Equity release mortgage counted as income?

overtaxed

Can anyone help? My Mum took out an equity release mortgage a while ago that pays he a small amount each month to live on. She recently was re-assessed for her Pension Credit and subsequently her Council Tax benefit. They have told her that this equity money is "income" and has to be taken into account and so she cannot receive any of the benefits. This means she will be worse off again than before she started the mortgage. Im going to get some professional advice but I dont understand? How can money from her own home be an income. Just proves it does not pay to try to cope and she should have just been less proud and applied for all the benefits instead!!?
Any thoughts? Thanks

Debt_Free_Chick

overtaxed wrote: »

Can anyone help? My Mum took out an equity release mortgage a while ago that pays he a small amount each month to live on.

There's the problem. It doesn't matter where the money comes from as anything she receives regularly is an income. It's a pity she didn't take advice about this before she did the equity release.

It's the way the benefits system works, I'm afraid.

koexelek

Debt_Free_Chick wrote: »

It's a pity she didn't take advice about this before she did the equity release.

It sure is.

There is always the danger an equity release can put the client in a worse position from a benefit point of view.

EdInvestor

Did she not take financial advice before signing up to ER?It's one of the first things the advisor will look at.

overtaxed

Thanks for the replies. She did see a Financial Advisor for advice to decide whether to take out the Equity Mortgage. I guess she had no choice except sell the house after my Father died and she was not ready to that.
Im going to book to see an accountant and see what damage limitation can now be done.

EdInvestor

Dig out all the documentation and see if she was warned on the benefits issue.If not make a complaint to the employer of the advisor, taking it on to the Ombudsman if it is rejected.