Support for Mortgage Interest Discussion Area

BigAunty

Mishy123 wrote: »

Q1: If I receive pension credit and the mortgage value is less than £100,000 do I receive the SMI in full 100% ? or is it Means tested so that the more company pension I have coming in monthly makes me eligible for a small portion of the total mortgage interest?

Q2: I am 60 years old and still in full time employment. I am not due state pension until I am 63. If I choose to retire now and live off my company pension can I claim pension credit?

Q3: If I choose to retire now when I have the option to continue working will I be able to claim jobseekers allowance?

.

How many years and what sum is left on your mortgage term?

Sorry I can't answer your questions but others will, plus I expect Age UK have benefits advice in this area.

I don't know when the changes will take place and what the exact changes are but there is expected to be big changes with the SMI scheme. I know the govt were keen to transform the payments from a benefit style one to a loan, to be repaid by the homeowner but I'm not aware if the govt got their way on this, they were just contacting various organisations to gather responses on this.

http://www.whatmortgage.co.uk/news/insurance/proposed-changes-support-mortgage-interest-lead-repossessions/

lld01

Mishy123 wrote: »

Q1: If I receive pension credit and the mortgage value is less than £100,000 do I receive the SMI in full 100% ? or is it Means tested so that the more company pension I have coming in monthly makes me eligible for a small portion of the total mortgage interest?

Q2: I am 60 years old and still in full time employment. I am not due state pension until I am 63. If I choose to retire now and live off my company pension can I claim pension credit?

Q3: If I choose to retire now when I have the option to continue working will I be able to claim jobseekers allowance?


sorry for going off topic from my original SMI question.

Q1 - Pension Credit is means tested so your entitlement will depend on how much other income and savings you have. If entitled to PC, the amount of SMI you get will depend on the outstanding mortgage balance and what the borrowing was used for.

Q2: No, you don't meet the age criteria. You cannot claim PC until you reach your State Pension age. I am assuming you are female.

Q3: You should be able to claim contribution based JSA assuming you have the correct NI conts, however, you may be sanctioned for leaving your current job. (Others should be able to offer better advice regarding this, perhaps you should start a new thread)

BigAunty

Age UK has a fact sheet on Pension Credit which says "The qualifying age [for PC Guarantee Credit] is 62 in April 2014 and will be 62 and 6 months by April 2015. ...Since April 2010 the qualifying age for the Guarantee Credit part of PC has
been rising in line with the State Pension age for women. In April 2010 State
Pension age for women started to increase from 60 to 65 to equalise it with that of men. This equalisation process will be complete by November 2018."
"

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

Mishy123

Thank you very much for your answers so far Big Auntie and lld01
Very helpful.

To answer your questions the loan was to switch mortgage providers. The original mortgage had a second mortgage for the kitchen extension. The new mortgage consolidated the two at a cheaper rate. There is no second mortgage now.

I have 14 years more term left.

The mortgage was changed to an 'interest only' about three years ago due to financial problems causing mortgage arrears.

There is over £70,000 outstanding.


Thanks to your answers I now understand that PC is means tested and I would not be entitled to this at my age due to state pension age increasing.

I was wondering whether the actual SMI is means tested ? or is it a "all or nothing" payment to cover my mortgage interest in full without me having to continually make up the difference out of my limited savings and company pension.

BigAunty

AFAIK, there is a certain interest rate that is used (3.63% now but used to be almost double until the 2010 emergency budget) so it may not necessarily correspond with the interest rate of the person with the mortgage but hopefully others will clarify.

https://www.gov.uk/support-for-mortgage-interest/what-youll-get

I'm not sure I understand what you mean by 'second mortgage' - are you referring to a re-mortgage or secured loan? It could be my lack of knowledge around mortgage lending but since SMI only pays the original sum of the mortgage, not subsequent remortgages, it's worth being totally clear.

