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

maninthestreet

I make the monthly capital repayment on the £10,000 over 20 years as £41.66. The interest will be paid by the DWP, as others have indicated.

Mulchey

Thanks for all your responses everyone. Just need to get my brain together for Wednesdays meeting with the BS now,

I sure a lot of people probably think I'm a clown but I've never made any money out of it !!!!!! So no - I'm not a travelling clown:D .

Thanks,

Mulchey.

benood

dmg24 wrote: »

They will draw their own conclusions from that information.

My goodness big brother indeed. If I was the OP I would fight tooth and claw if the DWP ever tried that on with me.

What it shows is that no doubt you need advice and don't seek it from the DWP in the first instance.

Poppy9

Play with some figures here

Becareful at your meeting they don't try to get you to remortgage as you are on a deal till 2010. They may want early redemption fees PLUS a fee for a new mortgage.

If the same BS sold you the CI to cover your mortgage they should let you just repay that proportion covered by the policy they sold you. You then keep the remainder of your mortgage on your current terms (which are no doubt better than new deals out there at the moment).

With repayments of less than £100 per month for a £10k mortgage it should be easily payable from your benefits.

benood

This might be of interest to you before you have your meeting: http://news.bbc.co.uk/1/hi/business/7516830.stm

Apparently this sub prime lender is offering borrowers the option to cash in their mortgages for an 8% discount - you need just over 9% - so you've got a chance of getting it away.

Good luck.

Mulchey

Hello Everyone,

After seeking advice from my local CAb I was told to go into my local JSPlus to explain that I was getting the money to pay off on my mortgage. So my wife man-handled me into the local office this morning, and I was told that if we did use the money to pay off all or a portion of the mortgage we may be considered to be disposing of capital in order to claim benefits and would thus loose any benefits we currently get. We were also told that if we did pay off the mortgage; we would then be deemed to have capital assets to the value of our home and would also loose entitlement to benefits (Incapacity benefit was mentioned).......Aarrrgh!

Surely this can't be right or ethical?

I'm at a real loss now. This money was meant to make things better by paying off our mortgage. Things just seem to be getting worse!!!

Can anyone advise ????????

Alan_M_2

That sounds a little strong, my partner has MS, she qualifies for DLA and IB despite having in excess of £200,000 equity in her home.

I'd get a second opinion on the advice you've been given by someone in a managerial position. You need to get this right from the start.

Good luck.

dunstonh

So my wife man-handled me into the local office this morning, and I was told that if we did use the money to pay off all or a portion of the mortgage we may be considered to be disposing of capital in order to claim benefits and would thus loose any benefits we currently get.

That does not sound right. If the CI is packaged as part of the life assurance policy that was offset against the mortgage then it should not be included in the means test if you pay it off the mortgage.

This money was meant to make things better by paying off our mortgage. Things just seem to be getting worse!!!

If you didnt have this money it would be far worse. You would have to pay the full mortgage for most of the year and when they did kick in they would only pay the interest element. Benefits would not come close to keeping you at your current lifestyle.

dmg24

dunstonh wrote: »

That does not sound right. If the CI is packaged as part of the life assurance policy that was offset against the mortgage then it should not be included in the means test if you pay it off the mortgage.

I agree with this. It sounds like the person you dealt with did not know what they are talking about.

Alan M, the benefits that you refer to are not means tested, so any equity or capital amounts are not counted. The OP claims IS, which is means tested.

Mulchey

Got a call from CAB who I had contacted for advice and they have told me basically that they cannot advise me and suggested i write to JSP telling them what i intend to do with the money and see what happens. Useful !!!

On the subject of means tested bens. I currently get Incapacity Ben topped up with Income support but paid via Income Support.

It had occured to me that IF the DWP wont "allow" us to pay of the lump sum on our mortgage without loosing our IS, Will I still qualify for Incapacity Benefit as this is non-means tested and doesnt take into account any capital we have ie our lump sum and mortgage. It does however mean that I loose ISMI payments and all of the disability premiums I get via IS. Is this correct?

This really is "doing in" what's left of my head!

Mulchey.