Paying of Mortgage with Inheritance

Oldernotwiser

If you can't pay off your mortgage, I doubt you face repossession. Most lenders are likely to allow you to carry on paying interest only (or having it paid for you) and collect on their loan when the second partner dies.

It could well be worth checking with your lender on this unless you have done so already.

RAS

htch75 wrote: »

RAS thank you for taking the time to respond, I am not quite sure I understand what you mean about a better financial position regarding outgoings and working. Sorry !

I assume that if you were working, you would still have 4 years of mortgage payments to go?

Had you been paying capital off over the years, most of those repayments would now be going towards capital repayment rarther than interest. So say the mortgage was £40K over 25 years. By year 21, you paid off say £33K of the capital with £7K still to go. (I am pulling these figures out of the air).

Now, because you have only been paying interest since you stopped work, the capital is currently still standing at £25K.

I think you might have problems if you paid off all £25K because you then have £7ks extra equity in the house, that you would not have had if you had been working. I think that if you paid off £(25-7)K, you could not be accused of deprivation of capital.

Personally, since your interest payments are being covered by the state at the moment, I would be prepared to argue that you should be allowed to pay off all £25K as that would save the state £interest for x years and would therefore be in the state's interest. But whether the powers that be agree is another matter.

I suggest finding out how much capital you should have paid off by now, according to the original schedule.

RAS

bunny999 wrote: »

If you pay off he mortgage you will be treated as if you still have the money. If this is over £16,000 then dwp means tested benefits will stop. If you don't pay the mortgage when its due you will get foreclosed. You will then get the money that is left after the mortgage co takes their cut. Bit of a catch 22.

Hi this is not correct.

septemberblues

Surely if the OP pays off their mortgage with their money then they just won't be entitled to Income Support and would have to pay the full amount of council tax? As do most people.

Just pay off your mortgage, consider yourself damn lucky you now have a fully paid up roof over your head, which most people (working or not ) do not have.

TOBRUK

septemberblues wrote: »

Surely if the OP pays off their mortgage with their money then they just won't be entitled to Income Support and would have to pay the full amount of council tax? As do most people.

Just pay off your mortgage, consider yourself damn lucky you now have a fully paid up roof over your head, which most people (working or not ) do not have.

If OP pays off the mortgage and finds she has no benefit how are they supposed to manage?! This is not good advice and is not helpful to htch75!

htch75 wrote: »

RAS thank you for taking the time to respond, I am not quite sure I understand what you mean about a better financial position regarding outgoings and working. Sorry !

To clarify I have been declared medically unfit to work for over 10 years now and given my condition it is highly unlikely I will ever work again.

My monthly outgoings will remain unchanged as I have been unable to make any capital repayments since being out of work therefore I am not reducing my monthly outgoings by paying the mortgage off.

We will have no other means of paying this debt so what happens when the debt becomes due in 4 years time ???

Firstly htch75, if you have already received any money at all you should notify the DWP and any other office from where you receive means tested benefit - council tax, mortgage office etc. regardless of what the outcome is of any enquiries.

I believe that what you were told over the phone by DWP is probably correct - they will not allow you to pay off your mortgage! HOWEVER, you need to write to them rather than phone them with all the facts of your situation - stating that your home is adapted for your child etc. I believe that there are certain situation that may allow you some slack!

I know that there are SPECIAL CIRCUMSTANCES that they allow payments because I have found out for myself. I am currently in a house and approx 100 miles from family. My health has deteriorated and I have had to put my house up for sale in order to move to a bungalow and move to be near family for my care needs - this is also backed by my GP who is prepared to write to them in support. As properties in that area are more expensive my family said that if I didn't have enough money from the sale of my house to buy a bungalow back home they would pay the rest. We enquired, and they will allow this because of the circumstances. We first went to CAB to enquire and they contacted someone that specialised in this sort of dilema. You really need to write to them.

I am in a similar although slightly different situation to you as I am disabled and I too had to leave my job 10 years ago through ill health and I have a mortgage.

