Benefit and mortgage assistance question.

Rikki

Quick question.............

A friend of mine has started recently to receive mortgage assistance. This week she has received a letter saying they are reducing the amount they pay to her lender.

I have explained this will be to do with the BoE base rate going down. She is distraught as her monthly payment hasn't changed. I've advised her to go to see the bank and talk things through with them.

The question I have is does anyone know what rate the DHSS base their calculations on?
This would be a big help when she goes to the bank.

PasturesNew

The Department for Work and Pensions uses a standard rate of interest which changes regularly and could be less than the interest you actually pay.

Rikki

PasturesNew wrote: »

The Department for Work and Pensions uses a standard rate of interest which changes regularly and could be less than the interest you actually pay.

Do you happen to know which bank or institution they base it on and what the rate is now?

Just to give her an idea of the potential shortfall she could be in for.

suelees1

It's calculated using a Standard Interest Rate which is based on the Bank of England base rate + 1.58%. From 16th November it should be 6.08%.

Greedy lenders always drag their feet when the rate reduces.

Rikki

suelees1 wrote: »

It's calculated using a Standard Interest Rate which is based on the Bank of England base rate + 1.58%. From 16th November it should be 6.08%.

Greedy lenders always drag their feet when the rate reduces.

DHSS are quick to drop their payments according to the BoE rate. :rotfl:


Thank you Pasturesnew and sueless.




:beer:

[Deleted User]

As base rates were only reduced last week its unlikely to be because of that,what is more likely is the fact that they contact the lender every 12 months then work out from the balance of the mortgage and their current rate of interest(the dwp that is)what they will pay for the next 12 months,if interest rates change during the following year then so will the payments either up or down,but they usually take a couple of months to bring in any change,although i`m abit puzzled as you say your friend only recently started to receive help???
One possibility for help from her lender might be to ask them to convert the loan to interest only for a short period?

cw18

suelees1 wrote: »

It's calculated using a Standard Interest Rate which is based on the Bank of England base rate + 1.58%. From 16th November it should be 6.08%.

Greedy lenders always drag their feet when the rate reduces.

When we got help for 8 weeks last year, I was told Base Rate + 1.38%, which is also what was quoted in the booklet I got from them.

Haven't heard of this being changed since our help ended in February

suelees1

I don't think I've made a mistake but apologise if I have. A web search should do it but you can also ring the Jobcentre and ask for the mortgage section

[Deleted User]

cw18 wrote: »

When we got help for 8 weeks last year, I was told Base Rate + 1.38%, which is also what was quoted in the booklet I got from them.

Haven't heard of this being changed since our help ended in February

It was changed this year probably around febuary,I think to reflect the fact that standard variable mortgage rates are now higher than base rates than they used to be i.e. the lenders are making more profit from borrowers:mad:

zappster1966

I've worked for the DHSS/DSS/DWP for over twenty years and didn't know anything about this Standard Interest Rate formula ... when the SIR was introduced way back we were told it was the average of the top 20 banks & building societies standard mortgage rates.

Just goes to show that MSE is a goldmine of useful information for those of us still daft enough to work in benefit delivery ;-)

Rikki

Her original rate reduction was due to an overpayment by the DHSS and has now been sorted out and a regular payments are being made every four weeks.



Does anyone know if the DHSS have lowered their rate yet?