mortgage interest relief

drewbert73

quick question,

i currently recieve mortgage interest relief.

weird circumstances

been in house 10 years, bought originally for £60000 then 2 years later £40000, It was my grans house and was left to my parents allowing me to buy at cheaper price.

because of this, i only get mortgage interest relief for the purchase price £60000, not the £100000, my mortgage now is for £131000 but i understand i cant get mortgage interest relief for the full amount and dont expect to but shouldnt i get it for £100000 not just the £60000.

help and advise please.

dmg24

For what reason did you 'buy' the house again after two years, and how is the amount now £131K? When did you start claiming SMI?

mitchaa

drewbert73 wrote: »

quick question,

i currently recieve mortgage interest relief.

weird circumstances

been in house 10 years, bought originally for £60000 then 2 years later £40000, It was my grans house and was left to my parents allowing me to buy at cheaper price.

because of this, i only get mortgage interest relief for the purchase price £60000, not the £100000, my mortgage now is for £131000 but i understand i cant get mortgage interest relief for the full amount and dont expect to but shouldnt i get it for £100000 not just the £60000.

help and advise please.

As asked above?

How on earth do you buy the same house twice? If you bought for £40k, then surely you should be getting interest paid on the £40k

And where has £131k come from?

Broken_hearted

Equity release and some sort of tax inheritance scam maybe, sounds stramge.

[Deleted User]

the bottom line is that smi will almost certainly be paid on the original 60k,unless any of the additional borrowing was for major improvements and you have all the receipts to prove it

AnxiousMum

Sounds like an inheritance scam........OP bought the house and let gran live in it, house increased in value when left to the parents.....parents felt it was worth £100K so 'sold' the rest of the house to OP for £40K......OP has taken out further mortgages on the equity bringing the mortgage to £131K......

OP - I imagine you had to show mortgage paperwork to dwp or whoever to get your mortgage interest paid in the first place. Did you show them the original purchase of £60K? If the equity release of £31K has been used to do things that were 'nice to have done', but not 'necessary' - then they won't pay the interest on that portion of the mortgage.

I'd be thinking that if the way you purchased it was a way around inheritanace tax or some such thing, then you've already benefited in that way - and wouldn't be pushing it for the rest of it to be covered by SMI!

drewbert73

no scam, i bought house at £60000 then cleared my parents mortgage 2 years later for £40000,this was agreed before smi and being retired as a way of getting me on property ladder, my salary increased over the 2 years allowing me to clear parents mortgage, yes the £31000 was for me, i was made retired due to disabilty (m.s.),and cleared my debts,

Hammyman

At the end of the day, SMI will only pay out on the purchase price of the house, not equity release except in very exceptional circumstances. The purchase price was £60k, the £40k and £31k were equity release.

dmg24

drewbert73 wrote: »

no scam, i bought house at £60000 then cleared my parents mortgage 2 years later for £40000,this was agreed before smi and being retired as a way of getting me on property ladder, my salary increased over the 2 years allowing me to clear parents mortgage, yes the £31000 was for me, i was made retired due to disabilty (m.s.),and cleared my debts,

It sounds like the property was transferred to you when you paid the £60,000, then the additional £40,000 was an informal arrangement. If this is the case, it would not be possible be claim SMI on the additional amount. The only time something like this would work is if it was a shared ownership staircasing arrangement.

SuziQ

I only get mir for the amount my mortgage was when I originally bought it 20 years ago, not for the extra I borrowed to give my kids their own bedroom. I then get half of that as my ex still pays half. The amount is dropping drastically soon because of the change in interest rate. It may seem unfair, as those in rented accomodation get all their rent paid, however I am grateful to be getting any help at all really and think things will get much worse-how can this country carry on paying these huge amounts of money out to people? I think some deal needs to be done betweeen the govt and mortgage countries so that the govt isn't paying the mortgage but it becomes more manageable for the homeowner. I have heard of such schemes in the US an the economy and housing market out ther now seems to be picking up again. I know such schemes were talked about here but I haven't heard of any that actually came about, unless someone can enlighten me?

damian-floyd

SuziQ, having read your thread, I know exactly what your going through..........



I purchased my property in a joint (interest only) mortgage back in 1999, the value of the house at that point cost £100k, however since then and a few additional additional loans later I re-mortgaged to buy out my Ex-partner (who had 50% shared equity).
The property was valued in 2007 at £180k............I was made redundant Jan 2010 and applied for mortgage relief, the DWP only calculated the amount on the original loan of £100k resulting in an underpayment to the mortgage lender.....they only base their calculations on the original mortgage and and loans which are used for any structual repairs to the property (from what i can work out)only. surfice to say the arrears quickly amounted to almost £10k.

I have an Tribunal next week to argue the case of the mortgage should be based on the current value of the house price when a buyout is forced.

Does anyone have any case law which mirrors my arguement, I have read case files relating to a commissioners verdict to land only??.