DWP mortgage cuts could mean rise in reposessions

GDB2222

1984ReturnsForReal wrote: »

Do you think everyone is on a low rate mortgage?

What about those that fixed in summer 2008 as advised by most media sources & banks?


I know a few of my neighbours fixed high....

As Olly said it was silly that the scheme paid a flat interest rate for all, rather than the actual interest rate. It may have been administratively easier to do it that way, but it was totally unfair on the poor taxpayers footing the bill to set it at such a high rate that scarcely anybody would be paying more than that and most would be paying less.

1984ReturnsForReal_2

GDB2222 wrote: »

As Olly said it was silly that the scheme paid a flat interest rate for all, rather than the actual interest rate. It may have been administratively easier to do it that way, but it was totally unfair on the poor taxpayers footing the bill to set it at such a high rate that scarcely anybody would be paying more than that and most would be paying less.

But now you have created a position where hundreds of thousands are better off renting & some of them will not be able to afford their mortgages.

I think also these payments are made directly to the mortgage lender.


So, what you have created is situations where you will be paying out more in rent benefit than mortgage benefit.

I doubt this will save much money at all.

GDB2222

1984ReturnsForReal wrote: »

But now you have created a position where hundreds of thousands are better off renting & some of them will not be able to afford their mortgages.

I think also these payments are made directly to the mortgage lender.


So, what you have created is situations where you will be paying out more in rent benefit than mortgage benefit.

I doubt this will save much money at all.

I haven't created this scheme or the changes. If I, as a taxpayer, have to pay someone's mortgage interest, I'll stomach that. And I agree your point that it may be as cheap to keep someone in their home as to make them homeless. However, a scheme that overpays for some and underpays for others just stinks!

By the way, if an overpayment is made to the lenders, ie more than the interest due, it just means some of the mortgage capital is paid off.

1984ReturnsForReal_2

GDB2222 wrote: »

By the way, if an overpayment is made to the lenders, ie more than the interest due, it just means some of the mortgage capital is paid off.

Better the taxpayer in needs' capital is paid off than than landlords.....

AMILLIONDOLLARS

As I understand it, these payments are made for a maximum of two years. I would have thought the person receiving this benefit would have found some kind of employment before their deadline was up. If not, they would still be on track to lose their house anyway. I think after the first year with no sign of a job in the offering, I would consider selling the house and downsizing to something with no mortgage, or possibly renting either way no point in holding onto something you can't afford.

AMD

olly300

AMILLIONDOLLARS wrote: »

As I understand it, these payments are made for a maximum of two years. I would have thought the person receiving this benefit would have found some kind of employment before their deadline was up. If not, they would still be on track to lose their house anyway. I think after the first year with no sign of a job in the offering, I would consider selling the house and downsizing to something with no mortgage, or possibly renting either way no point in holding onto something you can't afford.

AMD

The payments only start at the 13th week of unemployment. So the person is likely to be in arrears before then.

All the overpayments do is pay of the interest arrears that they have already chalked up.

And yes they should sell there house but you are presuming:
1. That the person is only claiming JSA there are other groups of people claiming this interest
2. That they aren't in negative equity.

drc

Interestingly enough, the majority of people that SMI has been helping has been the over 60s, presumably retired rather than young families suddenly made redundant.



Here is the dwp document with all the facts and figures. Makes for some interesting reading;

http://www.dwp.gov.uk/docs/support-for-mortgage-interest.pdf

GDB2222

Sorry drc, but we don't want facts around here. We have our opinions, and we don't want those upset, thank you very much.

MissMoneypenny

SingleSue wrote: »

There have been several threads in other parts of MSE about this, with people starting to get the letters telling them how much of a shortfall they will have to make up....and it is scaring them.

Many are getting their letters about their Support for Mortgage Interest (SMI) being cut and just seeing how much less they are going to get and not bothering to phone their mortgage lender to see what their interest payements are.

According to the people who know on the benefits board, SMI is meant to be 1.58% over the bank base rate: therefore 1.58 + 0.5 = 2.08%. From October, the SMI rate will be 3.67%, which is still higher than it should be but a lot less than the 6.08% they have been getting: for everyone on SMI (regardless of their mortgage rate).

Apart from those on job seekers, there seems to be no time limit on SMI. Which means that those who work and can't afford a house, are buying houses for some of those that don't work! Even that seems unfair as some who claim disablity are getting a house bought for them and other disabled people don't. It can't go on like this. Perhaps the governmnet should put a charge against houses where the owner has received long term SMI.

https://forums.moneysavingexpert.com/discussion/2729813

michaels

Disagree - unless house prices are falling sharply - equity in residence is the only capital that is ignored for benefits purposes - move in to rented and pretty much all benefits are stopped until any capital is exhausted.

I really don't see why they can't pay the actual amount of interest - they could simply push the admin costs on to the banks if processing is too expensive.

And here is another thought - if it gets to repossession why not give the local council first refusal at the best price offered, the previous owners could then stay as council tenants if this were cheaper for the council than housing them elsewhere.

AMILLIONDOLLARS wrote: »

As I understand it, these payments are made for a maximum of two years. I would have thought the person receiving this benefit would have found some kind of employment before their deadline was up. If not, they would still be on track to lose their house anyway. I think after the first year with no sign of a job in the offering, I would consider selling the house and downsizing to something with no mortgage, or possibly renting either way no point in holding onto something you can't afford.

AMD