgage now with what you have. If the IFA says yes, you are acting in accordance with their advice.

All that being said, Income related Benefits takes about 10 months of claiming before being entitled to mortgage help.
If you have been working full time (since April 2014) you may (should) be entitled to Contributory benefit. Which would not be affected by savings or deprivation of capital.

What is your marital status?
Is your partner working full time? or how many hours a week?

If you are able to work then JobSeekers Alowance Contributory will pay for 6 months, you can then stop claiming for 3 months and potentially get another 6 months of JSA C after that.

OR if you are able to get a doctors sick note:
ESA Conts will pay up to 1 year, and then after 3 months potentially for another 1 year. But during the claim you will be medically assessed and your claim could be closed because they consider you to be able to look for work.

iammumtoone · 23 July 2017 at 7:52PM

Spendless wrote: »

I'm sure when she sees it Iammumtoone will clarify, but I think what she is asking is

After the 6 months when she qualifies for contribution based benefits, then she will be eligible for income based benefits and at that point, does paying off her mortgage 7 months earlier, knowing she was going to lose her job classed as deprivation of assets?

Thank you spendless this is exactly what I was asking.

I had forgotten that I will go onto contribution based JSA to start with then move to income based. As spendless points out I need to work on worse case scenario that I won't find a job before the 6 months is up.

epitome · 23 July 2017 at 8:03PM

iammumtoone wrote: »

I had forgotten that I will go onto contribution based JSA to start with then move to income based. As spendless points out I need to work on worse case scenario that I won't find a job before the 6 months is up.

Worst case, you would close your JSA Conts claim after 6 months, wait 13 weeks, and then make a new claim to JSA Conts and get another 6 months of JSA Conts.

iammumtoone · 23 July 2017 at 8:21PM

epitome wrote: »

Sorry for your job situation.

The DWP are only concerned with people who deprive themselves of capital in order to be entitled to Income Related Benefits or entitled to more Income Related Benefits than they would have been had they still had the capital. Yes my situation could be viewed both ways. I have clearly been saving this money for the mortgage as I have been paying the over payments to the mortgage company and paying an endowment (that was originally taken out on an interest only mortgage and kept when I moved to re-payment mortgage). On the other hand this money is available to me and if I withdrew it I would be over the threshold for claiming anything.

There has to be reasoning that you, the claimant, MUST have done this in order to get benefit or more benefit. This in my opinion is entirely subjective and any decision they make is open to appeal by you. No I didn't start this to claim benefits as I didn't know know I would lose my job but I appreciate it could be argued that I am thinking of paying it off now so I am entitled to claim. Now I wish I have spent it as I went along on holidays ect so I wasn't in this situation I have put paying into the mortgage before everything else to try to better myself/situation now it has all gone wrong

The catch22 is that if you ask the question to the DWP or to anyone else i.e. here on this board, you are giving the DWP evidence that you are asking "If I do this, will I get benefit or no benefit" So when you do it they can say "You did this to get benefit." If you don't ask anyone about benefit implications, and you do it because to you it is logical to pay off the mortgage, then the DWP -in my opinion- should not be able to decide it was deprivation of capital.

To potentialy "protect yourself" you could decide to have Independant Financial Advice, (before claiming benefit) and ask them in your situation (not mentioning benefits) would it be prudent to pay off the mortgage now with what you have. If the IFA says yes, you are acting in accordance with their advice. Good idea I will look into this

All that being said, Income related Benefits takes about 10 months of claiming before being entitled to mortgage help.
If you have been working full time (since April 2014) you may (should) be entitled to Contributory benefit. Which would not be affected by savings or deprivation of capital. I have been working part time since April 2104, will this mean I go straight onto income based, How would I check this?
So in worse case I could have to spend my 'mortgage' money to live on, once its under the threshold I can claim JSA I then have to struggle on JSA paying a mortgage for 10 months before I get help with that, when I had 'mortgage' money available at the start

What is your marital status? Single Mother to 10 year old
Is your partner working full time? or how many hours a week?

If you are able to work then JobSeekers Alowance Contributory will pay for 6 months, you can then stop claiming for 3 months and potentially get another 6 months of JSA C after that. How does that work can you explain a bit more please?

OR if you are able to get a doctors sick note:
ESA Conts will pay up to 1 year, and then after 3 months potentially for another 1 year. But during the claim you will be medically assessed and your claim could be closed because they consider you to be able to look for work.

...............

iammumtoone · 23 July 2017 at 8:27PM

epitome wrote: »

Worst case, you would close your JSA Conts claim after 6 months, wait 13 weeks, and then make a new claim to JSA Conts and get another 6 months of JSA Conts.

After that could I then claim income based as enough time would have passed not to be depreciation of capital?

How can I check I will be entitled to 6 months cont then another 6 months cont after 13 weeks?

Spendless · 23 July 2017 at 8:42PM

iammumtoone wrote: »

After that could I then claim income based as enough time would have passed not to be depreciation of capital?

How can I check I will be entitled to 6 months cont then another 6 months cont after 13 weeks?

I believe in January of each year. I am not sure of exact date, the years that you have to have paid enough NI contributions in change, so it would depend on the month that you start claiming and the dates when you applied for another claim and if you were eligible.

In the meantime, how would you manage financially to support yourself and child?

Alice_Holt · 23 July 2017 at 8:45PM

Contribution-based JSA details here:
http://www.entitledto.co.uk/help/jobseekers-allowance

50 times the lower earnings limit is c£5,550. If you earned more than that in 2014/15 and 2015/16 tax years, and paid 26 weeks contributions in one of those tax years - then you should qualify for CB -JSA if you claim it in 2017.

How does the offset mortgage work. Do you have a savings account with the same bank, which is netted off your mortgage? If so how much savings do you currently hold?

Is paying off a mortage depreciation of capital?

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