ISMI Question

Vicky123

First post here,new to all of this.
Can someone tell me if ISMI needs to be paid back at any time for instance if we sold our house at some point in the future, also how does it affect my standing with our lender for the future.
Thanks

[Deleted User]

Welcome to MSE
ISMI does not have to be repaid at any time
As for affecting your credit status,as long as you keep up with the capital repayments(ismi covers interest only)then all should be well.
The DWP use a notional rate of interest for all claimants currently this is fixed at 6.08% until 31st dec.2009
It is usually fixed at base rate + 1.58% so should effectively be 2.08% not 6.08%

Vicky123

Thanks for that, my other concern was if things improve in the future and we need to move our mortgage we wont be able to because we would be considered higher risk having been on income support and had them paying interest, that's if they pay it in the first place.
They have sent the forms through and told me to send them on to the lender, does this mean customer services? Will they automatically send them back to DWP? Will they phone us and give us a grilling about our finances? We are not in any arrears but things are really tight so would like this help but not if it is going to cause all manner of extra problems.
Aslo DWP told me they may not pay this interest as our first application for IS was turned down, but that was because my husband was down as earning money that he hadn't actually earned and is all sorted out now with proof from Tax Credit office, we are talking 3 days here they say couldn't be accounted for at the time and it's enough in theory to have a refusal, so we could go all through this rigmarole with the building society for nothing at all, would like to know we would get it before contacting the building society but DWP wont give me that assurance.
Vicky

cattie

If it's the MI12 form that you've sent to your lender then yes it should be returned by them straight to DWP.

Don't worry about not being able to get a new mortgage because your interest was paid by DWP. I moved twice during the period I was eligible for ISMI & my lender had no trouble giving me a new mortgage. My new mortgage was always lower than the previous one though & I had never been in arrears at all with any mortgage.

No you won't be given a grilling about your finances from DWP. Yes they will ask for some information to do with savings/income etc. but that's to be expected as they have to ensure that you are rightly entitled to help with paying the interest from the tax payers money. Any information they need should be asked for by letter.

Stroof

The bank / mortgage lender won't grill you, but the DWP need to be satisfied you qualify. All the banks do is set up to receive a payment stream directly from DWP on your behalf, you don't have to do anything.

There is a waiting period - 13 weeks from ?? - before you get ISMI. Even after that payments are 4 weeks in arrears every 4 weeks, so it could be up to a 4 months wait. yThen you do not control the timing so you need to keep an eye on when payments are made or not to make sure you don't miss a bank deadline.

Vicky123

Thanks everyone, it was the lenders I was worried grilling us and maybe wanting to pull out altogether, very green about all this I'm afraid.
Have already answered the DWP questions, not afraid of anything as I'm not hiding anything lol, if only there were something to hide.
Feel secure enough to send the forms off now, my children are disabled so I'm very nervous about anything that might threaten their security.
Vicky

dmg24

One thing to be aware of, some lenders are so oblivious to a person receiving ISMI that they will forget to cancel your usual mortgage payment! If you can still afford to pay it this can be a bonus, as it means you will be making overpayments each month (assuming your mortgage product allows this). If not, once the DWP has confirmed that they are making the payments, contact the lender to arrange to stop/ lower your own payment.

Whatever happens, do not just cancel your direct debit - some lenders would be ok with this, but others will start charging you for missed payments.