repay mortgage in full

katkit

Hi i am due to be made redundant, I have 15 years left on my mortgage £42000 approx, my 2 year fixed deal comes to an end in march and i would like to know if i can pay off my mortgage in full once the deal had expired and would there be any penalties. In my current situation the pay off would pay my overdrafts and mortgage, but then I am left with nothing to live on, except for my partner who works part time and is paying the bills which falls short of what we have to pay out although we are trying our best to reduce them. I dont know if the dole would help me because i have worked for 20 years and not sure how to go about it. If i cant find any work and choose not to pay it off then the monthly installments would eat into my redundancy savings and in the long term I believe I would be worse off.
any info appreciated.
Thank you

DVardysShadow

Only you and your mortgage provider will know about penalties for early redemption or for overpayment. Speak to them, but fly under the radar by not letting on why you have money to pay it off. Say your partner has had a trust fund released or something.

If you can pay off without penalty in March, take the opportunity to pay down a substantial amount, while leaving a bit to see you through 6 months.

And don't leave your money lying around in your overdraft account. Once the bank realise you have no salary coming in, you will find they withdraw the overdraft. In your position, I would go to another bank and open a basic no overdraft account and leave the other account alone.

TallGirl

You might need to check your benefit entitlement as it could be classed deprivation of capital. You should get contribution based JSA but speak to a CAB about this. Good luck and hope you get a new job soon.

StuartGMC

TG is spot on, deliberate reduction of assets would count against you in means tested benefits. CAB should be a good starting point but remember the maximum savings you can have is I think £16k for means tested benefits so it may be worth establishing whether lowering the mortgage by £26k is an option initially? Also I guess your partner's income will be considered as well.

Best wishes in both the short term resolution of this and the future. Check out the various boards here to help you reduce costs such that your partner's salary goes further.

katkit

Thanks for all replys.
I not sure what you mean by deprivation of capital.
If i decided to lower my mortgage by 26k this would lower my mortgage payments yes, not sure how much, but its just another bill i have to pay and in x amount of months after paying out all my monthly bills i would eventually run out of money, if i cant find work i would still have the remainder of the mortgage to pay and still my bills. so i thought if i could get the mortgage out of the way i would be in a better position and have 1 less bill to pay.

is this what you mean? i have 42k from redundancy and the dole expect me to live on this minus the 16k savings before they will give me any help? If i choose to pay the mortgage in full there would be no help at all?
Seems im in a no win situation.
I just hope i can find work which will be my best option.

thanks again for your time i really appreciate it.

I

HOWMUCH

When hubby was made redundant back in 1992, we paid off our mortgage, he claimed JSA for 6 months, I still worked fulltime as before and so therefore we wasn't entitled to any benefits. I earned enough to keep us both so they said. So if you're married and otherhalf works you may be in the same boat.

jamesd

You start out getting contribution-related JSA, not means tested. It lasts for up to 182 days. Savings don't matter for this, you can get it even if you're a millionaire. It's £100.95 a week for a couple if neither is working, for a single person 25 and over it's £64.30 a week.

Yes, you're expected to use savings when applying for means tested benefits and this redundancy money would count as part of your savings for the means test. If you spend it then deprivation of assets rules normally mean that your application would be treated as if you still had the savings.

You can make 8-12% from some unit trust investments that can be held in a stocks and shares ISA so you may find that the best use for the redundancy money is to invest it to provide you with more income. At 8% income a £50,000 redundancy deal would generate £4,000 a year in income, £333 a month, £76.92 a week. As you can see from the numbers above, this is probably more than you'd get from the means tested JSA if your partner is working even a little. So you probably won't qualify for the means tested JSA when the first six months of contribution-related ends.

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dimbo61

If you do get another job ( good luck) even at a lower rate of pay you could then use your redundancy money to clear the mortgage and reduce your outgoings each month!
Have a look at all your bills and consider "if we had no mortgage or overdraft how much money would we need each month to live on "
We know nothing about you or job you were doing,age,location,job prospects ETC
Can you get work with an agency and then clear the mortgage while looking for a perment job.

katkit

Hi i am 45 years old, the company is getting someone in to show us how to complete C.V. We have been told there will be £1000 pounds towards a course from the council, not sure what this entails until i get more info.
Job agency, might be the way forward, not sure of the type of wages they pay. I wouldnt mind taking a course and being self employed, but due to recession im not sure how long that would take me to earn enough money. Also maybe my age would go against me for any future employment.
thanks

Ed_Zep

katkit wrote: »

Hi i am 45 years old, the company is getting someone in to show us how to complete C.V. We have been told there will be £1000 pounds towards a course from the council, not sure what this entails until i get more info.
Job agency, might be the way forward, not sure of the type of wages they pay. I wouldnt mind taking a course and being self employed, but due to recession im not sure how long that would take me to earn enough money. Also maybe my age would go against me for any future employment.
thanks

You're still young.