Looks like the current SMI scheme has been extended for a year so who knows what will happen past then.

http://www.mortgagestrategy.co.uk/latest-news/as-2012-govt-extends-support-for-mortgage-interest-scheme-until-2015/1062864.article

That's a large sum of money to find from a small pension until you reach retirement and it's not clear if the scheme will exist then. Do you have any other debts? If so, pop to the Debt Free wanabee board. MSE has a good budget planner that can be downloaded.

Do you have any inclination to sell up and downsize while the market is positive for sellers (interest rates will go up in the future and this could stagnate the market) or will you not get enough equity out of the property to find a new place that is suitable? That would take the worry over low income and debt, uncertainty over the future property market and continuance of SMI scheme.

Shelter has good info for homeowners at the risk of mortgage arrears or repossession, including various other government schemes (don't think you fit the criteria for them or if they are still in existence).

BigAunty

Mishy123 wrote: »

In this example if the monthly pension payments were a bit smaller (so that Job seekers allowance could be claimed), would the SMI payments cover the mortgage interest in full? or would the government pay a small percentage of the mortgage interest?
and arrears would therefore build up.

There's a note on this page to say the income rules that apply to Income Support, apply to JSA, hopefully this will give you pointers.

http://www.adviceguide.org.uk/wales/benefits_w/benefits_benefits_in_work_or_looking_for_work_ew/benefits_for_people_looking_for_work.htm

which leads to this

http://www.adviceguide.org.uk/wales/benefits_w/benefits_help_if_on_a_low_income_ew/help_for_people_on_a_low_income_-_income_support.htm#how_much_income_support_can_you_get

Hopefully a poster can tell you what the applicable amount is for a single person is which will give you understanding about what pension level affects receipt of JSA. There is some info on the following website that you should double check but unfortunately it seems to contradict earlier info on the age for PC entitlement - time to speak to Age UK?.

http://www.exeter.gov.uk/index.aspx?articleid=11025

lld01

Mishy123 wrote: »

Thank you very much for your answers so far Big Auntie and lld01
Very helpful.

To answer your questions the loan was to switch mortgage providers. The original mortgage had a second mortgage for the kitchen extension. The new mortgage consolidated the two at a cheaper rate. There is no second mortgage now.

I have 14 years more term left.

The mortgage was changed to an 'interest only' about three years ago due to financial problems causing mortgage arrears.

There is over £70,000 outstanding.


Thanks to your answers I now understand that PC is means tested and I would not be entitled to this at my age due to state pension age increasing.

I was wondering whether the actual SMI is means tested ? or is it a "all or nothing" payment to cover my mortgage interest in full without me having to continually make up the difference out of my limited savings and company pension.

SMI is not a stand-alone benefit. It is part of the overall PC / JSA / ESA / IS calculation. The weekly SMI (or "housing costs") amount is added to the "applicable amount" (ie the amount the govt says you need to live on, which varies between benefits). Other income you may have is then taken off that amount to reach your weekly award. It may be the case that, depending on the amounts of your other income, all of your PC / JSA award - except from 10p - is paid to the mortgage lender.

Based on balance of £70000.00, the most you will get towards the mortgage is £48.86 per week (the govt use a standard rate of 3.63%). They may not pay towards the amounts for the kitchen extension, and if there is accrued interest / arrears etc included in the outstanding amount, they will not pay towards that either.

Scooby_Saver

Hello,

I've been advised I can claim SMI for my mortgage (on my Shared Ownership property). Due to my financial problems I agreed with my building society two months ago to reduce my monthly payments and pay over a few more years instead.

This won't affect any SMI claim will it ? I've spoken to CAB and they said they don't know.

Thanks in advance

lld01

Scooby_Saver wrote: »

Hello,

I've been advised I can claim SMI for my mortgage (on my Shared Ownership property). Due to my financial problems I agreed with my building society two months ago to reduce my monthly payments and pay over a few more years instead.

This won't affect any SMI claim will it ? I've spoken to CAB and they said they don't know.

Thanks in advance

No, that won't affect the claim. The assistance is awarded based on the outstanding balance, not on what you pay (as long as you are still liable for the interest, of course).

Scooby_Saver

Thank you so much for your quick reply !