ISMI - How do you calculate it?

Glyndwr_2

I’ve been helping a friend with some of her finances & found out she was being paid some of her benefits at incorrect amounts, which has now been sorted. She’s now concerned about her ISMI payments being correct. I can understand her concern, whether correct or not, as she seems to get so many ‘change of circumstances’ letters altering the amount (when they haven’t, and they don’t seem to correspond with a cut in base rate).

I know the mortgage rate is set at BofE base rate + 1.58%, I’m just not good at maths so have no idea where to start with the calculation. The DWP have been unable to supply information on how it is calculated other than telling me the rate, which I already knew. They also insist, in writing that it will go down again in December, which is a whole other issue - obviously I'm making it up that they're holding the rate at 6.08% (excluding any changes as a result of the rate change today).

Repayment mortgage £56,000 (awaiting exact figure from the mortgage company).

1.Can anyone help me do the calculation to check the amount she should be paid weekly?
2.Is this paid every 4 weeks rather than monthly?
3.How often / when does the DWP check the balance and alter their payment down accordingly?

cw18

I'm afraid the only one of those I can answer is as to when it's paid -- and yes, it's 4 weekly. So one calendar month a year she'll have 2 payments credited to her mortgage account.

dmg24

56000 x 0.0608 = 3404.8 Annual Interest
3404.8 / 52 = 65.47 Weekly Interest
65.47 x 4 = 261.91 4 Weekly Interest

(I'm not sure if the weekly figure should be using 52 or 365/7, either way it will only make a very small difference)

I believe that the balance is checked annually, but I'm not 100% on that one.

mummytofour

There was also an announcement in the pre-budget report that ISMI will be at 6.08% until further notice not stuck at the 1.58 above bank of England base rate.

licolin3

I received a letter today from IS so telephoned for clarification - The figure they use to calculate mortgage interest rate will change on 14th December from 6.08% to the lower figure of 4.58%. This is based on the current Bank of England base rate, plus 1.58%.

dmg24

licolin3 wrote: »

I received a letter today from IS so telephoned for clarification - The figure they use to calculate mortgage interest rate will change on 14th December from 6.08% to the lower figure of 4.58%. This is based on the current Bank of England base rate, plus 1.58%.

Unfortunately the decision to freeze the rate at 6.08% has not been passed on at an operational level. Hopefully this will be sorted in the near future.

[Deleted User]

mummytofour wrote: »

There was also an announcement in the pre-budget report that ISMI will be at 6.08% until further notice not stuck at the 1.58 above bank of England base rate.

Its actually been fixed for 6 months.

mummytofour

woodbine wrote: »

Its actually been fixed for 6 months.

http://www.dwp.gov.uk/resourcecentre/standard_rate_of_interest.pdf

Altho in that link it states until further notice, probably 6 months tho!

Glyndwr_2

dmg24 wrote: »

56000 x 0.0608 = 3404.8 Annual Interest
3404.8 / 52 = 65.47 Weekly Interest
65.47 x 4 = 261.91 4 Weekly Interest

(I'm not sure if the weekly figure should be using 52 or 365/7, either way it will only make a very small difference)

OK, am I doing something wrong? The DWP say she should get £49.99 paid based on 6.08%. Mortgage is between £56,000 & £56,500 so that shouldn't make much difference.

The calculations they are using are:
Personal allowance £60.50
Disability premium £25.85
Housing costs £65.89
Total £152.24

Income disability premium £102.15
152.24-50.09 = 50.09
10p IS left in payment to keep claim open

Can you use your usual plain & simple language to clarify this for me as the amount you kindly calculated isn't close to their amount?

cw18

Personal Allowance of £60.50 is Income Support for a Single Person
Disability Premium of £25.85 is an extra Income Support element for people in receipt of specific DLA rate(s)
(ETA: Having checked this morning, this is also payable under a few other situations - rules are here )

Total Income Support would be £86.35

Housing costs of £65.89 is what they calculate the mortgage assistance to (ie. 6.08% of her balance)


They then look at her income, which according to your post is £102.15 (though I'm confused as to where this comes from)

This is more than her IS entitlement by £15.80, so they deduct that from her ISMI -- meaning her entitlement for that is now £65.89-15.80 = £50.09/week.

Of this 10p is paid as IS, otherwise they can't pay ISMI..... so she gets 10p/week into her bank account (probably paid as 20p every fortnight), and they pay £199.96 (£49.99 * 4) to her mortgage company every 4 weeks.

dmg24

The calculations they are using are:
Personal allowance £60.50
Disability premium £25.85
Housing costs £65.89
Total £152.24

This is what the govt says that the claimant needs to live on each week.

Income disability premium £102.15
152.24-50.09 = 50.09
10p IS left in payment to keep claim open

Have they detailed where the £102.15 comes from? Does she have a small income from elsewhere, perhaps a pension or some permitted work?