Mortgage redemption and state benefits

starkj

If someone receiving benefits used their savings to clear their mortgage thus bringing their savings below the £16000 threshold and becoming eligible for more benefit. Would the DSS (or whatever they are called) object?

I wouldn't have thought there would be a problem but does anyone know?

Thanks

StuartGMC

If you did so to achieve this level knowing you are about/have just been made redundant, then I think it constitutes "deliberate reduction of assets" and would be viewed in detail and may count against you. This is one of the risks of offsetting because the sums are seen as savings....

However, if you had done the reduction before any awareness of redundancy then I think it would be ok. So it is time dependent and you'd need to prove you had no knowledge of possible loss of job. The best option may be to OP each month over an extended period rather than lump sum so your savings are reducing on a "planned" basis?

You may get better response on the main mortgage board, or even the debt-free wannabe board where people with more knowledge can help.

Try searching the forums for deliberate reduction of assets, it may help.

starkj

Thanks Stuart, the person I am asking the question for has already been made redundant. The point you made of "deliberate reduction of assets" is what I was worried about. My friend has already had to declare what savings he has to the DSS and would have to be assessed again.

FairyElephant_2

Something rings a bell that you may be able to do this withour falling foul of the 'reduction of assets' thing, if you can show that the overpayment then reduces your monthly mortgage payments due, and that you are doing this so that you can better afford the mortgage payments....Can't recall exactly but I am sure I have read somewhere about someone doing this with their redundancy payment, for this reason....will have a think & see if I can remember where....

Wookey

They could well argue that they are unable to afford to pay the mortgage due to being on benefits and by wiping it out using money they have is there only way out, this of course would depend on there individual status.