Self employed help with your mortgage payments

Tillydot

Hi

I have read recently that if you lose your job as from April you only have to wait 3 months and that they have upped the £100,000 to £175,000. Does anyone know if there is any help like this if you are self employed? Probably a daft question but I did wonder.

olly300

I read somewhere that you can get help after 6 months. (I actually can't find links which I am not surprised about.) All I know is that you need to be able prove that you have had no earnings for this time. Probably the best people to contact for more information is the CAB.

Someone posted elsewhere on this forum that the Job Centre told them they could get no help. I know this isn't true so if you have difficulties go through the appeals process.

feisty1

Tillydot wrote: »

Hi

I have read recently that if you lose your job as from April you only have to wait 3 months and that they have upped the £100,000 to £175,000. Does anyone know if there is any help like this if you are self employed? Probably a daft question but I did wonder.

Was there appropriate insurance available to cover the circumstaces you are now facing?

AdrianHi

feisty1 wrote: »

Was there appropriate insurance available to cover the circumstaces you are now facing?

The insurance only pays out if you have a contract terminated early. If you are like me and contracts are for 3 or at most 6 months at a time there is almost no benefit in this kind of insurance.

feisty1

AdrianHi wrote: »

The insurance only pays out if you have a contract terminated early. .

DO u think you are in a position to comment on the type of contract AdrianHi has (if any) Pls note policies vary so such a statement is misleading

AdrianHi

feisty1 wrote: »

DO u think you are in a position to comment on the type of contract AdrianHi has (if any) Pls note policies vary so such a statement is misleading

I've been involved with businesses selling this kind of insurance and am well aware of the cover limitations and have never seen a policy which is of much help to the genuinely self employed.
If you have been long term (2 years+) with one "client" you are deemed employed and covered accordingly.
Otherwise your business must fail and be insolvent with final accounts submitted to the inland revenue.
You must have had cover for a period typically 6 months before insolvency before can claim.
You must be unaware if any circumstances which may lead to unemployment...
and so on and they don't vary that much.

feisty1

Pls do not discourage people from arranging appropriate insurances to suit their needs. Too much media hype regarding insurances discourages people from not arranging appropriate cover.......we are seeing the consequences of this daily at the moment...........

AdrianHi

feisty1 wrote: »

Pls do not discourage people from arranging appropriate insurances to suit their needs.

Sure don't want to do that, but anyone considering taking up this type of cover now needs to think about it very carefully.
The payment and income protection products that work on a scale suitable for covering mortgage or rent payments are generally underwritten by the same Lloyds syndicate, which is why the terms and consitions do not vary even when sold through different product packaging companies and insurance sales intermediary companies.
Premiums tend to be around 10% of sum insured and with income protection products (not tied to any payment commitment such as a mortgage or rent) there is a claims limit of 12 months.
Given the increased risk of unemployment (we are in recession) you have to ask yourself if you are going to make it through the next 6 months remaining employed, not be aware of anything that might cause you to become employed and so be able to benefit. As already said the limitations are stronger for the self employed.
You have to ask yourself if the premium is better off in your bank account to help you through the tough times ahead or used to invest in training for yourself to improve your skills and value in the job market, so if you do have to look for another job you have a better chance of getting one quickly.

This is the position my thoughts have got me to as a self employed person considering this issue over the last 6 years and having exposure to the insurance sales market (I'm a software designer BTW), in particular the product set sold alongside mortgages, life, critical illness, household and payment and income protection insurance.

Everyone has to decide for themselves though, I just hope my view is of help.

Tillydot

Hi

Thank you for your replies. I have a pet care business and of course people can decide your services are a luxury and just not need you anymore. I do worry about the current mortgage problems as I am with NR cannot now change my mortgage as my property by next year will be in negative equity. I have looked at British mortgage insurance cover for 89 pounds a month. This is a lot of money to me and I am not sure if it will help me if needed. Hopefully I will keep my customers and not need it but there is so many stories about insurance not paying out. Of course when you are paying NR the SV mortgage rate it doesnt help. Say I was to lose a lot of my customers and not have enough money then coming in to pay the mortgage would they expect me to declare myself bankrupt before they paid. As you can see I dont know much about it. Why can employed people get help after 3 months but self employed do not get any from the Government.

AdrianHi

Tillydot wrote: »

Why can employed people get help after 3 months but self employed do not get any from the Government.

It is rough, the answer is your supposed to know what your doing and not allow your business to run into trouble.... just like Gordon Brown is meant to know what he is doing and has brought an end to boom and bust in our economy :mad: (his words remember!)

On the plus side NR are getting heat for repossing properties too easily and measures are coming through so that courts will not allow a repossession unless there there is no alternative. If you can keep some money coming through the business you could fight for paying interest only for a while, extending the length of the mortgage or some other means of keeping going. I think if a court could see that your business stands a good chance of recovering and bringing in the money again you should be able to hold onto the house.
A mortgage broker client of mine says he is only able to help 2 out of 10 people coming to him for a re-mortgage because they don;t have enough equity in their houses to qualify for the new deals - due to the drop in house prices. Doesn't even need to be a negative equity situation, you need 15% equity (LTV 85%) to get the better deals now.