Mortgage Critical Illness Payout Not Enough to Cover Outstanding Mortgage-Advice Plse

Mulchey

Thanks sim11 - i didnt know about the 6 months. That would take the pressure off a bit. Regards, Mulchey

dmg24

sim11 wrote: »

be carefull you do not get charged an early redemption on your mortgage deal? ask about this. also i was under the impression you could hold onto this money for six months if it is to pay off a mortgage or buy another house without it affecting your benefits. How much interest would be added to it in that time? this you should look into at least it would give you some breathing space to decide what to do.

The DWP are unlikely to go for this. When you get the money they will ask for proof of how much you got, and they would expect the money to be used for the purpose it is paid out for.

Also, even if you are allowed, be careful with saving exactly £16K. Everytime you gain interest, you are going to go over the amount, and lose your IS for the relevant period. Even if you only go over for a week at a time, you will need to do a rapid reclaim each time.

benood

dmg24 wrote: »

they would expect the money to be used for the purpose it is paid out for.

The insurance isn't being paid out for the purpose of paying off the mortgage - it's to help with the consequences of the critical illness.

jediknightwarrior

dmg, thanks for pointing out the savings route would work. I don't know what I was thinking. Would have to be done on a smaller scale.

beingjdc

Mulchey wrote: »

I have arranged to go see the BS Mortgage Advisor next week to discuss options. I'd really like to go into the meeting with an idea of how much we will still have to pay pcm for the remaining £10K ish.

By my maths*, £70.

* So don't take any notice of it.

happybroker

My tip for your meeting next week would be to make sure that the person you are going to see has full CeMAP and is able to give you advice. The majority of mortgage transactions done in high street banks these days are done without customers receiving any form of advice at all.

melvis

sim11 wrote: »

be carefull you do not get charged an early redemption on your mortgage deal? ask about this.

If the capital repayment is from the proceeds of a Critical Illness Claim, the Early Repayment Charge should be waived. The BS should just require a copy of the claim confirmation from the Company settling the claim.

Ian_Griffiths_Halifax

melvis wrote: »

If the capital repayment is from the proceeds of a Critical Illness Claim, the Early Repayment Charge should be waived. The BS should just require a copy of the claim confirmation from the Company settling the claim.

That's upto the lender melvis. It's not an automatic right.

Some lenders will waive any redemption penalties if the mortgage is being redeemed from the proceeds of a life assurance policy, but it's not automatic and you still have to point it out to them. Many will just charge the penalty unless asked to waive it.

I had a hell of a job helping a client to pay off their mortgage with the Woolwich recently, when her husband died. It went on for months.

Rabiddog_2

JKW, surely if your only allowed to have 16000 b4 it affects your bens (I think its 6000) then every time you get interest you will be going over the benefit limit and losing money. You will certainly have no option of accruing £42000 as you state. I think you lose £1 for £250 over the Limit.
£10k is easily digestible over 20 years, £41pcm. £10pweek. I think you can earn that without affecting your Bens..

N.B. You weren't a Travelling Clown were you, Mulchey?

dmg24

benood wrote: »

The insurance isn't being paid out for the purpose of paying off the mortgage - it's to help with the consequences of the critical illness.

The DWP will look at the purpose for which the policy was taken out, which was by the OP's own admission to cover the mortgage. Even if the OP denies that the policy was taken out for this purpose, the DWP will see that the amount matches the original mortgage amount, and that the policy was taken out at the same time as the mortgage. They will draw their own conclusions from that information.

Rabiddog, both figures are relevant, benefits start to be affected at £6K, but the entitlement is stopped completely at £16K.