Support for Mortgage Interest on Interest only Mortgage?

dogmai

hi.....

I have been layed off from work and just had a baby and am claiming income based job seekers allowance. i have an 'interest only' mortgage NOT a repayment mortgage. can i claim this Support for Mortgage Interest payments???

any help appreciated!!!
thanks in advance

black_paw

think you can but after 13 weeks and up to hundred thousand pounds.

Sprintblue

Yes you can, they ONLY ever pay the interest in theory as they use 6.08% as the interest rate. so the max payment you would get is £233.85 per week for a £200k mortgage ..... you might be quids in if YOUR intrest rate is lower. BTW you don't get the excess the Mortgage provider does ... into your mortgage account.

For the avoidance of doubt £200k is the limit.

[Deleted User]

Sprintblue wrote: »

Yes you can, they ONLY ever pay the interest in theory as they use 6.08% as the interest rate. so the max payment you would get is £233.85 per week for a £200k mortgage ..... you might be quids in if YOUR intrest rate is lower. BTW you don't get the excess the Mortgage provider does ... into your mortgage account.

For the avoidance of doubt £200k is the limit.

Should also mention that the 6.08% was/is a temporary messure announced by the chancellor in november for 6 months,the normal rate is 1.58% over base rate,so it should be 2.58%,what they will do in may is anyones guess if base rate is 0.5% by then,ismi could go down to 2.08%,or £40 a week on 100k or £80 on a 200k mortgage

Sprintblue

That will be interesting to watch if they change that ... they know that most Mortgage rates are not this low ...

[Deleted User]

Sprintblue wrote: »

That will be interesting to watch if they change that ... they know that most Mortgage rates are not this low ...

Too right,mine is with a local building society on their SVR and thats now 5.25% after all the recent cuts

deb0020

dogmai wrote: »

hi.....

I have been layed off from work and just had a baby and am claiming income based job seekers allowance. i have an 'interest only' mortgage NOT a repayment mortgage. can i claim this Support for Mortgage Interest payments???

any help appreciated!!!
thanks in advance

The mortgage calculation for JSA (IB), ESA (IR) and IS does not differentiate in any way between repayment mortgages and interest only mortgages. The calculation is based on the original amount borrowed and the amount outstanding whichever is the lower.


Hope this helps

froggy27_2

deb0020 wrote: »

The mortgage calculation for JSA (IB), ESA (IR) and IS does not differentiate in any way between repayment mortgages and interest only mortgages. The calculation is based on the original amount borrowed and the amount outstanding whichever is the lower.


Hope this helps

I wonder if anybody has some advice... we've been told that we can now receive help with our mortgage as OH has been on JSA for more than 13 weeks.. I've heard that i need to have an interest only mortgage..but i have a repayment mortgage and i've just signed for a fixed rate and period. how does that work? i presume i can't change now...any advice and help much appreciated...

SuziQ

froggy27 wrote: »

I wonder if anybody has some advice... we've been told that we can now receive help with our mortgage as OH has been on JSA for more than 13 weeks.. I've heard that i need to have an interest only mortgage..but i have a repayment mortgage and i've just signed for a fixed rate and period. how does that work? i presume i can't change now...any advice and help much appreciated...

Who told you that? You will still be eligible with a repayment mortgage,however they will only pay the interest part of the mortgage-you will have to pay the other yourself or negotiate with the mortgage provider.

Stroof

The clue is in the name - the government provides Income Support for Mortgage Interest. Irrespective of what type of mortgage you have, the support this benefit provides is in respect of the interest charge component of your mortgage payment (only). Specifically, income support is not provided towards paying endowment costs.

The payments are available 13 weeks after the ESA qualifying date, and can cover the interest on an outstanding mortgage balance up to £200,000 I think now. Almost always the payment is made direct to the mortgage lender, if you haven't yet done so you will get bank forms to complete and pass on to let the government make automatic payments direct to your mortgage account.

There is some confusion about the rate of interest the government is using to calculate the payment it makes. You would think it would be the actual rate of interest being charged by the mortgage lender, but apparently this is not the case. The government instead use a standard formula - and it is not clear what this is at the moment: either Bank of England Base Rate +1.58%, or 6.08% which it (Alastair Darling ?) stated before Christmas (when BBR was 4.5%) was going to be the fixed rate the government would use for all calculations for the next 6 months.

This obviously makes a huge difference, and I am getting close to the end of my 13 week waiting period, so watching this issue all the time.

froggy27_2

SuziQ wrote: »

Who told you that? You will still be eligible with a repayment mortgage,however they will only pay the interest part of the mortgage-you will have to pay the other yourself or negotiate with the mortgage provider.

Thanks.. The guy from the JSA told us that we need an Interest only mortgage and would need to move the repayment one but I don't think they know all the details every time....we shall give it a go i think.