Underpaid Support for Mortgage Iinterest by DWP

mongerer

Hello, I hope someone has some info on this. I'm trying to help a friend who is unwell and unable to deal with all this sort of problems.
She is in receipt of State Pension which is topped up with Pension Credit as she has no other income and therefore qualifies for SMI. Like many posters she has been advised by the Building Society of an impending shortfall from the DWP of some £65/m and has little hope of finding that extra money, like many others.

My actual query is that I have found an article from Nov last year regarding the DWP underpaying some claiments, whilst the rate was 6.08%, and on checking I find that this is the case with her.
She is one of the unfortunates with a fixed rate interest only mortgage at 5.15%. On checking, the DWP have only been paying 4.5% meaning that for some considerable time she has been paying the shortfall to the Building Society amounting to £17.03 each month.
Has anyone else been caught in this trap and has anyone successfully reclaimed the underpayment from the DWP?
Anyone's opinion would be helpfull. Thanks.

tcr_3

Was her mortgage rate ever 4.5% ? When did she go onto the fixed rate ?

anmarj

was she entitled to be paid the full weekly amount? They would of used the 6.08% in working out her entitlement (it is automatic), was the amount awarded under pension credit going to cover that full amount? if not then Pension Credit can only pay the amount that she is entitled to. for example her mortgae amount was £25 per week, but her entitlement to benefit after income taken off was £20 per week, then they would only pay her interest at £19.10 per week, if you see what I mean. If you are not sure, you can alway PM me her income details and I can work it out (I do work on PC)

[Deleted User]

does the full amount of her mortgage qualify for SMI?if at some point she has re-mortgaged only the original amount borrowed for the purchase of the property qualifies,that might explain a shortfall.
if this isnt the case then she needs to speak to the benefit delivery centre(mortgage dept)to sort it out with them.
might also be worth a read thru the sticky at the top of page

andyandflo

anmarj wrote: »

was she entitled to be paid the full weekly amount? They would of used the 6.08% in working out her entitlement (it is automatic), was the amount awarded under pension credit going to cover that full amount? if not then Pension Credit can only pay the amount that she is entitled to. for example her mortgae amount was £25 per week, but her entitlement to benefit after income taken off was £20 per week, then they would only pay her interest at £19.10 per week, if you see what I mean. If you are not sure, you can alway PM me her income details and I can work it out (I do work on PC)

I can see where you are coming from, but not all mortgages are allowable anyhow.
I get just over £5 PC and had a mortgage interest payment of £350pm
They didn't cover any of my interest payments!

It all depends on all of your previous property deals (buying, selling etc) and in my case they went back to 1989 which was 4 properties earlier that had been purchased and sold.
They wanted to know why I had not re-invested all of the sale proceeds in those properties from the previous one sold. They said that I had taken out mortgages instead of using the profits from sales over 21 years!!!

tcr_3

I'm wondering if they weren't paying out at the Lender's Interest Rate (LIR)(which they paid on if the LIR was under 5%) and for reasons unknown it never went onto the Standard Interest Rate (SIR) ?

OP, you'll need to get your friend to contact the Pension Centre to establish why they were paying on the lower rate. You can speak on their behalf if they're not up to it, so long as they're with you at the time to confirm ID details etc.

andyandflo

skcollobcat10 wrote: »

Is the OP a pensioner? I thought that you had to make sure that your mortgage was paid up before you became of pensionable age, or if taking out a mortgage have some other way of funding it?

If the OP is anything like a lot of people my age, there was never any question asked of how the mortgage would be paid off by pensionable age.
The only condition they used to put on it was that the mortgage could not normally go beyond the 85th birthday.
You would be surprised how many 'pensioners' have mortgages today.

anmarj

tcr wrote: »

I'm wondering if they weren't paying out at the Lender's Interest Rate (LIR)(which they paid on if the LIR was under 5%) and for reasons unknown it never went onto the Standard Interest Rate (SIR) ?

OP, you'll need to get your friend to contact the Pension Centre to establish why they were paying on the lower rate. You can speak on their behalf if they're not up to it, so long as they're with you at the time to confirm ID details etc.

they wouldn't be, the system went through major changes when they changed it to one rate, it would of been upped to SIR when they dropped the less than 5% rule, it is either to do with the entitlement or the friend is not getting the full amount of mid help becasue of something with how the mortgage was used for.

andyandflo

skcollobcat10 wrote: »

Hello andyandflo,

I am 52 years old, I got my first mortgage at 19 years old. I have always been told/asked how I was going to repay my mortgage.

So that is approx 33 years I have had mortgages on many houses. I am assuming that you are a lot older than me?

And.....

I had my first mortgage when I was 22 and have had them ever since. The last one that my wife applied for in her name only to move into the house we have just lost was in 2003 - when I was 54 and she was 59.
It was an open ended mortgage with an anticipated date of paying it off when she is 85 - 2029. It was an interest only one.

andyandflo

skcollobcat10 wrote: »

Hello Andy and I am assuming your wife is called Flo,

What age are you Andy?

errr the answer is in the above figures!

2003, I was 54 and my wife was 59. That makes me 62 and my wife 66.

Thank you

andyandflo

skcollobcat10 wrote: »

Sorry Andy & Flo,

Can I ask why at the age you where at the time, you took out your mortgage, why did you take out an interest only mortgage??

Surely with your experience Andy you would have known that this was a bit unsuitable considering both your ages?

Not really, I had considerable investments put aside in 2003 (£135,000). Enough to repay the mortgage on demand (£103,000) if need be. In 2004, I became seriously ill. From 2004 until 2009 when I had to give up work altogether, I was off sick more than I was working.
I couldn't claim any means tested benefits because of the capital I had. I couldn't repay the mortgage as I was told that it would be seen as deprivation of capital and be treated as though I still had it. In fact I didn't claim any benefits at all.

So the mortgage payments came out of it each month, our living expenses came out of it and by October 2009 it had all almost gone except for £4000 in a bond. I claimed benefit then for sickness and Pension Credit.