Any ideas who could answer this question?

marycanary

Hi

A couple of days ago I asked the question below on his forum. Although 94 people viewed it (thank you) no one could provide an answer.

I have been unemployed and on CBJSA for 4 months. I can not claim IBJSA because of the amount I received in redundancy payment and some saving I had. I have now found a new job but it is low paid and only part time. To enable me to make the mortgage payments at this new wage I will need to use what is left of my redundancy payment approximately £50k to reduce the outstanding amount and reduce the amount per month.

Would this be viewed as deliberately depriving myself of capital if I then applied for CTB and WTC?


Does anyone how I could ask about this?

Regards

Mary

Mojisola

I suspect the lack of replies is because the answer isn't set in stone. I've found this old ruling https://www.rightsnet.org.uk/pdfs/cis/635_93.pdf, see 15 in particular, which suggests you can't pay off your mortgage. You will probably have to use the capital to pay the monthly instalments until your lump sum is low enough to claim benefits.

If you can get someone from the Benefits Agency to put it in writing that it won't be treated as deprivation of capital, perhaps it would be worth the risk, but different decision makers seem to make different decisions.

Oldernotwiser

marycanary wrote: »

Hi

A couple of days ago I asked the question below on his forum. Although 94 people viewed it (thank you) no one could provide an answer.

I have been unemployed and on CBJSA for 4 months. I can not claim IBJSA because of the amount I received in redundancy payment and some saving I had. I have now found a new job but it is low paid and only part time. To enable me to make the mortgage payments at this new wage I will need to use what is left of my redundancy payment approximately £50k to reduce the outstanding amount and reduce the amount per month.

Would this be viewed as deliberately depriving myself of capital if I then applied for CTB and WTC?


Does anyone how I could ask about this?

Regards

Mary

WTCs aren't affected by capital, only the interest gained from it.

Surely you'll be better off paying a far lower mortgage, even if you have to pay CT?

dmg24

Why not use the capital to make your monthly payment rather than paying off a lump sum?

GlasweJen

For council tax benefit the answer is probably yes, deprivation of capital but this would be at a decision makers discretion and if you could prove that you wouldn't be able to afford your mortgage repayments without investing some of the money in the mortage then you could possibly still get some help with council tax.

For tax credits, the answer is no, there would be no deprivation of capital as tax credits don't normally take capital into account, they only worry about any interest over £300 per year earned on capital.

Hammyman

dmg24 wrote: »

Why not use the capital to make your monthly payment rather than paying off a lump sum?

Because you then needlessly pay thousands of pounds (as in over £10k) in interest over the term of the mortgage. Its even more of a bad idea if the interest rate on the £50k is less than the interest rate on the mortgage.

marycanary

Many thanks everyone for you posts

Mary

dmg24

Hammyman wrote: »

Because you then needlessly pay thousands of pounds (as in over £10k) in interest over the term of the mortgage. Its even more of a bad idea if the interest rate on the £50k is less than the interest rate on the mortgage.

The OP asked about deprivation of capital, which does not take into account what is best for the OP in the long term. They would be much worse if they paid off the mortgage and so were treated as having notional capital and hence not entitled to benefits. Then what would they live off? Credit, at an even higher interest rate!

NASA_2

Mortgage debt repayments are generally seen in a better light, IME, than other kinds of debt.

Mostly because they are actually 'enforcable' ie. if you dont pay it then you are out on your !!!!. Whereas people who pay off credit cards are screwed.

dmg24

NASA wrote: »

Mortgage debt repayments are generally seen in a better light, IME, than other kinds of debt.

Mostly because they are actually 'enforcable' ie. if you dont pay it then you are out on your !!!!. Whereas people who pay off credit cards are screwed.

What you are referring to is the difference between priority and non priority debts. Priority debts are certainly given more leeway, but only in so much as the customer is allowed to keep to their regular payment and hence to not go into arrears. The only lump sum payment that would be allowed would be to clear any arrears already accrued. Also, in the (incredibly rare) event that the bank called in the loan for no reason, I can't see that there would be any question of deprivation.

NASA_2

dmg24 wrote: »

What you are referring to is the difference between priority and non priority debts. Priority debts are certainly given more leeway, but only in so much as the customer is allowed to keep to their regular payment and hence to not go into arrears. The only lump sum payment that would be allowed would be to clear any arrears already accrued. Also, in the (incredibly rare) event that the bank called in the loan for no reason, I can't see that there would be any question of deprivation.

I'll have to disagree - I've seen mortgages cleared and the claimant not having deprived themselves of capital.

The intention is everything (Or close to everything) when deciding deprivation cases.

Each case on its merits.