Does using savings to pay off a mortgage count as deprivation of capital for benefits

michaels

I have found various threads here and elsewhere some stating it is others that it isn't - does anyone know fro sure or which govt dept I should contact for a definitive answer?

Thanks

karenx

Depends what benefits you are trying to claim. And also if you have already tried to claim and been refused and now trying to use up all your savings in order to reclaim.
As the money you use could be used to live on for day to day living instead of having to rely on the government to help

alwaysonthego_2

If you are not in arrears with your mortgage and paying it off so you qualify for state benefits then it would be DOC. However it is best to check with the benefits agency and get it in writing.

michaels

I recently moved and extended my mortgage as I was planning to extend but now with redundancy a possibility I am thinking it would be better to pay off the mortgage and then remortgage to fund the extension if my employment makes spending the money look safe. However I am worried that doing so may impact my benefit entitlement and then I would also not have the possibility of living off the extension money if I had used it to pay off the mortgage. I am currently employed and have not been given notice (yet) - would the benefits people look at transactions I make now?

Robert2009

How can someone who has paid off their mortgage be entitled to more state benefit?

My brother was getting help with his mortgage until the endowments paid out. Something like £60 per week

Now no mortgage, no benefits to pay the mortgage. Now he gets the minimum pension credit to bring up his income to about £200 a week for him and his wife but at least he has no mortgage and doesn't pay council tax.

In fact he has more money left over each month than I do.

Rob

missbunbury

michaels wrote: »

I recently moved and extended my mortgage as I was planning to extend but now with redundancy a possibility I am thinking it would be better to pay off the mortgage and then remortgage to fund the extension if my employment makes spending the money look safe.

So it's money that you've recently borrowed for a specific purpose and you have now decided it would be better to forget the extension plan? Essentially you're giving the money back, I guess, rather than using savings to pay off the mortgage? It's not savings, if the money came from the bank in the first place?

michaels wrote: »

However I am worried that doing so may impact my benefit entitlement and then I would also not have the possibility of living off the extension money if I had used it to pay off the mortgage.

I will be very interested to hear from an expert whether this is right or not? It doesn't seem right that someone would be expected to use credit to live on, which is what the OP seems to be describing? For example, if I had a credit card available with a £1000 limit, I wouldn't expect to be told I had to spend the £1000 before I could get any benefits. (Not that I am on benefits, or indeed have a credit card!)

I suppose on the other side of the argument, you might have a person living in a massive house with no mortgage, who lost their job - it wouldn't seem so ridiculous for them to be expected to sell the house and get a littler one so they could access the money tied up in the house. The difference between this scenario and the OP though, if I've understood it right, is that the OP has borrowed money against the house already and has now changed his mind about that decision as the finances are starting to look shaky. Surely that's OK? As long as the money is given back to the bank, I mean?

alwaysonthego_2

missbunbury wrote: »

So it's money that you've recently borrowed for a specific purpose and you have now decided it would be better to forget the extension plan? Essentially you're giving the money back, I guess, rather than using savings to pay off the mortgage? It's not savings, if the money came from the bank in the first place?



I will be very interested to hear from an expert whether this is right or not? It doesn't seem right that someone would be expected to use credit to live on, which is what the OP seems to be describing? For example, if I had a credit card available with a £1000 limit, I wouldn't expect to be told I had to spend the £1000 before I could get any benefits. (Not that I am on benefits, or indeed have a credit card!)

I suppose on the other side of the argument, you might have a person living in a massive house with no mortgage, who lost their job - it wouldn't seem so ridiculous for them to be expected to sell the house and get a littler one so they could access the money tied up in the house. The difference between this scenario and the OP though, if I've understood it right, is that the OP has borrowed money against the house already and has now changed his mind about that decision as the finances are starting to look shaky. Surely that's OK? As long as the money is given back to the bank, I mean?

It is not as simple as that. No one can give an definite answer this is why I suggested they contacted the benefits agencies involved.

hippy-chicy

Each case is looked at on a case by case basis by a decision maker. There are no hard and set rules so to speak with what they will and what they wont see as deprivation. There are lots of differnt factors taken into account when a decision is made. Alwaysonthe go is right no one can give you a definate answer.

NASA_2

michaels wrote: »

I recently moved and extended my mortgage as I was planning to extend but now with redundancy a possibility I am thinking it would be better to pay off the mortgage and then remortgage to fund the extension if my employment makes spending the money look safe. However I am worried that doing so may impact my benefit entitlement and then I would also not have the possibility of living off the extension money if I had used it to pay off the mortgage. I am currently employed and have not been given notice (yet) - would the benefits people look at transactions I make now?

Given that you are looking at this from the point of view of maximising benefits I would certainly look into the transactions you are making now.

It seems like Deprivation of Capital to me.

dookar

NASA wrote: »

Given that you are looking at this from the point of view of maximising benefits I would certainly look into the transactions you are making now.

It seems like Deprivation of Capital to me.

Yep, this is key.

Bogof_Babe

If you will be entitled to contributions based JSA then paying off your mortgage won't make any difference.

It's only means tested benefits that you need to take into consideration.