Claiming benefit when you have large savings?

gunnaknow

I was wondering if anyone knew what my eligibility for receiving benefits would be if I have large savings in the bank. I inherited a large sum of money over a year ago and have watched it steadily get eaten into because of the fact that my illnesses mean that I can't work. Those savings are for me to buy my first home but in the current housing market, I'd lose many thousands if I bought now.

Am I stuck in a catch 22 situation? I'm in a position where I can't buy a house without risking losing thousands but am I also in a position where I can't claim benefits until I empty my savings by buying a house? If so, is there a solution to the problem? Thanks.

Conor_3

In short, no. All means tested benefits are going to get hammered in some way. But things like DLA aren't means tested and you may qualify for that.

[Deleted User]

if youre a cash buyer you could probably get a great discount on alot of the properties for sale atm(especially at auction),and if you look on it as not just something to make money on but as a home then it doesnt matter what its worth next year,remember that in the long term bricks and mortar have always been a good investment

LizzieS_2

Incapacity benefit is not means tested like Income Support or JSA. Incapacity benefit is paid if the DWP deem you unfit for work on their assessment criteria.

cw18

I'd make sure you're allowed to use the savings to buy a property before doing so. We can't use ours to pay off (part of) our mortgage, and if we use it for this then the benefits agencies see it as 'capital avoidance' and treat our claim as if the money is still in the bank !!

Oldernotwiser

gunnaknow wrote: »

I was wondering if anyone knew what my eligibility for receiving benefits would be if I have large savings in the bank. I inherited a large sum of money over a year ago and have watched it steadily get eaten into because of the fact that my illnesses mean that I can't work. Those savings are for me to buy my first home but in the current housing market, I'd lose many thousands if I bought now.

Am I stuck in a catch 22 situation? I'm in a position where I can't buy a house without risking losing thousands but am I also in a position where I can't claim benefits until I empty my savings by buying a house? If so, is there a solution to the problem? Thanks.

The solution to your problem is simple; buy a house. If you'd done this when you received your inheritance the property might have devalued but is that any different from having spent lots of it on other things?

Oldernotwiser

cw18 wrote: »

I'd make sure you're allowed to use the savings to buy a property before doing so. We can't use ours to pay off (part of) our mortgage, and if we use it for this then the benefits agencies see it as 'capital avoidance' and treat our claim as if the money is still in the bank !!

But presumably, if the OP does this, s/he's saving the state having to pay for her housing?

cw18

I would have thought they'd have seen it the same way with paying off a mortgage -- but not so !!

sharski

ESA (not IB/IS, guys!!) has 2 components.... Contribution Based & Income Based (just like JSA)...

It sounds as though you may not be eligible for Income based.. however, you MAY still struggle to get contribution based as it sounds as though you have not worked in some time - and this will be based on the NI paid in the 2 previous tax years..???

gunnaknow

Thanks for the responses so far guys. I have no idea what DLA, ESA, IB and IS mean though. My situation is that I have contributed almost no national insurance or income tax because I have never worked. Because of my social anxiety disorder and chronic fatigue syndrome I haven't worked since the age of 18 and I'm now 28. The only nasional insurance that might have been paid was when I worked for a few months when I was 18 but I didn't knowingly contribute it unless it was automaticly included with the income tax that was taken out of my wages. The only income tax that I have ever paid is the small amount when I was 18 and the tax deducted from my large savings upon interest being paid in. I am still planning to give the minimum sum for national insurance. The final deadline for that is in march or april 09, after which time I would never be eligible for a state pension I don't think.

As for buying a house, I'd be treating it as an investment because another family member might invest some of their money and work in doing the place up. So now wouldn't be a good time to buy a house as an investment. I believe that if I made a profit then I wouldn't then be eligible for benefit but until I actually buy and sell the place I'll require benefits to support myself. Although my lack of tax and NS payments might make that an impossibility. It's not as if I could help that though, I didn't choose to have my illnesses. I've never claimed benefit for the last 10 years because of a feeling of guilt about never having contributed and therefore being undeserving. I'm starting to become desperate now though, my savings are starting to vanish. If I buy a house now, I won't be able to make a living from it. If I wait before buying yet don't receive benefit, I'll again lose money and never make the money back when I do buy and sell a place. Therefore, without benefit I'm a bit screwed.

KimYeovil

Are you spending the capital as well as the income from the savings? After all, if the lump sum were large enough to buy you a home then (well, before a couple of days ago) the interest would be higher than benefits income.

Buy a home, not an investment.