Redundancy, Savings and Benefits

michaels

I may be made redundant later this year

I have a large mortgage but savings equal to this amount.

Does it make sense for me to repay the mortgage so that I can qualify for income based JSA and all the related benefits rather than just contributions based? Could I do this after the 6 months of cb-jsa runs out?

I am uncomfortable with doing this as it would mean cashing in my isas which of course I can't get back and meaning that I wouldn't have a saving scushion but would of course potentially open the door to lots of benefits like council tax, prescriptions, free school meals etc.

getmore4less

Once redundant this is a none starter.

How much redundancy will you get? thta may make it impractical.

First priority should be getting another job.

Setting up a mortgage that you can get back overpayments still gives a saving buffer just not means tested.

michaels

OK - so if I have a mortgage and savings and after redundancy chose to use the savings to pay down the mortgage the benefits agency would consider that to be deliberate getting rid of assets (sorry I know there is a technical term for this but don't know the terminology - yet!)

I have just such a mortgage that you mention but am concerned that if I wished to redraw the mortgage company might ask me to send in payslips?

It is tricky cos if I did get a new job quickly then I would not want to have rearranged all my finances unnecessarily as this would not be costless and obviously with things like ISAs it would not be possible to get back to the initial position.

highguyuk

michaels wrote: »

It is tricky cos if I did get a new job quickly then I would not want to have rearranged all my finances unnecessarily as this would not be costless and obviously with things like ISAs it would not be possible to get back to the initial position.

Not meant in a bad way at all, but this is the risk you take by trying to play the system to receive benefits. You have sum up all the positives and negatives and work out the best way forward. It is possible you will be in a new job in a weeks time, or still be unemployed 3 years down the line...

michaels

Agree but I'm not sure I would describe it as playing the system- after all if I had just blown all the money on cheap 'hoes and coke then I would be able to claim for everything whereas saving appears to be punished.

highguyuk wrote: »

Not meant in a bad way at all, but this is the risk you take by trying to play the system to receive benefits. You have sum up all the positives and negatives and work out the best way forward. It is possible you will be in a new job in a weeks time, or still be unemployed 3 years down the line...

getmore4less

if all the money is tucked away in ISAs then that the risk yoi get a job and have surpluss incomethat can more than fill the ISA allowances.

Since the end goal is no mortgage and a pot of money you either have to break through the is it worth saving barrier or stick it all in a pension wrapper which has it own drawbacks.

If you don't get a job long term you are stuffed anyway so I would focus on getting replacement income and if you end up using the savings at least you tried.

For couples it becomes almost pointless going down the benifit route if you both work or could work and the goal is to have a decent pot of dosh.

Peelerfart

Personally I would use the savings to pay the mortgage.

I would take the hit of losing ISA's as the benefit of knowing that what ever happens job wise,we would not ever lose the family home. If I got a job quickly - great fine, let's build the isa's again if not,no-one is gonna come knockin on my door.

Got to agree with your comment about playing the system, I wouldn't see it that way either.