claiming council tax benefit with ISA backing interest only mortgage

hepsee993

Anyone know if it is OK to claim council tax benefit while having a current ISA [stocks and shares based] "backing" your interest only mortgage.

The rules for benefis say that savings over £16000 disallows you to claim, but if you have taken out an ISA to "back" your interest only mortgage, how do you "prove" that this was the purpose for which it was taken out.

I am facing this problem. I feel that the council tax office will disallow any benefit because I have this ISA, they will not be interested to know that it is supporting a mortgage. How do you get round this? How do you prove it Anyone know?

dmg24

You need to show that the ISA was taken out at the same time as the mortgage, and that a specific amount is put into the account each month to cover the capital part of the mortgage. Also, your mortgage documents may refer to the ISA as the relevant repayment vehicle.

hepsee993

OK thanks for getting back. Problem is the mortgage lender obviously is a building society, the organisation that "sold" me the ISA was an independent financial advisor.
Where on the mortgage docs might this info be contained. Do you know?

Other problem - since the "crash" last year, decided for good or bad to "stop" my payments, since the shares prices were falling so badly - so although I have about 7 years evidence of submitting regular payments to the ISA, in the last year, "no".

I am considering selling the shares -to get out of the situation - but reluctant since they are so low - any more advice please? thanks

dmg24

I don't know where it will be in the mortgage document (if anywhere), I just know that there is a line in mine that states that the capital element will be repaid through an ISA account.

Because you have not maintained the payments, I think the best thing that you can do is to write all of this down when you submit your CTB application. Do you still have the illustration that the IFA gave you, showing how the ISA will pay off the mortgage? This could also be strong evidence towards the two being linked.

hepsee993

Thanks again. I will have a look. Also suggested that I contact the FA who sold me the ISA and have him put something in writing - do you think they would buy that?

dmg24

Documentation from the time the ISA was taken out would hold more weight.

hepsee993

thanks, do you think they might take the word of my financial advisor. If I asked him to verify the purpose of the ISA - do you think they would buy that?

They are so fussy, I realise that

MrsTinks

It's not a matter of if they "buy that" - it's a matter of if that is acceptable or if an ISA is a saving regardless of what the purpose of it was... Best of luck though