Do I have a problem?

sleepless_saver

You would not have to spend all (or even most of) the equity before you got pension credit - there is no capital limit. The pension credit would be reduced to take account of assumed income from your savings, but you would likely get full council tax benefit and housing benefit assuming your only income is from benefits. However the position would change when he starts to get state pension at 65 and you get the 60% pension based on his contributions.

You can see what I mean if you run figures for different scenarios through a benefit checker. Or go to local CAB and ask them to work it out for you. You really need accurate information about your options before deciding what to do.

The possible change to £140 a week pension won't happen until after 2015 at the earliest. But from what you said before it doesn't sound like you would be getting help with mortgage interest whether or not there's a standard pension of £140.