DWP mortgage cuts could mean rise in reposessions

AMILLIONDOLLARS

I popped over there and noticed that some people were reporting between £50 - £80 shortfall in their weekly payment. On £80 someone worked out, that that person mortgage would be around £180K.

AMD

cheap_charlie

I unfortunately had to claim SMI following the death of my husband in March 2008 - for the first year I survived on our savings and the fact the bank only took interest from me on the mortgage in the expectation I would sell the house quickly.

Unfortunately, due to bad legal advice (and the fact we took said advice at face value and didn't check) when we purchased I was unable to even put the house on the market until the start of this year which led my savings being exhausted.

I don't work due to my daughter's disability but it was still my understanding that SMI was only available to me for a maximum period of two years.

I was aware of it being reduced in the Budget but luckily for me this won't affect me as I finally sold the house in August but make no mistake - SMI made the difference between being able to sell myself or having the bank do it for me.

Of course there will be people who are affected and want to sell their house but in this current climate simply cannot sell - the fact is buyers are thin on the ground.

olly300

MissMoneypenny wrote: »

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.

SMI pays mortgage interest not the capital.

It's only recently that the government was paying too much.

That means after 25 years or whatever term the mortgage is the house has to be sold to repay all the capital.

Paying this stops people being a burden to the council and is cheaper for the government then paying their rent or a B&B.

chewmylegoff

MissMoneypenny wrote: »

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.

SMI only covers the interest on mortgages not the capital repayments, therefore it is not the case that people are having houses bought for them. people are having the interest on loans paid for them. in practice there will be some people who receive more SMI than they actually pay mortgage interest, so they will technically be paying off capital with the SMI, but that is just because it is a simplified benefit paid at a flat rate regardless of actual interest rate of the mortgage.

Orpheo

chewmylegoff wrote: »

SMI only covers the interest on mortgages not the capital repayments, therefore it is not the case that people are having houses bought for them. people are having the interest on loans paid for them. in practice there will be some people who receive more SMI than they actually pay mortgage interest, so they will technically be paying off capital with the SMI, but that is just because it is a simplified benefit paid at a flat rate regardless of actual interest rate of the mortgage.

So the sum total of your post is that some people receiving SMI are having the capital paid off their mortgages. Therefore some people are having their houses bought for them.

Orpheo

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

https://forums.moneysavingexpert.com/discussion/2708477

chewmylegoff

Orpheo wrote: »

So the sum total of your post is that some people receiving SMI are having the capital paid off their mortgages. Therefore some people are having their houses bought for them.

yeah, there are be. the reduction of SMI should deal with most of that issue though.

expect there are far more people paying off capital on mortgages using LHA than there are with SMI though.

nearlynew

If people can't keep up the payments on a mortgage, it is right that they should be repossessed.

The government has no right to interfere and use taxpayers' money to prevent it happening.

chewmylegoff

nearlynew wrote: »

If people can't keep up the payments on a mortgage, it is right that they should be repossessed.

The government has no right to interfere and use taxpayers' money to prevent it happening.

the government does have a right to - it's elected to make such decisions.

in some circumstances, it must be the cheapest option to pay someone's mortgage interest rather than let them be repossessed and then pay LHA to them to rent somewhere. surely the government has a responsibility to taxpayers to spend the least amount of taxpayers' money necessary?

drc

So, people have been getting 6.08% even if the interest on their mortgages is a lot lower. What happens to the excess they get, are they allowed to keep it and is it counted as a benefit? Seems like this has been an easy way for a lot of people to up their unearned income and continue claming other benefits. The taxpayer should not have been funding this. I thought it was a prerequisite that people get mortgage insurance when they get a mortgage in the event that they cannot pay for whatever reason?