I understand your worries with regard your mortgage ends in 4 years and you will clearly be unable to pay this off. However, you say that you have approx 80% equity in your home - this is good news, I also have a high amount of equity. What I have managed to do (because I have a lot of equity)is extend the length of my mortgage - I now have a 40 year mortgage!! Yes ... 40! I couldn't believe that I was able to change my mortgage in my situation, but I have!

Oldernotwiser wrote: »

If you can't pay off your mortgage, I doubt you face repossession. Most lenders are likely to allow you to carry on paying interest only (or having it paid for you) and collect on their loan when the second partner dies.

It could well be worth checking with your lender on this unless you have done so already.

You are correct Oldernotwiser as I have extended my motgage to 40 years - I will probably die before my mortgage ends!

Oldernotwiser

TOBRUK wrote: »

You are correct Oldernotwiser as I have extended my motgage to 40 years - I will probably die before my mortgage ends!

My parents had an interest only mortgage which was repaid from the sale of the house after they both died. It was just like paying rent.

septemberblues

TOBRUK wrote: »

If OP pays off the mortgage and finds she has no benefit how are they supposed to manage?! This is not good advice and is not helpful to htch75!

QUOTE]

The OP is on Incapacity Benefit and gets Income Support - to pay the interest on their mortgage. If they pay off the mortgage they will no longer get IS because they no longer have a mortgage!

Either way they will lose their Income Support, having an inheritance will be too much money to have for Income Support purposes anyway. Duh

kingfisherblue

I have an endowment mortgage for £38,000. I took out £19,000 twenty two years ago, and a further £19,000 sixteen years ago. For the last five years, I have been a single parent. I receive Income Support as I am my disabled son's carer, and the house has been adapated for his needs. I get government help with my mortgage; this has recently reduced.

I was worried about the endowments not performing well enough to pay off the capital amount at the end of the term, so earlier this year I went into the Halifax to ask what would happen. I'm not able to pay any additional amounts, and my ex doesn't pay anything towards the mortgage or endowments.

The Halifax were very helpful. They told me that the endowments would pay off part of the capital amount remaining (amoount depends on how well they perform), then the rest would be transferred to a repayment mortgage for me. They are aware of my situation and said that they would be prepared to allow for my individual circumstances, giving me a longer period to pay if I need it. They assured me that they do not want to repossess a house if at all possible, and as long as I communicate any difficulties, they will try to help me. Whether this will happen, of course, remains to be seen.

At some point, I will inherit some of my mum's estate (not for a long time I hope - I'd like her to live for a lot longer!). At that point, I will have to contact the DWP to see if I can pay off my remaining mortgage (assuming I still have one, which I probably will!)

Specialist advice is definitely the best bet, otherwise it is easy to fall foul of the rules.

TOBRUK

septemberblues wrote: »

TOBRUK wrote: »

If OP pays off the mortgage and finds she has no benefit how are they supposed to manage?! This is not good advice and is not helpful to htch75!

QUOTE]

The OP is on Incapacity Benefit and gets Income Support - to pay the interest on their mortgage. If they pay off the mortgage they will no longer get IS because they no longer have a mortgage!

Either way they will lose their Income Support, having an inheritance will be too much money to have for Income Support purposes anyway. Duh

In OP's situation who has stated will probably never work again if the money is used to pay off the mortgage she will be unable to receive any IS benefit etc for many years (depending on how much they believe the money would need to last, for which I would imagine around £5000 a year) to come.

Yes the OP is receiving some Incapacity benefit at the moment BUT this is based on how much stamp you have paid and so this will not last. The OP says that they receive IS and IB, I used to be on IB but was moved to IS and they said that this would include any IB that I am entitled to.

So there will come a time when the OP will not receive any IB and also when the changes come, nobody knows exactly what the Universal Benefit involves. How then would the OP be able to pay the bills, council tax etc if she doesn't have any income? Perhaps she will have to sell the house!

So I don't think I deserved a 'duh'!:)

septemberblues

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