SMI -if loan off family for home ?

hope86

Does anyone know if I would be eligable for mortgage interest support for a loan I took from my g.parents to buy my property (only worth 65k) I pay them £260 per month as interest and 6monthly lump sums off the capital part of the loan.
They are willing to defer the lump sums until can afford to pay them (I currently have 2part time jobs but one is ending due to closure)
But they need the interest payments & i,m going to struggle to pay.
I will be on JSA as will be working under 16 hours & low rate DLA so would qualify if i had a standard mortgage but not sure with it being a lone?
Thanks in advance for any constructive advice.

AnxiousMum

No idea I'm sorry - but one question you will likely be asked - what would happen if you couldn't pay the interest only? Would they sell the house on you? What type of paperwork do you have drawn up on the 'mortgage'? Whose names are on the title to the property?

Caz3121

Mortgage interest relief is paid direct to the mortgage lender. If you took a loan of your grandparents to purchase the property, on paper it belongs to you mortgage free so no payment and it will be classed the same as a bank loan etc (eg no help to pay)

anmarj

as anxious mum states it may boil down to a number of factors, but they have been known to allow interest for things like this, mortgage interest relief is not alway paid to lenders.

hope86

Thanks for replies

I,m hoping it doesnt come down to selling the property as it has fallen in price, but my g.parents live in part off the interest I pay. They took it from a very high paid interest rate scheme to lend to me so I feeling very bad that they are already losing out.

We saw a solicitor when bought the property,had something drawn up so g.parents are noted as having an interest in the property & that proceeds of sale would go to pay them back remaining amount owed on the loan at the time.

If that happened then I would probly have to go back to renting a home & probably be able to claim some housing benefit, but would obviously much rather keep the home i,m in.

AnxiousMum

If you have paperwork drawn up about the payment for the house, loan repayments and can show a record of having paid according to the agreement - then you should go ahead and apply! They can only say no, but the longer you leave it, the longer it will be before you know the outcome for sure. I would like to think that you could be helped If, as said above, that there has been help available to non regular mortgage lenders, the fact that you have the paperwork and records of payment according to that paperwork will hopefully go in your favour.

Oldernotwiser

Are you claiming income based or contributions based JSA because you can only claim SMI if you're on income based? Do you realise that there is a 13 week waiting period from when you submit a claim?

Gemstar30

hope86 wrote: »

Does anyone know if I would be eligable for mortgage interest support for a loan I took from my g.parents to buy my property (only worth 65k) I pay them £260 per month as interest and 6monthly lump sums off the capital part of the loan.
They are willing to defer the lump sums until can afford to pay them (I currently have 2part time jobs but one is ending due to closure)
But they need the interest payments & i,m going to struggle to pay.
I will be on JSA as will be working under 16 hours & low rate DLA so would qualify if i had a standard mortgage but not sure with it being a lone?
Thanks in advance for any constructive advice.

Hello,

This is a strange one. Under the government's terminology it has to be a mortgage or loan used to purchase the property. So on the face of it, it is a loan not a mortgage that you have.

Having said that I then wonder if you would get the relief if you had a simple bank loan - I think not. I think the deciding factor is that the property has to be secured to a 'loan' as in the normal terms of a 'mortgage'.

There was one guy on here a while ago that borrowed the money from a friend for a few weeks then took out a mortgage to repay the friend. That, if I remember correctly was taken as equity release and he was refused any help.

In that case I believe he had to give the property back to the bank and lost about £80,000 of equity in it and went renting instead.

So it is not that easy - best way is to put a claim in and find out. You have nothing to lose apart from the property if the loan isn't paid.

Let us know what happens, as this is an important question for those that maybe borrowed a sizeable amount from mum and dad and are having to repay them.

Gemma

[Deleted User]

Just as a back up plan in case you can't get any help, Have you considered taking in a lodger, just would be better than losing your home?

tcr_3

The basics of the SMI scheme & housing costs are that you're 1. liable for those costs and 2. responsible for those costs and 3. treated as living in the home those costs are for and 4. those costs are allowable.

So who owns the house ? Do your Grandparents have a mortgage/secured loan on the house ? Or was it an unsecured loan ? You mentioned previously they took out a high interest loan to help you buy it and I'd suspect most lenders would insist that a loan of that amount was secured on the house.

Those questions are very important because the answers will help determine liability and responsibility for the payments.

Assuming you own the house & that you've got a watertight agreement with your Grandparents for repaying the loan (which specifies the date & amount borrowed, the interest rate to be applied, how capital payments are to be made etc) then I think you should apply for help through the SMI scheme. Your Grandparents obviously aren't "qualified lenders" so any interest payments awarded by DWP will be paid as part of your JSA benefit ... you'll have to pass that onto your Grandparents.

hope86

Thanks all
in response to previous post,sorry i maybe wasnt very clear, to clarify- my grandparents didnt take a loan out for property, they took their own savings out of a high interest scheme to lend to me .
we write down in a reciept book and both sign for every payment made and the interest payments go straight into their bank account from mine via standing order every month.
There are no mortgage or other loans secured on property.

I have thought of a lodger but wouldnt that income just be lost by then being awarded a lesser rate of JSA