Deprivation of capital and benefits

ManicMum

Hello

I have recently acquired some funds which i want to use to pay off my mortgage. My husband has lost a lot of earnings over past year and we need to reduce overheads. However, his job is looking very precarious. I am paying the money into my mortgage at the moment.

If he was to be made redundant, would they say this was deprivation of capital or does that only apply if you diverted funds after you were made redundant?

Many thanks.

UnderPressure

This is a good question, I dont pretend to be the most experienced in this area (far from it) so keep an eye on this thread for other posting from more knowledgable MSE's, as a hunch I would say it would be classed as deprevation for the simple reason there is no "need" to pay these fund off your mortgage, apart from lowering payments or reducing the amount of time left to pay you are under no obligation to do this.

Also would this be wise? If you "think" you are about to come under somekind of financial hardship surely it would be better to have these funds available to you?

As said I could be completely wrong so keep an eye on this

ManicMum

Thanks. Hope you aren't right because I would have sold a property for nothing then. I did this as felt we needed to reduce overheads should worse happen. Just didn't sit comfortable with large mortgages after big drop in income. Rent was covering mortgage but wanted to reduce my residential.

But then where do you draw the line? Not having a go at you - just saying!! If someone buys a car, is that deprivation of capital? I am still holding some back so not totally leaving myself without a penny. I was thinking that if you did it before you knew you had no job, then you can not be seen to be deliberately depriving yourself of income because you weren't aware it was going to happen?

thanks for thoughts

UnderPressure

I must admit it does seem quite a "sketchy" area especially as you say if the capital is gone before you had lnowledge of the loss of job, however you do have knowledge that there "may" be a loss of job, just be careful the last thing you want is for a severe reduction in income but owing a few grand less on the mortgage??

As said if you think this may happen then surely for your own piece of mind having this capital available to you and your family would be a much better scenario? After all "most" people dont claim benefits because they want to.....................

Im sorry I could not give you a definate answer, there are somefantastic people on these forums that have great knowledge just keep your eyes peeled I am sure one of these people will post soon

ManicMum

thank underpressure. I understand what you are saying. Thhis was something we have had in the pipeline since January so didn't suddenly sell up due to job looking dodgy. Looking to basically cut mortgage by about a third. thinking that if we had to get any old jobs to pay bills, a mortgage payment of £200 a month is a lot easier than £600. Would rather be able to pay it than have to finance larger payments out of the capital. Otherwise all we have worked towards over last 12 years for nothing. Hopefully will get some more views but thanks for your thoughts.

Bonbon

Like the others, I am no expert on this, but hope this helps.......there are 2 types of jobseekers allowance.One based on NI contributions and the other if you have less than the allowed amount in savings (currently £16,000 I think). If you claim the NI based benefit, they do not ask you ANY questions about savings. I was made redundant this year and my payout brought me over the savings limit. I didn't think I could claim anything until I had spent the money but was told I was still entitled to NI contrubution based benefit, which is what I am receiving now. If you want to claim Council tax benefit you must have less than £7000 and they will want to know about your finances.

healy

Bonbon wrote: »

Like the others, I am no expert on this, but hope this helps.......there are 2 types of jobseekers allowance.One based on NI contributions and the other if you have less than the allowed amount in savings (currently £16,000 I think). If you claim the NI based benefit, they do not ask you ANY questions about savings. I was made redundant this year and my payout brought me over the savings limit. I didn't think I could claim anything until I had spent the money but was told I was still entitled to NI contrubution based benefit, which is what I am receiving now. If you want to claim Council tax benefit you must have less than £7000 and they will want to know about your finances.

People can claim Council Tax Benefit with savings of up to £16,000.

ManicMum

thanks guys. My husband has been working in permanent job for 3 1/2 years so hope that would be enough to qualify. My maiin question is whether they look retrospectively at what you have been doing with your money?

My motivation is to reduce my mortgage to make my family's situation more secure. Also, it will mean i can swap to another deal as we are currently stuck on 4.99 variable due to other lenders saying we can not afford mortgage we have. This is to lower outgoings. I do not want to have to claim benefits if possible. My intentions are honourable. It's not like I am giving my parents the money to stuff into their account so I can claim.


thanks

margaretclare

It does sound a reasonable enough thing to want to do. Having a mortgage is all well and fine when you're in a secure job with a dependable income - when that all changes then a mortgage is not so good, just because, as they say 'if you do not keep up the payments then your home is at risk'.

Bonbon

IF...you have to claim benefits I'm sure they won't look at what you've been doing with your money.As I said in my previous post they didn't want to know about mine.My job was on dodgy ground for a couple of years after another company took over. I then made it my priority to pay as much off my mortgage as possible, knowing that I might be redundant at any time and that's exactly what happened.I can honestly say that was the best financial decision I've ever made, as I'm now unemployed but have no house worries (I was lucky enough to have a small mortgage). Personally I think the biggest expense and worry for most people is the their home. If your husbands job is looking precarious I would get the mortgage costs down if possible.

ManicMum

Thanks Bonbon. My thinnking. I don't feel the need to keep large sums aside to finance my lifestyle. We want a safety net but we aren't conspicuous consumers at all. Far from it.

Hope you find work soon.:beer: