Redundant and mortgaged

LynnJC

I will be made redundant by September and am 52, so am unlikely to walk straight into another job. I have an interest-only mortgage and the capital is due in 18 months’ time.
I have invested and saved over the mortgage term and – adding in my redundancy payment – should have enough to pay off the mortgage when it’s due. ( I have some cash and two mortgage-free properties abroad.)
My question is: when I sign on, will these investments (made purely to repay the mortgage) count as savings when it comes to means-tested benefits? Obviously I can’t sell the properties instantly but the cash and redundancy payment are available immediately.
Will the benefits agency take a short-term view and not see the bigger picture and force me to do the same (ie liquidise all my assets and pay off the mortgage immediately)? (Does an endowment policy being used to save to repay a mortgage count as ‘savings’ and reduce means-tested benefits?) But then will they think this ‘disposal’ of my savings is a deliberate act to bring me below the means-tested threshold?
Any thoughts please?

LeeSouthEast

They will, but if you've paid sufficient NI for the last 2 tax years, your first (6 months?) of JSA will be contribution based, and therefore immune to any savings you have.

I believe, anyway. An expert will be along shortly.

[Deleted User]

Firstly, I am not an expert in this area but I was made redundant last November so I am familiar with some of the issues you are facing. Any savings over £16,000 will disqualify you from means tested benefits. If you have been paying full NI contributions for the last two years then you will be entitled to contribution based JSA for 6 months as stated by the poster above. I believe (but didn't test out) that if you use redundancy payment / savings to reduce your mortgage, the benefits people don't regard this as trying to fiddle the benefits but would suggest that you ask them first if you are considering going down this route. I don't know how your overseas property or endowment policy affects things. Hopefully, someone else can answer that.

LynnJC

LeeSouthEast wrote: »

They will, but if you've paid sufficient NI for the last 2 tax years, your first (6 months?) of JSA will be contribution based, and therefore immune to any savings you have.

I believe, anyway. An expert will be along shortly.

That's fab, thanks Lee. So it looks like I'd have a period of grace to sort my mortgage repayment out.
I'm confused about the contribution/income based JSA, except to say that I've been in the (PAYE) same job for 23 years (and other jobs before that) so I'm positive I've been making the correct, full NI contributions.

custardy

LynnJC wrote: »

I will be made redundant by September and am 52, so am unlikely to walk straight into another job. I have an interest-only mortgage and the capital is due in 18 months’ time.
I have invested and saved over the mortgage term and – adding in my redundancy payment – should have enough to pay off the mortgage when it’s due. ( I have some cash and two mortgage-free properties abroad.)
My question is: when I sign on, will these investments (made purely to repay the mortgage) count as savings when it comes to means-tested benefits? Obviously I can’t sell the properties instantly but the cash and redundancy payment are available immediately.
Will the benefits agency take a short-term view and not see the bigger picture and force me to do the same (ie liquidise all my assets and pay off the mortgage immediately)? (Does an endowment policy being used to save to repay a mortgage count as ‘savings’ and reduce means-tested benefits?) But then will they think this ‘disposal’ of my savings is a deliberate act to bring me below the means-tested threshold?
Any thoughts please?

no offence but having investments and 2 properties owned outright,why would you tihnk they wouldnt be counted?
as for the 'short term view' surely the long term view would be redundency insurance?
Im not having a go and encourage you to claim what you can, but i think you need to be realistic on your situation

Lube

Yes they will count.

LynnJC

CR10 wrote: »

Firstly, I am not an expert in this area but I was made redundant last November so I am familiar with some of the issues you are facing. Any savings over £16,000 will disqualify you from means tested benefits. If you have been paying full NI contributions for the last two years then you will be entitled to contribution based JSA for 6 months as stated by the poster above. I believe (but didn't test out) that if you use redundancy payment / savings to reduce your mortgage, the benefits people don't regard this as trying to fiddle the benefits but would suggest that you ask them first if you are considering going down this route. I don't know how your overseas property or endowment policy affects things. Hopefully, someone else can answer that.

Thank you! I've never had any contact with them so I don't know how the benefits agency mindset works - my thoughts were that when "computer says no, computer means no" and that it was all a bit detached from the real world and "the system" might not understand my plans. Perhaps I've been a bit unfair and it will all be ok. Fingers crossed! At least it's taking my mind off the redundancy and not having a job!!

[Deleted User]

custardy wrote: »

surely the long term view would be redundency insurance?

If by that you mean mortgage protection insurance, these can offer pretty poor value for someone in the OP's financial position. Although they are usually designed to pay out for 12 months, many are dependant on the claimant being in receipt of JSA. In the OP's case, this would allow a maximum claim of 6 months rather than the full 12.
On top of that, if you had substantial savings, why would you want to pay the extortionate premiums for these policies anyway?

opinions4u

1) The assets described would, as far as I can see, affect means tested benefits.

2) If you have the ability to dispose of the assets by repaying your own debt, I believe this is allowed as your "net" position is unchanged. If you disposed of the assets by gifting them to your kids then that wouldn't be allowed.

Do a little bit of research on tax credits though. I was pleasantly surprised at what I would be entitled to when I thought my job was going to vanish.

LynnJC

custardy wrote: »

no offence but having investments and 2 properties owned outright,why would you tihnk they wouldnt be counted?
as for the 'short term view' surely the long term view would be redundency insurance?
Im not having a go and encourage you to claim what you can, but i think you need to be realistic on your situation

Ah ha, this is more how I thought it would be!! The reason I queried whether my savings should be counted is because I wondered whether an endowment policy would be counted as savings? (I had one which was failing miserably and I've made more by withdrawing it and using it wisely.)
Back in the real world, I made a choice of having an interest-only mortgage (and saving) rather than a repayment mortgage. Perhaps I should have gone down the 'spend, spend, spend' route, then I'd have no savings at all. Or got a repayment mortgage and get into arrears now (interest being the only element that could be covered by benefits). But no! I did the sensible thing to maximise the chances of repayment on time and it could lessen my benefits.

LynnJC

CR10 wrote: »

If by that you mean mortgage protection insurance, these can offer pretty poor value for someone in the OP's financial position. Although they are usually designed to pay out for 12 months, many are dependant on the claimant being in receipt of JSA. In the OP's case, this would allow a maximum claim of 6 months rather than the full 12.
On top of that, if you had substantial savings, why would you want to pay the extortionate premiums for these policies anyway?

I'm new to this ... what does 'OP' mean? I have got payment protection insurance which will cover the mortgage payment (interest only as that is the basis of my mortgage) for 12 months. It was very cheap at the time I took the mortage out (plus I hadn't started on building up my savings at that point), so it seemed like a good idea.